The Goldilocks budget

• mickysavage
• 2 years ago
• Categories: budget 2022, Economy, grant robertson, labour, treasury

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.