Budget kindles a sense of tokenism
OPINION: Given the dripfeeding of prior announcements, Budget Day long ago lost its aura of being the one occasion when the curtain gets dropped and governments reveal everything about their economic plans for the year ahead.
For a few people of course, the only thing that’s worse than taxation is the sight of a government spending the money on services used by the people who paid the taxes. (Admittedly, there are taxpayerswho have never ridden on a bus in their lives.) For the naysayers, Budget 2022 wrapped up the Government’s tax take and spending plans, into the one sinful package.
The outlines of Budget 2022 are already familiar. Apart from the pre-announced $2.9 billion plan to combat climate change, public health and cost-of-living relief measures took the lion’s share of the largesse left on offer.
The four-year, $11.1b package of health reforms, district health board debt write-offs and other increases (for example, to Pharmac funding) should eventually deliver major gains. For example, they should reduce the inefficient and ruinously expensive farrago of 19 competing DHBs foisted on us by the freemarket zealots of the early 1990s.
The other big-ticket item last week was the $1b bag of cost-ofliving relief measures. The dominant $814 million element in that package involved a targeted payment of $350 to help the needy to cope with the cost of living. This temporary relief amounts to only $27 aweek for three months. Nevertheless, it will be welcomed by the estimated 2.1 million adults able to meet the qualifying conditions. Some struggling households, after all, may contain two or more recipients.
Unfortunately, people earning over $70,000, beneficiaries and those receiving the Winter Energy Paymentswon’t qualify, and the relief will be well gone by Christmas. Along the way, the payments may provide a brief sugar hit for retailers confronted by a slowing economy. However, society is facing some chronic cost-of -living problems. An estimated 1.4 million New Zealanders are renters, and $350 will not cover the cost of even one week’s rent.
What could have been done in Budget 2022, but wasn’t? For no justifiable reason, the one-off payments, and the temporary wage fixes, keep on making a pernicious distinction between people in paid employment and those on benefits.
True, amodest rise in benefit entitlements did kick in on April 1 but, as the Child Poverty Action Group pointed out last week, this still leaves one in eight children in this country living in poverty. Arguably, Finance Minister Grant Robertson could have extended some of the existing Working For Families and tax credit entitlements (of circa $70 aweek) to all the people subsisting on low incomes.
However, that’s a line the Ardern government continues to walk. It seeks applause for adhering to the strictures of orthodox market economics while alsowanting to be seen as being big-hearted and compassionate. A sense of tokenism tends to be the unsurprising result.
No doubt, a genuine desire exists within the Government to reduce the incidence of poverty. Yet that impulse also sits right alongside a politically driven risk aversion to changing the structures that keep on generating it.