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Budget the real test of new government

9:25 pm on 26 April 2018

Jane Patterson, Political Editor

Power Play - Six months into the new government and the real test will be May 17th - the Budget.

Labour and its governing partners have been laying the groundwork for a Budget that will signal new priorities for spending, after building the case for significant increases to public sector funding.

Ministers have been dropping claims of 'fiscal holes' in health, education and defence and will have others lined up before Budget Day.

Until now it has been a case of 'he said, she said' with denials from National about persistent underfunding or spending promises with no money tagged to them.

National's mantra, particularly in its early years of governing, was the expectation the public sector do more with less, accompanied by relentless restructuring. There is restructure fatigue in the public service, and also a more sceptical view among some that while core agencies and departments have been stripped back, the use of consultants continues to flourish.

The coalition government will take a different tack, with promises to pour money into health, education and housing in particular. That has created big expectations within those sectors that may start to push back if the Budget does not meet those expectations.

Under the self imposed deadline of its own 100 day plan the government launched into an ambitious programme to implement, or start the ball rolling, on key policies and initiatives.

The first was the fees free tertiary policy, in the first year for those who had not studied before.

The jury is still out on whether that will actually achieve better access to tertiary study as intended; what is clear is that at $2.8 billion over four years it does not come cheap and is a commitment that will limit what the government can do in its first term.

Other big ticket items like the Provincial Growth Fund and the Kiwibuild Programme will also take up a fair amount of room in Finance Minister Grant Robertson's first Budget.

All of this of course is the prerogative of a new government, to move money away from policies like National's planned tax cuts, to areas where it believes it could be better spent.

Mr Robertson has also ordered a review of all government spending to make sure it fits with the broader strategy; he will be looking to make cutbacks to any programmes or funding areas not aligned with the government's priorities to give him more flexibility.

Political management is another test of the government and most of the responsibility lies on the shoulders of the Prime Minister Jacinda Ardern.

Domestically, it has been a rough couple of months - on the whole it has been up to Ms Ardern to defend the failings of some of her ministers, and balance the interests of Labour against those of its coalition partner New Zealand First, and of the Greens.

Shane Jones' attack on Air New Zealand, the regional fuel tax and the halt to most new oil and gas exploration are just a few examples. They have all been handled without any major fallout, but have tested relationships.

Closer to home, Labour also had to deal with the damaging headlines of sexual assault claims at a party camp, a story only halted by the announcement of the inevitable review.

While the first 100 days was a hive of activity many of the policies were only initiated, although policies including fees free tertiary and the rejigged families package were fully put in place.

There are still key areas in which the government has not revealed its full plan, the most notable an overhaul of the welfare system. It is not clear exactly what the government intends to do to curb immigration numbers, and change visa entitlements for students in particular.

Inquiries into mental health, abuse in state care, Hit and Run allegations and effectively into a possible Pike River re-entry have put off the need for any immediate action on complex and sensitive issues Labour made a lot of noise about in opposition.

The nerve attack in Salisbury, cyber attacks, wrangles over trade talks and Russia's actions at the United Nations over Syria have put pressure on Ms Ardern's skills in the foreign affairs arena. A stronger condemnation of Russia has been tempered by her inclination for action only when mandated by the United Nations, considerations that did not similarly constrain Five Eyes partners the United Kingdom and the United States.

There have also been questions about whether the Foreign Minister Winston Peters has influenced a 'softer' response to Russia.

That is denied by both Ms Ardern and Mr Peters, but the inclusion of a free trade deal with Russia (and Belarus and Kazakhstan) in Labour's coalition deal with New Zealand First has attracted more attention than it would have if Russia had not been dominating the headlines.

Ms Ardern is a 'girly swot' in her own words and easily handles questions about policy detail. But is she exhibiting the steel voters look for in a Prime Minister?

Prime Ministers should not sack ministers for the sake of it and to make themselves look tough, but (as with Prime Ministers past) most often it is ministerial colleagues, rather than their own performance, that cause the biggest problems.

Ms Ardern will be judged on how she handles ministerial misdemeanours and while a new Cabinet will initially be given a bit of latitude as they settle into their roles, that time is past.

All in all she has weathered a stormy few months and has come out relatively unscathed. Rounding off the six months with a high profile overseas trip making progress on crucial trade deals for New Zealand has not been unhelpful. The next big challenge will be to demonstrate the Government has the economic chops to deliver on the promises made to voters, while sticking to the budget principles it insists it will not abandon.


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