Fiscal prudence, back-pocket gains

ABudget in an election year by Steven Joyce as new finance minister is always going to be more tantalising than if it had been delivered by Bill English.

Particularly when Steven is so close to National’s election campaign.

But no National Budget can be just a lolly scramble, even if there are plenty of lollies to go around. That would be hugely damaging to National’s hard-won brand of being the careful and responsible steward of the nation’s finances.

So how well has Joyce managed the artful balance of fiscal prudence and giving hard-working Kiwi families their reward for several years of improving economic performance?

Pretty damn well in fact. All the traditional areas of health, education and family welfare get a good dollop of new funds: $7 billion over 4 years, with $3.9 billion going to health alone.

The key initiative of the Budget is giving families a direct financial gain. Real dollars in the back pocket often matter more to voters than spending everything on state-provided services.

The tax threshold changes lifting the 10.5 per cent rate from $14,000 to $22,000 and the 17.5 per cent rate from $48,000 to $52,000 will give an extra $20 a week to someone on around the average wage. Worth having. Pushing up the two bottom tax thresholds benefits everyone irrespective of their income, pretty much to the same dollar amount. But the biggest percentage increase goes to middle and low-income families. It is a smart way to ensure the cake is evenly spread.

All while maintaining solid surpluses into the future, $1.7 billion for 2017 rising to $6.1 billion in 2020, coincidentally the next election year.

Real dollars in the back pocket often matter more to voters than spending everything on stateprovided services.

Budgets are not just about who gets what. They also signal the philosophical direction of government.

In this instance a relentless commitment to middle New Zealand. National has to hold on to around 45 per cent of the vote if it wants to govern. Forty-five per cent is a big number. It covers many more people than traditional National voters.

Keeping swinging voters is a difficult art, especially for a third-term government. It can only be done by a careful balance between giving voters a direct financial benefit while ensuring that hard pressed lower-income New Zealanders get a fair deal, especially in housing, and a real opportunity to get ahead.

The Budget had to deal with both goals. In doing so one of Steven Joyce’s goals is to show that the proposed budgets of other parties look unrealistic. That only National can wisely manage the nation’s finances, while providing real gains for families and shoring up key social services.

In short, in election year the Budget is a central part of the campaign for National to be seen as the only logical choice to be government. Wayne Mapp is a former National Party MP and Cabinet minister.