Mini-budget a test for new powers

Prime Minister Jacinda Ardern liked to say during the election campaign that climate change is her generation’s anti-nuclear moment. Similarities between the two global crises are obvious but it could more easily be argued that child poverty is the issue Ardern has been most identified with, and it was telling that when National leader Bill English sought to take the wind out of her sails during the campaign, he did so by suddenly announcing a child poverty reduction target during a televised debate. It was a surprise to her, the nation and possibly even to other senior figures in the National Party.

A projected drop in child poverty numbers by 88,000 is the headline number that emerged from Finance Minister Grant Robertson’s mini-budget yesterday. The minibudget was a distillation of promises made during the campaign and in the coalition Government’s first 100 days programme, which ranged further than talking solely about children in need.

In many ways, it was a test, the moment when the rubber truly hit the road. More specifically, it was seen as direct scrutiny of Robertson’s ability and gravitas as finance minister after pre-election distractions about a probably fictional ‘‘fiscal hole’’ and continued post-election needling from National that Labour is cutting workers’ incomes in 2018.

That is of course disingenuous. Labour’s axing of legislated tax cuts will not take money out of anyone’s pockets but Labour, both in opposition and in Government, has done a poor job of cutting through the noise to tell lower and middle-income New Zealanders that it will make them just as well off. That changed with the minibudget announcement when it was clearly spelled out by Robertson that the Government’s Families Package should lift 39,000 more families out of poverty than National would have.

The poorest 385,000 families will get an extra $75 per week. Another 365,000 families should get $39 extra per week and 650,000 families will get an extra $14 per week. About a million people will be eligible for a Winter Energy Payment of $450 for a single person or $700 for a couple. That was first announced by former leader Andrew Little in July, when fewer were listening. Labour saw it as a policy to combat poor housing standards that make heating unaffordable for many.

The restarting of payments to the Superannuation Fund, which National stopped in 2009 during the global financial crisis, is another welcome move that was already signalled by the new Government. It suggests long-term rather than short-term thinking.

The National opposition will be able to say that the Government is fortunate to have inherited relatively positive economic conditions and it would be right. As Robertson noted, economic growth will remain strong, with unemployment expected to fall to 4 per cent by 2022, which will contribute to wage rises at an average of 3 per cent per year.

But it is still a fairly tight economic picture that Robertson painted. The longer-term test of his new-found powers is whether the Government has the discipline to keep new spending at about $600 million per year, especially with hungry coalition and support partners to satisfy.