Rob Salmond at Polity on the budget.
Earlier this week I predicted the Budget would be Labour-lite. I was right, but only in part. Extending PPL, more money for ECE, and extending free doctor visits for more kids are all good ideas.
But in other enormously important areas, I was wrong. National’s commitment to first home buyers and to wage earners isn’t even too little too late. It’s a poke in the eye too late.
By far the biggest disappointment is in housing. The government signalled help for home buyers would be a highlight in the Budget. This morning, Stuff published a poll showing:
Help for buyers of first homes was top, 76.4 per cent of those surveyed believing it would be good for the country, including those who did not see it making a difference to them personally.
So what did they get? An end to duties and tariffs on plasterboard, reinforcing steel, nails, and some other building materials. Woohoo! The street marches and the letter-writing campaigns worked! The government says this will reduce the cost of building a new home by a paltry $3,500, a good portion of which will be absorbed by contractors and developers.
And that pathetic morsel is it.
This will make next to no difference to the housing affordability crisis. First home buyers aren’t $3,500 short of a house. They are hundreds of thousands short, because there aren’t nearly enough homes. National was vulnerable on housing before today, and are even more vulnerable now.
Growth for owners, but not for workers
Thanks to the global recovery and the rebuild, real GDP growth is forecast to be 14.2% over the 2014-2018 forecast period. That’s around 2.8% annually, which is pretty good.
But real wage growth (wage growth less inflation) is forecast by the government at less than 4% over the entire five year forecast period.1 That’s 0.8% annually. It is pathetic.
How can this government accept – and even celebrate – of a situation where the fruits of growth are mostly hoarded by the owners of capital, and are not shared with wage earners in a remotely fair manner? It is an insult to the millions of workers who missed out in National’s recession-era tax switch in 2010, and are now missing out on the recovery-era growth as well.
The government has run out of its own ideas. Where it can stomach Labour’s plan, it has announced a flaccid imitation. Where it cannot stomach Labour’s plans, it has erected surrender signs instead.