Ardern’s AAA team has one member — and a vital one

Robertson undisputed winner in ‘bus test’

Jacinda Ardern has her A team to handle the Covid-19 crisis and then her AAA team. There are four ministers in the A team: herself, Grant Robertson, Winston Peters and David Parker. They are keeping watch on the bigger picture as to how New Zealand emerges from the crisis.

Her AAA team has one member, Robertson.

As close friend, mentor, Finance Minister, and confidante to Ardern, Robertson has been an integral part of her political career at every step of the way.

During the Covid-19 crisis, they have been more joined at the hip than ever. They are both across every aspect of the pandemic response and nothing gets done unless it is agreed by both of them.

When Robertson deputises for Ardern at a Friday press conference, it is an effortless switch.

Trust in Robertson has increased, as it has for her, as events have unfolded and he is now the undisputed winner in Labour’s bus test.

It’s the informal test of who would take over if the leader accidentally fell under a bus. And it would be Robertson, no question. Kelvin Davis is deputy in name only.

Helen Clark, in her first term as Prime Minister, nominated Trevor Mallard as a potential successor should unforeseen misfortune befall her.

By her second and third term, there was only one person who would have had the standing and that was her deputy and Finance Minister, Michael Cullen.

Under John Key for the first two terms, it was Steven Joyce, although by the third term Bill English was the natural choice.

Cullen was a mentor of Robertson’s and publicly backed him for the Labour leadership (with Ardern as deputy) in the bruising contest in 2014.

Robertson got the finance portfolio from Andrew Little, who won the leadership vote through the union vote, and only after the incumbent in finance, David Parker, turned it down.

Robertson’s record, from his three years of meticulous preparation in Opposition to his two years in the job, is eroding the accepted wisdom that National are always better economic managers.

With each passing month in the job, his incumbency is a growing advantage.

Robertson has faced two National finance spokespeople, Amy Adams and Paul Goldsmith, both former Commerce Ministers but not with the same heft as their political forebears, in Key, English and even Don Brash.

The Covid-19 crisis has compounded Robertson’s advantage, but nothing could have prepared him for it.

The speed and scale of spending

Nothing gets done unless it is agreed by both of them.

demanded by the crisis has been massive compared to what had been in train for next week’s Budget.

In the Budget Policy Statement in December, Robertson confirmed the operating allowance — new operational spending — in the Budget would be $3 billion for the whole 2020-21 year.

In the past seven weeks, the Government has committed more than $20b on the myriad response measures, including $10.6b in the wage subsidy scheme. Since December, there has been little political argument about plans for capital expenditure because Robertson flagged back then the Government was effectively adopting National’s plan, with a massive $12b spend on Upgrade New Zealand.

The only debate is over delays, not the projects.

Much has changed even since February, when the capital projects were identified. At that stage the effects of Covid-19 had hit New Zealand only in terms of the China lockdown and what that was doing to demand for exports and inbound tourism.

The pace really picked up in March once the global impacts hit and it became clear the tourism sector had collapsed in a matter of weeks.

As Robertson himself has said, the compressed timeframes the

Government is working under have meant that what might have taken a month took a week, what took a week took a day and what took a day took an hour.

He doesn’t have trouble sleeping at night, he told Parliament in response to a question, especially after he has worked for 18 hours straight.

Because of the lag effect, the financial hits the country is taking are just starting to appear. Yesterday it was revealed beneficiary numbers have risen by 40,000 since Covid arrived and borrowing has risen $22b more than expected.

Next week’s official forecasts by Treasury will be eye-watering, with deficits stretching out for years and debt rising steeply.

S & P Global Ratings reaffirmed New Zealand at AA this week, despite forecasting net debt to rise from 19.6 per cent in December to 30 per cent of GDP, a rating which is vitally important because it will keep down the cost of borrowing.

In the short term, rising deficits and debt won’t be a problem for Robertson. The public expects it.

National can hardly describe it as wasteful spending because it called for the massive relief programmes that have been delivered.

If they do, it will have as much effect as Labour had complaining, as it did occasionally, that debt under National had risen to record amounts — because of the Christchurch earthquakes.

Robertson has indicated the next phase of the wage subsidy scheme will be more targeted than the current requirement to show a 30 per cent decline in revenue because of Covid19.

It promises to be a different Budget.

There may, in fact, be more debate around general direction given that there should be little quibbling over the last $2 or $3 billion as sometimes happens.

Already Robertson has parked the five thematic priorities identified in December: a just transition to a lowemissions economy; the future of work; lifting Ma¯ori and Pacific opportunities; improving child wellbeing; and physical and mental wellbeing.

The “wellbeing” hoops and hurdles that ministers and ministries had to jump through in last year’s Budget bids were simply scrapped this year.

The people who would have conducted them were too busy on Covid-19 response.

It will be the next stage of the Covid-19 response, a Budget like no other.