Battle for mantle of economic credibility ensues as Budget nears
THE most important pageant in politics at the moment is that for the coveted tiara of Mr Economic Credibility.
It is taking place in the leadup to the Budget. Budget politics are a pretty simple game.
The Budget itself is a bit dull and all the action is in the leadup.
The Opposition’s job is to fan expectations into an inferno so that when the Budget lands, there is nationwide disappointment that its offerings are paltry, or that what is unwrapped is different from what was wanted.
The Government’s job is to try to keep expectations in check, and then hope the contents are either accepted as all that was affordable, or are a suitable alternative to what the voters had asked for.
That is where we are now. National is frantically applying the bellows on people’s hopes of tax cuts.
The Budget will not contain tax cuts. If they do come, it is more likely to be next year.
But National wants voters to think Labour will at least deliver something significant on the cost of living side of things.
At the same time, National wants people to think Labour will spend too much money on things that aren’t tax cuts and also aren’t important things.
Finance Minister Grant Robertson is trying to convince them of the opposite. He has emphasised health and climate change will still be the bigticket items for the $6 billion in extra spending, despite the recent surge in the cost of living.
Robertson is also in the fight of his life to try to win back the Mr Economic Credibility title.
As part of this, Labour’s social media action has ratcheted back up. This week there came a snappy video advertisement on social media, funded by the taxpayer, featuring Prime Minister Jacinda Ardern walking around places.
In a voiceover, Ardern read out the good numbers on the economy: the unemployment rate, export figures and GDP. She did not read out the bad numbers: inflation outstripping wage growth.
Then came Robertson’s new set of fiscal responsibility rules.
These rules are something of a political construct, designed to make Labour look a bit like National in an area it has struggled on in public perceptions: keeping a good grip on the economy.
Robertson first brought them in when Labour was in opposition and he was trying to convince voters he could be trusted with the books.
He did it by effectively saying he would be judged on the same grounds National ministers of finance judged themselves: through debt reduction targets and dates to get the books back into surplus.
It understandably angered the Greens and some Labour supporters, because Robertson’s insistence on sticking to the rules even when interest rates were low sometimes came at the cost of reforms and policies Labour wanted. Some held the view Labour should simply stick to those areas on which it was considered a better manager: social services.
However, Labour did overtake National in polling on which party was considered best to manage the economy — and remained dominant for some time.
Covid19 was a solid reason to rip up those rules and Labour did not suffer from that, at least at the time. Now the bill has to be paid.
Since Christopher Luxon took over and soaring inflation, that has all changed — in public polls, National is again considered best on the economy.
So Robertson is again shoehorning himself into shoes that would be more comfortably worn by a National minister of finance, and setting debt targets and targets for returning to surplus.
It carries all the hallmarks of a governing party starting to worry that it is losing the argument.
On tax cuts, Robertson has argued inflation will ease from the middle of the year and National’s tax cuts will give a lot to those who are rich and not much to those who are poor. He has contrasted that with Labour’s targeted support for those on low incomes.
The trouble is the bulk of voters are in the middle. They got nothing from Labour’s package and will get something from tax cuts — and all the arguing about whether tax cuts are needed has only served to advertise more widely that National is offering them.
It has been a long time between drinks from the tax cuts fountain — and National wants people to be thirsty.
Judging from the results of this week’s Newshub Reid Research poll, they are getting thirsty.
Tax cuts had no traction in the last election, but the poll showed more than twothirds of people now wanted a tax cut from the Budget. That included more than half of Labour voters. It’s a blunt question that does not take into account the tradeoffs that might be required to deliver those tax cuts.
Labour’s challenge is in explaining what those tradeoffs are — and trying to convince voters that they are worth more than more money in the voters’ pockets.
At the moment that will be a hard job. The news it has raked in $3 billion more from taxes than forecast won’t help there either.
The contest is showing in Question Time as well, where National’s new Tauranga byelection candidate, Sam Uffindell, has been caught in the crossfire before even getting there.
On Tuesday on her way to Parliament, Ardern told the media her approach had always been to play the ball, not the man. She then went into Parliament and played the man — or rather two men — both white men in suits.
She mocked Luxon’s statement Uffindell offered diversity for National because he was ‘‘really well educated’’ and came from a finance and agribusiness background.
The next day, Robertson followed suit.
To be fair, Luxon’s comment Uffindell delivered diversity by dint of being ‘‘really well educated’’ was ripe for lampooning — not least for what it said about the rest of the caucus.
However, it is a bit rich for Robertson to be chipping in.
When it comes to contests involving white men, Labour too has had its struggles with diversity.
µ Claire Trevett is The New Zealand Herald political editor.