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Budget 2018 – Foundations for the distant future?

Audio: Grant Robertson’s Budget Announcement Speech

Click a link to play audio (or right-click to download) in either
MP3 format.

Even the title of this budget 'Foundations for the future' sounds conservative. It may as well have been called 'don’t expect too much now'. A bit like Hamilton 'City of the Future' not so great now but wait a few years. What is clear is that it’s all about the long game here with an eye to 2020 and re-election. This first budget by Jacinda Ardern’s Government is more or less playing it safe. The budget documents stress repeatedly that this is a 'fiscally responsible' budget, as well as one focused on the future. Robertson is sticking to the budget responsibility rules as the government clearly is not willing to put themselves out there for criticism that they are a tax and spend government. The myth perpetuated by successive Neoliberal politicians and the subservient mainstream media painting National and only National as a fiscally responsible caretaker of the economy is responsible for this. This article by Grant Duncan on The Conversation also covers this here.

The result is that the Government have had to scrimp and scrape to find funds in unlikely places to muster together the amount they propose to spend on this ambitious budget. They have cut the National parties untargeted tax cuts (good) and funds allocated to many other programmes (eg the NZ space exploration project) have been reprioritised.

This budget also features much rhetoric about sustainability. True there is some reasonable funding for green initiatives, but some might still question whether it is being spent in the systemic way needed to really drive the change towards a more sustainable economy in the time it is necessary to do so before climate change causes serious disruption to our ability to make this transition. There is money here for a Green growth fund, the PGF tree planting fund and predator free New Zealand, but neither of these will solve the big ‘wicked problems’ facing NZ such as land and water use.

There is certainly more to be thankful about here than any other budget in the last decade, but that is not exactly a high standard after a strongly neoliberal National Government that essentially neglected core public services completely. Will the changes the Government have made in this budget actually do anything to address these real systemic problems? It is not looking very likely at this stage. It is a relatively conservative budget with some spending in key areas of health, education and housing but nothing here is going to reverse the downward trend created by not only the last decade but the last 4 decades of neoliberal economic policies in New Zealand since the 1980s.

Despite all that – there is reason for hope…in the future.

2019 Wellbeing Budget

Robertson announced that Budget 2019 will be a ‘wellbeing budget’. The Government is planning to use Treasury’s Living Standards Framework to determine measurable for that budget. Hopefully this focus ono human, social and environmental capital rather than simply GDP will lead to some more ambitious spending that will have a real impact on the lives of the New Zealanders who need it the most. Until then New Zealanders in need of urgent intervention and living in poverty or poor health will have to be content with what we have here.

The ‘Living Standards Framework’ essentially formalises the ‘diversity of livings standards outcomes’ approach by drawing on the OECDs ‘Four Capitals’ framework to organise indicators of intergenerational wellbeing.

It has been adapted to the unique context of NZ to allow us to create the indicators we need to address the Four Capitals for living standards in NZ – natural, social, human, financial/physical.

There is much practical work to be done by stats nz and treasury to create measurable indicators Next steps are:

This strategy will help the government to deliver a wellbeing budget in 2019 to use this list to prioritise wellbeing of New Zealanders.

Highlights of this budget announcement were:

Health

The Health sector receives a boost of $3.2 billion in operating funding over 4 years and $850 million in new capital spending over the same period. This is compared to 150 million spend by National last year. $750 million of this is destined to rebuild our ailing hospitals while $100 million will be available to strengthen DHB balance sheets through deficit support.

DHBs will receive an extra $2.2 billion over the next 4 years to ensure they can maintain standards of care, mental health services and support for New Zealanders – this is the largest funding increase in the last decade.

This health spending includes free GP visits for all under 14 years of age, low cost GP visits ($30 discount) to all community service card holders Housing NZ tenants and accommodation supplement recipients. -

Elective surgery, maternity services Midwives will receive 103 million of new operating funding for community midwifery services., air ambulances (60 million +22 million from ACC), and the national bowel screening programme all get funding.

Education

The education sector will receive $1.6 billion in total, a 45% increase on last year’s allocation. This includes:

$394.9 million in capital spending to build more schools and classrooms, operating costs over 4 years will increase allowing funding for 500 new teachers

Early Childhood Education will receive a $590.2 million boost over four years

$284 million will be available to increase extra learning support which Minister Robertson claims will have a big impact for many schools by reducing overall pressure on schools.

Housing

In addition to the $2.1 billion already committed to Kiwibuild, housing will be boosted by $634 million in operating funds.

The Government has committed to building 6,000 new public housing homes over 4 years – which exceeds their election promise of 100 per year.

There is also $300 million in capital for the Tamaki regeneration project to build 1,400 more houses and 700 new public housing units.

There will be funding for more transitional housing and for homelessness relief solutions.

An interesting budget item is the $142 million in funding for grants to low-income new Zealanders to pay for insulation and heating. Some might question why the Government is subsidising an overpriced electricity sector instead of acting immediately on pricing reform? It is promising however that the Government has announced a review of power pricing. This is much needed so we don’t just continue to subsidise power companies for the unethical way they are overcharging citizens. In the interim this may provide relief for those in need but is not a long term solution.

The housing investment also features $15 million for Maori housing providers through support for the Maori Housing Network.

Investing to create a Productive and sustainable economy

The budget includes $1 billion over 4 years for business innovation by way of Research & Development incentives.

The government’s $1 Billion Provincial Growth Fund is included and the budget sets out the first year’s allocation of $245 billion over ten years. This balance could change as the fund matures according to Minister Robertson.

The fund will also invest in forestry, tourism, energy and infrastructure projects across the regions and according to Robertson represents the largest investment in New Zealand’s regions in all our lifetimes.

In addition the Government announced a $100 million investment in the Green investment fund. This is start-up capital which will leverage investment from the private sector to help fund projects furthering the economy’s transition to a more sustainable one.

Conservation

The budget includes $181 million allocation for predators, biodiversity and DOC.

Police

The police will receive $300 million

Defence

The defence force will receive $345 million


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