Rising public sector needs mean 'budget responsibility rules' too tight, says CTU
By Pattrick Smellie
March 28 (BusinessDesk) - The Council of Trade Unions says mounting evidence of underfunded public services justifies the government abandoning its pre-election commitment to Budget Responsibility Rules that seek to reduce net Crown debt to 20 percent of gross domestic product.
The rules, which have sparked criticism from the left of the Labour Party and elements of their support partner, the Greens, were adopted before the 2017 election as part of Labour's bid to establish credibility as a prudent economic manager and featured in its coalition agreement with New Zealand First.
"The responsible way to deal with any crisis is to reassess your game plan," said CTU president Richard Wagstaff in a statement, leveraging Prime Minister Jacinda Ardern's comments this week that the capital needs in the public health sector were larger than the government had anticipated following reports of previously undisclosed major maintenance required on parts of Auckland's Middlemore Hospital.
"Our political leadership must now reconsider the restrictive Budget Responsibility Rules plan and whether their revenue is sufficient to gut and repair the rot that’s built up in public services," said Wagstaff.
His comments come also as nurses, teachers and the police force seek catch-up pay claims under a new government that they expect will be more sympathetic to the argument that their wages were screwed down hard during nine years of the National-led administration.
The New Zealand Nurses Union this week rejected a 2 percent wage increase offered by their district health board employers, leading Ardern to suggest government involvement in a process of independent mediation to try and avoid industrial action.
The CTU call also comes as Finance Minister Grant Robertson puts final touches on his first Budget, due for delivery on May 17.
In his statement, Wagstaff said: "The prime minister has realised that underfunding in health goes even deeper than she expected when taking office. Mould is a visible symptom in our buildings, but it’s also visible in the unmet need for care in our community and the stress and burnout visible in health staff.
"This Government has committed not to present rosy budget figures at the expense of our people and our public assets."
Under its budget rules, Labour would take two years longer to reduce net Crown debt to 20 percent of GDP, but the target was retained in part because much of Labour's critique of the previous government's performance rested on the large increase in nominal Crown debt caused by responses to the global financial crisis and Canterbury earthquakes.
Labour has also promised to continue running budget surpluses, albeit smaller than those projected under the previous government, and to keep government spending at around 30 percent of GDP, reversing the declining trend forecast under National.
Wagstaff said the Middlemore example was "just the tip of the iceberg"
"This government was already coming into an environment of billions of dollars of underfunding in health, which has manifested in short staffing. Kiwis value our hospitals, schools and other public services that keep us healthy and happy. They voted at the last general election for a fresh approach that puts the needs of people before artificial economic spin. Now’s the time to put that into practice."