The Government’s Covid-19 Budget was on a scale unlike any in recent memory – but despite the protestations of the Opposition, that seems right for the nearly unprecedented situation we find ourselves in, Sam Sachdeva writes
Parliament is a highly ritualised place at the best of times, and that goes doubly so for Budget Day – so the restrictions imposed by Covid-19 were always going to shock the system.
While the move to Level 2 earlier in the week allowed greater numbers inside the Banquet Hall “lock-up”, a number of concessions to current circumstances still had to be made.
Much to the dismay of journalists and analysts, it was a BYO lunch with no sausage rolls or lamingtons on offer (although given the viral horror show that buffets appear to be, perhaps that is no bad thing).
Robertson’s staffers were turned into human microphone stands during the question and answer session following his lock-up speech, the traditional approach of simply passing the microphone around also deemed to fall foul of public health standards.
But some traditions endured: Ardern was able to gift Robertson a Budget Day tie thanks to a local artisan who apparently worked through the night to make it.
And the Finance Minister was even able to set the stage for some voter-friendly spending in election year, albeit on a scale unlike anything seen before in recent years.
$30b down, $20b to go
The $50 billion figure tacked to the centrepiece Covid Response and Recovery Fund is in some respects a case of magic with numbers.
Nearly $14b of that had already been spent, with a further $16b laid out in the day’s Budget.
Importantly, that leaves nearly $20b of fiscal headroom for further announcements in the months leading up to the election.
Government staffers were quick to state the $50b number was a cap rather than a target, but Robertson undermined that somewhat by saying it would almost certainly be spent within the next few years.
That sets the stage for some form of pre-election spend, with long-term stimulus measures like “helicopter money” apparently still being considered by ministers.
The nature of coalition government might apply a handbrake to any major investments, but equally it could be in the interest of all three parties to provide a timely boost to Kiwis.
But even without the use of that extra funding, there was still plenty for everyone in yesterday’s document: $4b in business support (including an expanded but targeted wage subsidy scheme), an extra $3b for infrastructure, and $1.4b for a trades and apprenticeships package.
Any of those alone would normally be a Budget centrepiece – that they came in combination is a sign of the environment we find ourselves in.
There were still some striking omissions, however. It was little surprise the Green Party came under pressure from supporters for a lack of policy and funding wins.
There was a $1.1b environmental jobs package, to be sure, but barely any mention of climate change – supposedly one of the Government’s top priorities – and no further increase to welfare payments despite Robertson acknowledging lower-income New Zealanders would be among those worst affected by the Covid crisis.
Ardern suggested more climate change support could come in the form of the $3b infrastructure package, but the far larger $12b New Zealand Upgrade Programme announced earlier this year did little to satisfy climate advocates.
But the wide array of initiatives funded put National leader Simon Bridges in a difficult position when it came to highlighting any particular omissions.
Bridges opted against proposing a vote of no confidence in the Government, a Budget Day tradition for opposition leaders responding to the Finance Minister.
That was a deliberate choice, he later said, a reflection of the unusual circumstances New Zealand finds itself in (although there is at least some suggestion from within his caucus it was actually a mistake).
Taking Bridges at his word, he may have expected some credit from Ardern: instead, she turned it back on him, affecting an air of naïveté as she asked whether that meant National would be voting in favour of the Budget.
It was a useful reminder that for all her claims to the moral high ground, Ardern is still a politician at heart.
But Bridges also has to take some blame for failing to properly explain his actions beforehand – an error that was emblematic of his day as a whole.
You could almost feel the National leader straining to maintain a sense of statesmanship in his response.
Spending on projects like rail and pest eradication may have merit, he said on the one hand; but on the other, what about the debt they would create?
Bridges spoke about poorly prioritised spending and a “$50 billion slush fund” – but praised the Government’s wage subsidy scheme, $6b of which was paid for from that so-called slush fund, and struggled to explain exactly which initiatives he would cut.
Decrying the additional $140b of debt outlined in the Treasury figures, he claimed: “I note Bill English, I think, didn’t really ever have over an extra $1 billion in a Budget in his time as Minister of Finance” – a statement that makes no sense whatsoever, whichever way you look at it.
It may well not be a $140b problem, but the evidence would suggest that $50b will almost certainly not be enough to deal with the scale of the challenges facing us.
Indeed, Bridges’ canned line that the Government was “turning a $50b problem into a $140b problem” seemed underpinned by the roughly $50b of extra borrowing the last National government took out to cover the costs of the global financial crisis and the Christchurch earthquakes.
But Covid-19 has affected far greater swathes of the country than the earthquakes did, while it is currently projected to be far more devastating for our economy than the GFC.
It may well not be a $140b problem, but the evidence would suggest that $50b will almost certainly not be enough to deal with the scale of the challenges facing us.
Bridges is gambling that voters’ historic concerns about debt levels will outweigh their desire for sweeping support – Kiwis faced a “tsunami of debt”, as he put it.
But Robertson’s statement that the country faced a 1-in-100 year global shock, forcing drastic measures, seemed more closely aligned to the national (and global) mood.
