Robertson got tricky balancing act right

Finance Minister Grant Robertson nailed the Budget balancing act yesterday. But that might be the easy bit. In the end, he won’t be judged on today’s effort.

He has bet big that by spending big he can support the economy through to a quicker recovery. He’ll be judged on the recovery and all the hard work still ahead.

The Government has set a bold target to get unemployment — which it sees spiking to 9.8 per cent — back to where we started (at 4.2 per cent) in just two years.

Westpac senior economist Michael

Gordon described that as “extremely ambitious”.

But Robertson has allocated the funds to support New Zealanders through the downturn. And cleverly he has not allocated them all.

This is a big-spending Budget — technically the single biggest spending package in New Zealand’s history.

But since the lockdown of New Zealand’s borders in March, it was always going to be. It takes total Covid-19 related spending to $63 billion, including $20b set aside for the months ahead.

The uncertain nature of the ongoing pandemic means he was always going to be vulnerable to criticism that his focus is too long (not enough emergency support) or too short (where’s the road map to recovery.)

Already we are hearing a chorus from both ends. In the end, National appears to have opted for the former approach, critical of the large amount of unallocated funds.

It’s clearly a matter of degree. Allocating all the fiscal firepower would have been unthinkable.

It’s not hard to sympathise with the Opposition’s concerns that this gives the Government enormous headroom to tweak policy as required in the run-up to the election.

They can and should fight hard on issues around the quality of the spending.

But it puts them on the back foot.

Whether this Budget makes business happy is a loaded question — likely to be determined by the viability of the businesses and by their access to support.

There is no way around the fact that there will be business failures ahead as the wage subsidy focus tightens. But equally, any business person who believes in a freemarket world will understand that subsidies can’t last forever.

It is becoming increasingly clear that PM Jacinda Ardern and Robertson are good at listening to the wider business community when it comes to the big picture.

In pre-Budget speeches, they pivoted quickly to talking about job creation and job training. Whether there is substance behind those words remains to be seen.

It is becoming increasingly clear that Ardern and Robertson are good at listening to the wider business community when it comes to the big picture.