The Goldilocks budget

Written By: - Date published: 9:25 am, May 20th, 2022 - 24 comments
Categories: budget 2022, Economy, grant robertson, labour, treasury - Tags:

The pundits are punditing and the shills are shilling.

How was the 2022 budget?  Was it the worst since Ruth Richardson’s mother of all budgets or the best since the first Labour Government gave everyone a Christmas bonus in 1935?

The right are incandescent with finely calculated rage.  They complain about the squeezed middle, by which they mean the slightly inconvenienced rich.  They claim that too much is being spent without having the guts and the nerve to say which areas would be cut if they were in power.  They claim they would be better managers of the Government’s books even though recent election campaigns suggest that their ability to add and subtract let alone comprehend is compromised.

The left are complaining that beneficiaries should have been included in the inflation payments.  I have much more sympathy for this argument although I note that making public transport permanently half price is a significant cost saving for many.  And changes that came into effect on April 1 have already made a significant difference.

Vox pops from locals are being collected by the media.  Many are grateful for the extra funds being offered to 2.1 million kiwis.  Some are not.  The reasons offered give an insight into their political persuasion.  If they talk about the payment being inflationary or that it is wrong that they should not get the payment because they have worked and been successful then their class privilege and their political allegiance are showing.  The best vox pop I heard was an older woman who said that she was comfortably well off and would not receive the payment but thought it was a very good idea because it would go to those who needed it.

Various representatives of ginger groups have also been interviewed and show how transactional politics has become.  The largest increase in Pharmac’s funding ever has been described as a very bad thing by those who think that all drugs should be funded.  This self appointed public transport spokesperson rated the budget 3.5 out of 10 because transport fare subsidies will not continue past a further two months.  I can only conclude that he missed Monday’s announcement where clean vehicle upgrades, the rapid development of urban cycleway networks, increase accessibility and reliability of public transport through their transport choices initiative and accelerating the decarbonisation of the public transport bus fleet were announced.

The major features of the budget are pretty impressive:

  1. $1.3 billion for new hospitals, $1.1 billion for ambulance and helicopter services, GPs and Maori health providers.  And $11 billion to pay off all Health Board deficits in preparation for the new system.
  2. Fuel tax cuts and public transport fare cuts to continue for two months, funded by the remainder of the Covid fund.
  3. $200 million for light rail in Auckland.  Further funding for new trains and wagons.
  4. The largest ever increase in Pharmac’s funding, $191 million over two years.
  5. $2 billion increase in Education funding including $777 million on new schools and classrooms.
  6. $1.8 billion for public and transitional housing programmes and adjustments to allowances for first home buyers.
  7. Between 6,000 and 14,000 more children being lifted out of poverty.

The approach in the budget is utterly fiscally conventional.  The Government’s books are predicted to return to surplus in 2025 and debt to GDP is set to reduce to 30% at the same time.  Grant Robertson cannot be accused of being a left wing maveric.

The budget is expansive and will address many of the issues that the country faces.  Yes it could go further, I for one think that the self imposed debt to GDP ratio limitation as being a absurd restriction but Robertson is a very conventional Minister of Finance.  The measures to address inflation pressures will be welcome and no doubt a further extension will be in the back of people’s minds.

Overall I would rate it as a goldilocks budget.  There was a great deal of good in it but it was conventional in financial terms and should not scare the markets.

24 comments on “The Goldilocks budget ”

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  1. Ad 1
    20 May 2022 at 9:48 am

    You forgot that massive multimillion climate fund. Even Shane Jones would be jealous of that scale.

    This budget didn't strike me as a vote-shifter which is what it needed to do.

    The PT and fuel subsidy is the sweet spot that is hip-pocket positive.

    I was expecting a more thorough budget on health anticipating how regional health disparities would be raised and evened out.

    Felt more like a solid structural rebuild than anything grander.

    Where is their moment to seize back momentum?

    • AB 1.1
      20 May 2022 at 10:12 am

      This budget didn't strike me as a vote-shifter which is what it needed to do.

      My concern also. They picked the right group (sub $70k), but these ordinary voters need to actually feel that a Labour government has made a noticeable and material difference to their pockets and lives before the next election. What we saw was not enough and only temporary in most cases. Delaying doing this till the 2023 budget will be too late. By that stage it will be merely a promise. And I fear that their innate caution means that they won't do it in 2023 either.

      Obviously they were spooked by the idea that too much stimulus at the bottom end – because it will all get spent – might add a domestic component on top of imported inflation. That would mean not only undermining what they were trying to achieve, but also that National's lies about the origins of inflation would become partially true.

  2. Jimmy 2
    20 May 2022 at 10:17 am

    The only guarantee is, you will never please everyone.

    The $350 was a pleasant surprise for under $70k earners. Many will say this is too little, but I wasn't expecting anything

  3. Reality 3
    20 May 2022 at 10:47 am

    As usual, the complainers are out in force. Do people these days ever appreciate anything? One of the ridiculous headlines post budget was that the $27 per week would not pay for a Uber delivery! Do some not know how to make a toasted sandwich, open a can of soup or boil an egg!

    For those who are wanting more, more and more – guess what – that will be less, less and less for another cause.

    • mary_a 3.1
      20 May 2022 at 1:18 pm

      @ Reality (3) … a very good comment.

      Unfortunately we have become a very greedy society.

      I have been on this earth for almost 76 years and for the past thirty years or so, I have never known such selfishness and greed as that which exists now and I don't like it. It seems it's all about 'what about me … where's my share of the goodies' etc etc, with little consideration given for what's best for the country as a whole and not precious greedy individuals, expecting themselves to be first in line for the handouts!

      As far as I'm concerned this was a good fair budget and extremely pleased health and education were at the top of the list for government funding. That's what I get out of it, to know funds are going to the necessary recipients, which will benefit NZers in general.

      • Anne 3.1.1
        20 May 2022 at 3:09 pm

        … for the past thirty years or so, I have never known such selfishness and greed as that which exists now…

        Inside the Public Service it started immediately following the Roger-gnomes opening the doors to this neoliberal ideology.

        Out the door went the former bosses who had climbed the ladder over many years and knew their 'product' inside and out. [The concept of providing a service was no longer in vogue.] In came the 'Johnny come latelies', who more often than not knew nothing about the product being provided, and whose sole ambition was to make big profits no matter the deleterious effect on thousands upon thousands of people over the years. It is not surprising therefore that the general public picked up the message and became greedy and selfish too.

        There has been a slow reversal in recent years – thanks to the Clark and Ardern governments but there is still a way to go.

  4. Keith Christie 4
    20 May 2022 at 11:14 am

    Well said Micky. As a member of the "Squeezed Middle" we have never had it so good as under this govt. Even though our combined income is less than $140,000, we miss out on the $700 because I am on Super and my wife earns more than $70k (Boo Hoo).

    What annoys me more than anything is all the whinging from the likes of schoolteachers and nurses. As a retired accountant I still do tax returns and can see what they earn. I would have liked to been on what they are getting.

    So I am applauding this budget – it has had to walk a fine line. In my day of studying economics we used to talk about the magic square. In one corner is inflation, opposite is employment in the other corners are growth and overseas trade balance. What Robertson has done has hit the square right in the middle.

    So I would call it a Robin Hood or William Tell budget.

  5. Scud 5
    20 May 2022 at 11:19 am

    $300m for Rail, to increase its axle loads for the new rolling stock including Pax Carriages, upgrades to the soon to be reopened Hillside Workshops.

    Apparently the business case for new inter-regional communter trains is still setting on someone's desk waiting to be signed off.

    And there was something about the new Branch line for Marsden Pt mentioned before the Budget.

    Defence wise, well the budget($650m) for the New Southern Ocean Patrol Vessel that was quietly cancelled a few mths ago has been diverted to cover the cover defence infrastructure deficit, aging equipment & pay raises for the lower ranks including junior officers.

    I'm still concern that the Southern Ocean Patrol Vessel has been kicked down the. Because the current 2 in-service OPV's are no longer fit for purpose to operate in the Southern Ocean due to CC weather related events, even though CC was identified by the Navy during Project Protector & again in the Coles Report into Project Protector which was commissioned by Phil Goff after the death of a sailor on the Canterbury around 06.

    Personally I believe the RNZN are going to require at least a minimum of 3 Southern Ocean Patrol Vessels to be based out of Port Chalmers into the future 3-6yrs time. Because my gut feeling is that the Antarctic Treaty which is up for renewal very soon, is likely to collapse & the increasing likely hood of the Chinese Fishing Fleet (based out of the Solly's) moving into the Southern Ocean Fishing Grounds within 2-3yrs time.

  6. Robert Guyton 6
    20 May 2022 at 11:37 am

    "

    What Treasury did was to compare the handling of the economic harms done by the GFC (ie. under a National government) with the handling of the economic harms caused by the Covid pandemic (under a Labour led government.) Here’s what it found initially:

    Real GDP fell 10 percent in the second quarter of 2020 as a result of the economic impacts of COVID-19, compared to a peak-to-trough fall of nearly 3 percent of GDP through to the second quarter of 2009 following the GFC.

    So… The impact on GDP of the pandemic was three times worse than the damage done by the GFC. But guess what? The Labour-led government was over three times faster at getting the economy back on the rails, even though the problem it faced was three times bigger than the one that faced the Key government:"

    http://werewolf.co.nz/2022/05/gordon-campbell-on-budget-2022/

  7. Patricia Bremner 7
    20 May 2022 at 11:39 am

    The next budget should deal with tax bracket creep and build on the "steady hand on the tiller".

    In an uncertain world with huge weather events and geopolitical clashes becoming more usual, people will want the infrastructure and public service and genuine care.

    This budget is providing for that future.

    Targeting "the squeezed middle" with the $350 per person earning under $70001.00 was a clever move, taking the question to National. "Are you serious about aiding this group, or is $2 tax refund a week their lot?"

    Many couples will receive $700 tax free per household, in 3 payments over 3 months, and for those singles who are the working poor, this $350 is the first help and recognition, apart from the general budget aims.

    They are the group who will benefit by moving the tax thresholds next as the wage rises occur.

    This is a mitigation budget rather than a transformational budget. Put the structures training and support in place to encourage employment, and the insurance scheme to assist in the pivots people will have to make when polluting activities end, or when health issues disrupt lives.

    Many write about what they want from a society, but not many can harmoniously join up disparate needs, present a workable plan and get people "on board"

    Many actions this Government has made lay the path forward, and as we see other places failing to help their own through these ongoing shocks, we will again be glad to be here.

    The certainty of 2 3 and 4 year funding and planning gives surety in this chaotic time. imo.

    • Nordy 7.1
      20 May 2022 at 12:15 pm

      Yes, it is definitely a transformational budget, just look at the climate change and health spending (including purpose/direction) as examples.

      When you consider all the budgets delivered by Labour since 2017, their transformational nature (especially compared with NACT) is undeniable.

      Political change is not measured in one-off decision-making, but in the overall vision, direction and outcomes. They are all clear and undeniable.

      PS – yes, not everyone one will be 'happy', but that is the inherent nature of politics and having fiscal constraints, leading to choices. As Grant R has quite rightly has been saying – the need for balance.

  8. SPC 8
    20 May 2022 at 12:51 pm

    THE BIG OVERSIGHT

    There are 25,000 on the state housing waiting list, there are thousands more working and paying rent over 60 (who will later go onto the waiting list).

    They need to be buying up 5000 houses a year (now the market has peaked and is easing back probably for 5 years or so – as per 1976-1981, this is the time) for about 5 years to deal with this.

    Every house bought is an equal value asset – rent to income cost vs the government debt financing cost is the only thing to be accounted for. But given the government spending/cost on motels I reckon they would be saving money by being far bolder.

    60,000 state houses 3M people, 100,000 houses 5M people.

    • Binders full of women 8.1
      21 May 2022 at 7:11 am

      Agreed, our local polytechnic turns out great relocate able new houses from the chippie apprenticeship course. The dumb spend on Chloe s doco could have produced 2 more. Ffs.

      • SPC 8.1.1
        21 May 2022 at 7:25 am

        And the rate of increase in building new state houses atm is barely keeping up with the add-ons to the 25,000 already on the waiting list.

        1 the old people not owning property working to pay the market rent eventually get have to retire and then go onto the state house waiting list.

        2. those who get sick (cancer and chemo, diabetes and dialysis etc) and who cannot work and pay market rent) and go onto the state house waiting list.

  9. Mike the Lefty 9
    20 May 2022 at 12:59 pm

    I feel that the budget took a little too much notice of the bleatings of "the poor squeezed middle".

    As far as I am concerned the "poor squeezed middle" can go f…. themselves. They are in part responsible for the high inflation and exponential house prices inflation by over indulging in property speculation, buying up overpriced ego-utes by the mass because the price was going up, and whining about border restrictions affecting their leisure. They went on a spending spree, the creditors are coming for their money and the poor squeezed middle class are comparing themselves to the prodigal son.

    I would personally have liked to see the cost of living payment restricted to incomes under $50,000 and beneficiaries also included. Why? Because not all beneficiaries are work dodgers, despite what National and ACT think. Many of them are injured, infirm, disabled or having to look after parents, children, etc and these people are the ones REALLY doing it hard – not the poor squeezed middle class whining about the rising cost of their lattes.

    • Belladonna 9.1
      20 May 2022 at 5:42 pm

      Pragmatically, I think that Labour have got it right – targeting the payment up to 70K.
      The squeezed middle (and that's how they perceive themselves) vote.
      The marginalized beneficiaries, don't.

      [Yes, of course I'm generalizing]

      A huge number of that up to 70K income group swing-voted for Ardern (and it was for Ardern, not Labour) in the 2020 election. If Labour want to win in 2023, they need to hang onto a percentage of that vote….

      So, tactical, rather than ideological, from Labour.

      Also, sneeringly dismissing them as 'whining about the rising cost of their lattes' is not the way to persuade any of them to vote the way you want them to.

  10. SPC 10
    20 May 2022 at 1:44 pm

    On PT, the government should have gone with half price for all and free for CSC holders 9-3 (as per Gold Card) while there is the spare capacity.

    While some people work from home and the oldies are isolating – this leaves unused space on PT.

    Maybe till the end of the year, maybe next year as well.

  11. Corey Humm 11
    20 May 2022 at 3:46 pm

    The budget is about a 5/10. It's average. It's not a budget that'll change the political narrative, which is what I was hoping for but it'll do. There's nothing wrong with it. Nothing great about it.

    The pharmac funding people who are pro extra funding getting furious they got an increase but not the increase they want are ridiculous.

    I like the cost of living payment but I have a major issue with it. It should be permanent. Why? Its just giving people back the extra tax they've been paying since 2018 simply cos wages go up meaning more money for govt. You could call it the workers winter rebate whatever you want but do it every year for four months. A one off is just meh and without changing the tax brackets for inflation there's going to be big issues with min wage earners soon.

    I think half price public transport should have been universal and permanent, since they halved prices I've never seen an empty bus which they were almost always empty. they are chocker now and it's saving people money getting to and from work and the more people using the better the roads and the more persuasive arguments for more public transport options become, I think this was the biggest miss in the budget.

    Dental was good.

    Child support good.

    I don't understand $11 million dollars going to combatting the duopoly being in there…. That's bizzare…. Is it going to cost $11 million dollars to hire consultants to do it?

    Which leads me to my biggest beef with Wellington, Consultants. Wellington is addicted to them. When the ministry of transport is spending nearly half it's budget on consultants how much of this extra spending is going to go to improving health, education, climate etc and how much is going to overpaid consultants, a lot is going to go to consultants, which means a lot will be wasted and could have spent in other places especially targeted spending like half priced buses for everyone which kills multiple birds with one stone (it's good for the environment, good for traffic, good for incomes and is spending that isn't inflationary) Wellington needs to kick it's consultant addiction. It's costing the country too much.

    I actually want ministers to start putting their feet down on consultant hiring.

    Sadly not much in there for students and not much in there to encourage people to train to be nurses doctors or teachers and at some point NZ has to look at making study free for people who want to get in medicine, mental health or teaching if they stay in NZ for a certain period of time. Not having to pay back a student loan would make med and teaching more desirable.

    They could have removed some sanctions from welfare, like the relationship or living with someone sanction. Thatd have been welcome.

    Spending in climate is good but I don't know why they made such a big deal about it in the lead up, it's not very impressive and you don't win votes off of climate policy in government, you only win votes off that issue from opposition because you can never please climate activists, you could spend 100% on climate change initiatives and you'd still be called a climate denying failure as the Greens will find out if they ever get in cabinet.

    All in all 5 out 10. Next year's budget needs to be a lolly scramble and the govt is starting to run out of road, a lot of upcoming reforms are extremely unpopular and the govts not offering anything much on economic reforms or housing reforms to keep the public happy on that front so they don't worry about the other stuff and Fafoi saying they are bringing back hate speech after binning it for being unpopular is just… Oy vey. I'm getting a very contemptuous "it's the right thing to do who cares about what the public want" technocratic vibe from govt. They need to go back to the semi populist vibe that made them popular.

    Big Supermarket reform or major dental reform may be their only chance to get reelected and if labour won't touch tax brackets, national will.

    Noones reading this far in so I'll just say, I've always wanted my own submarine.

    • mac1 11.1
      20 May 2022 at 4:10 pm

      What colour? Yellow? Trouble with submarines is that they are difficult to power with solar.

      Good points there in your contribution, and your harkening forward to the 2023 Budget is one well worth keeping in mind when looking at what was done here.

    • Belladonna 11.2
      20 May 2022 at 5:46 pm

      Really think your own submarine should be in the next budget! 🙂

    • weka 11.3
      20 May 2022 at 5:48 pm

      I appreciate your comments Corey. Don’t reply often but there’s usually something thought provoking (more than one thing often).

    • Belladonna 11.4
      20 May 2022 at 5:53 pm

      Also, absolutely agree about Consultants. Auckland's light rail is still on the drawing board. We must be talking millions on consultants by this stage….

      At this stage, I'm not sure if it's Labour trying to please everyone with infrastructure (which is impossible); or not having the political nous to pick the 'least bad' solution and bull it through; or being unwilling to bite the bullet and say, this was a good idea when we were campaigning, but the reality post-Covid is different, and we can't afford it.

  12. weka 12
    20 May 2022 at 5:58 pm

    And changes that came into effect on April 1 have already made a significant difference.

    I agree with the general sentiment, good and safe. I’d like to point out that SLP increased $23 in April. I got $10 of that, but I’m probably paying off that much per week in debt repayments to WINZ. I’m ok, and I have family I can borrow from for big cost items, but many beneficiaries are in a much worse position.

    yes the WEP is given to beneficiaries. but,

    https://twitter.com/shut_the_fridge/status/1527468534715994113

    Meanwhile a couple on $140,000 / year will get $700 cash transfer to help with cost of living.

    the intention is there but the settings are wrong. And still nothing for disabled people who cannot work and who are part of the group WINZ financially penalises. I cannot understand Labour’s thinking on this. I wish someone could explain it.

  13. Mat Simpson 13
    20 May 2022 at 6:41 pm

    " Grant Robertson cannot be accused of being a left wing maveric "

    No we cant have that. Neo liberal economics has ensured he never strays from the capitalist path or ever for one moment display’s any maverick behaviour that being a independent thinker would ever be tolerated.