Sludge Report #71 – Old Mother Hubbard’s Budget
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Old Mother Hubbard’s Budget
Question: Why are we spending more on new computers for the Department of Work and Income than we are on protecting our children by implementing the Judge Mick Brown report?
Answer (Minister of Finance, Dr Michael Cullen): We have to have computers to pay the benefits. That’s just the way it is. I can tell you I wasn’t delighted either when I was told this spending was necessary.
Q: Is this then symptomatic of this budget, is this in fact old Mother Hubbard’s budget?
A: The cupboard is not bare. And next year we are forshadowing $850 million of extra spending. So the cupboard isn’t bare and neither will we be having an election year spendup.
Dr Michael Cullen is being disingenuous about this budget and he knows it. How long he maintains the pretext that he is in fact proud of it is a moot point. Certainly his media monitors don’t like this line of questioning anyway.
Q: Are you caught in a straight jacket by the Fiscal Responsibility Act?
A: No. I don’t see it that way. Though it would be fair to say that we caught a little by the perceptions of the financial markets about these things.
A: Would you have liked to have spent more?
A: Would I have liked to spend more money on protecting children? Would I have liked to spend more money on education? Would I have liked to reduce student fees? Would I have liked to spend more on infrastructure and roading? On health? Yes. Of course I would have.
(Media Minder from the back of the room) last question please.
Q: Why didn’t you increase spending by more then? Is this budget too prudent?
A: We can’t just borrow against the interests of future generations.
Q: But we have recorded surpluses for the last eight years. Isn’t the truth that it is irrational of the markets to describe a tiny increase over planned expenditure as a budget blow out.
A: That’s not an expression I have ever used. And it’s true we have had had a long run of surpluses, yes.
Q: What are you scared of?
A: Who me?
Q: Yes. Are you scared that if you spent more that the markets would send the NZ Dollar even lower? Wouldn’t such a move by the markets be irrational given that the increase of spending by the government is lower even than inflation?
A: Certainly as a percentage of GDP government expenditure is forecast to fall.
Today’s budget is definitely not made from the cloth of socialist revolutions. This budget is prudent, conservative, responsible and thrifty. It is in short an ultra-careful-as-she-goes, lets-get-ourselves-re-elected-by-centrist-voters-in-2002 budget.
On the bottom line total government expenditure is forecast to increase at just $1085 million this year or 2.8% over what it was in the financial year just finished. This is around the level of inflation during the same period and is, Sludge reckons, the smallest ever bottom line increase in government expenditure.
But while the cut of this budget maybe sack-cloth and ashes, considerable effort has gone into the styling.
The government has tried to do its best of a bad lot and the budget comes equipped with several catchy slogans designed to make it more palatable.
In addition, and for this the government deserves credit, a focus on improving the lot of at risk children is definitely evident, even if the $56 million provision is embarrassingly overshadowed by $71 million for new DWI computers.
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