Labour’s families gamble

OPINION: In theory this was a mini-Budget. In practice, this was Finance Minister Grant Robertson’s first Budget.

The kitchen sink may not be there but there’s not much wriggle room in there either for his May Budget.

Labour has taken a huge gamble front-loading its election promises, including its flagship families package.

But it had no choice. Parliament was heading into urgency last night to scrap National’s April 1 tax cuts and, so far, Labour has been on the losing side of the argument about it being an old-fashioned tax grab.

Robertson’s mini-Budget was a chance to re-announce a $1.8 billion package to boost family incomes, through an increase to Working For Families payments, a $60-a-week baby bonus, and rolling out National’s previously announced increase to the accommodation supplement.

There are winners and some losers but this is a package that delivers on Labour’s promise to halve child poverty. That will resonate with more than its core supporters.

But the gamble is in the timing. The package does not come into effect until July 1 – a good month after the May Budget.

And, thanks to yesterday’s announcements, there won’t be much more than crumbs left to spread some mid-winter cheer.

Once other coalition commitments are accounted for in the new Government’s spending allowances, including the flagship Kiwibuild programme, Robertson will have a paltry $600 million a year for new policies and to deal with building pressures in the state sector.

Compared with some recent Budgets – like the infamous zero Budgets under John Key and Bill English – that might seem like money to burn. But the economy Labour has inherited is very different.

Delivering Budgets in the good times comes with its own pressures, including higher expectations of government spending from unions and the public sector. Robertson acknowledged that.

National will argue those rosy forecasts are the dividend of nine years of its economic stewardship, making them the benchmark by which Labour will be judged.

The prospect of a business backlash to Labour’s industrial relations policies is just one of the risks that Treasury has touched on.

But Labour’s focus will be on stamping its mark on the end of the parliamentary year.