Please sir, we want some more

In the past, the nation would crouch around the radio on Budget Day with the same reverence afforded to the announcement of All Black teams. Since then, a slew of forecast revisions and half yearly updates have eroded the Budget’s significance, yet the self-interest involved hasn’t changed much. People used to tune in to learn what a beer and a packet of smokes would cost them. Nowadays, people want to know the size of their tax cuts.

Primarily, the Budget serves as a marketing opportunity for the government of the day. Clearly, the intended takeaway message from last week’s revelations was that the public was finally being rewarded for its years of belt tightening, from budget surpluses created by the government’s prudent economic management. To enable individual ministers to maximise their own splashes of publicity, the public had already been dripfed the Government’s plans to spend $11 billion over the next four years on physical and social infrastructure, to boost tourism by $178 million, to spend $2.3 billion on housing, etc.

Yet to the surprise of the spin merchants, the response has been mixed. Given the $7.2 billion size of the projected surpluses, some sectors have been left feeling somewhat disappointed. Business groups, for instance, have criticised the lack of cuts in corporate tax rates, and for high income earners. To heighten their apparent size and impact, Budget allocations are now routinely expressed in four yearly amounts. On closer inspection, however, some of this Budget’s spending increases have been deemed to be more like soup kitchen rations than a four-year banquet.

As critics have not been slow to point out, the amounts allocated to Votes Education and Health in general (and to mental health services in particular) mean that these sectors may well struggle to maintain their current levels of service delivery - once the impact of inflation, rising costs and the needs of an ageing population have been factored in. Like Oliver, key parts of the economy were left wanting considerably more.

Where tax relief was delivered, it wasn’t in the usual fashion. Instead of rate cuts, a trio of changes were made to tax thresholds, Working For Families tax credits and accommodation supplements. Although this was packaged as a $2 billion response to the needs of the poor, the ripple effects through the tiers of income mean that higher income earners will still reap the biggest rewards. A risk remains that the accommodation supplement changes – which include a $20 boost to student allowances – will be taken by landlords as a green light to raise rents.

Still, few other countries can point to surpluses stretching to the horizon, low government debt and low unemployment. Treasury’s forecasts of continued strong growth may be optimistic, given that in construction and elsewhere, the economy is already bumping up against capacity constraints.

In an election year, the voting public could still take some convincing that this Budget’s provisions are the best it can reasonably expect.