Real change re­mains in the dis­tance

The New Zealand Herald - - Editorial & Letters -

‘Trans­for­ma­tion” is the la­bel the Gov­ern­ment wants to put on its first Bud­get but it re­mains a prospect rather than a re­al­ity. Eco­nomic trans­for­ma­tion, says the Fi­nance Min­is­ter will mean im­prov­ing pro­duc­tiv­ity, mov­ing to a low car­bon econ­omy and adapt­ing to tech­no­log­i­cal change in the jobs peo­ple do. That is the in­ten­tion but for the mo­ment, it is busi­ness as nor­mal. The Bud­get Grant Robert­son de­liv­ered yes­ter­day is not so very dif­fer­ent from those of re­cent years.

It looks fis­cally sound, spend­ing more than Na­tional planned, tax­ing and bor­row­ing more and slow­ing the debt re­duc­tion sched­ule by two years rather than one as promised be­fore the last elec­tion. But it is bud­get­ing for a $3.7 bil­lion sur­plus in the next fi­nan­cial year, ris­ing to $7.3b in four years, which is less than the $8.8b pro­jected by the Trea­sury last year but re­spectable. Flush with in­her­ited sur­pluses and strong growth pro­jec­tions, the Gov­ern­ment can­not be ac­cused of over­spend­ing.

But health has re­ceived a $3.2b boost Robert­son called “huge” . It in­cludes an ad­di­tional $750 mil­lion for cap­i­tal projects, the “big­gest com­mit­ment to re­build­ing health in­fra­struc­ture in a decade”. He had bless­edly lit­tle to say about Mid­dle­more Hos­pi­tal and the pre­vi­ous Gov­ern­ment’s sup­posed “ne­glect”. Health has been the fastest-grow­ing pub­lic ex­pense for years, dou­bling in 20 years, and no gov­ern­ment can af­ford to lose con­trol of it.

Doc­tors’ sub­si­dies are to be sub­stan­tially in­creased, re­duc­ing pa­tient fees by $10 for those with com­mu­nity ser­vice cards, if the prac­tice takes up the ad­di­tional fund­ing. On top of that, prac­tices are to get a 5 per cent rise to meet in­creased de­mand on their ser­vices. Mid­wives have also had their re­mu­ner­a­tion plea an­swered with $103.6m, pro­vid­ing an 8.9 per cent pay in­crease over the next four years.

But this Gov­ern­ment’s most ur­gent mis­sion ought to be hous­ing. Its Ki­wiBuild homes pro­vided at cost price might not be cheap enough to re­store hope of home own­er­ship for all young work­ing cou­ples. The Bud­get put an­other $334.4m into Hous­ing NZ and com­mu­nity hous­ing providers but some­thing more dras­tic will be re­quired and could have been ex­pected.

The Bud­get is per­haps a lit­tle too cau­tious con­sid­er­ing the health of the ac­counts and the eco­nomic out­look, strength­ened by in­ter­na­tional re­cov­ery, con­tin­u­ing im­mi­gra­tion and strong terms of trade. The Bud­get con­tained noth­ing to sug­gest im­mi­gra­tion will be cut in a way that wors­ens labour short­ages. The Gov­ern­ment “would en­sure any gen­uine skill short­ages are filled, with im­mi­gra­tion lev­els that are sus­tain­able”. In th­ese cir­cum­stances, they may have been fis­cal room for a big new idea in hous­ing or as­so­ci­ated in­fra­struc­ture fi­nance that might im­prove the ca­pac­ity of the build­ing sec­tor.

Clearly the Gov­ern­ment re­alised it first needs to re­as­sure busi­ness own­ers and in­vestors that the eco­nomic essen­tials are not go­ing to change. Bud­get sur­pluses will con­tinue, the ac­counts re­main sound. Now the task is to keep them that way.

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