What happens in US will be repeated here
It seems likely that Bill English will declare an operating surplus when he reads out the Budget later today. Good on him. They’ve been hard to come by in recent years, despite being National’s yardstick for success. But while Michael Cullen always brought home a surplus, he knew being in the black is just the start. A Budget has to make a real difference to people’s lives. And the needs today are obvious.
Look below the line in 2016’s Budget and you will see a very real deficit – a social deficit.
When there are more than 300,000 children living in poverty, when home ownership rates are the lowest they have been in 64 years, and people are forced to live in cars and garages, when many elderly live in pain, bounced around a health system that cannot afford to give them the operations that they need, we cannot claim success.
Success in terms of a Budget is when we know that we are giving every New Zealander the opportunities and the support to achieve their potential and get a share in prosperity.
In this Budget the Government has been forced to bring forward money set aside for next year’s Budget. English can’t avoid the enormous need around him in health, education and housing. However, going on their previous record, they will do just enough to be seen to do something. Just enough is not good enough.
To give most New Zealanders a share in prosperity will take more than token measures in one Budget. It is reckless and irresponsible for John Key to be dangling $3 billion of tax cuts in front of voters when the need for change is so great.
We desperately need a Budget that not only meets the pressing social needs of today, but has a clear path to build a sustainable and resilient economic base.
In housing, there are three words that should leap out in this Budget – build more homes. We need a government-led house build that will provide affordable houses for first-home buyers to buy and meet the needs of the most vulnerable. Labour’s KiwiBuild programme remains the only viable option on the table to address these issues. We also need to crack down on the speculators who add nothing to our country but want to take the profits.
In health, Labour would meet the cost of a rising and ageing population. The failure of the National government to do that over the past eight years has left what Infometrics has calculated as a $1.7 billion shortfall. That is leading to people who need operations simply being bumped off the list, and a dire shortfall in PHOTO: DAVID WHITE/FAIRFAX NZ areas such as mental health. We can do so much better.
In education, a Labour Budget would turn around the per pupil decline in funding in our schools. Parents are copping increases 10 times the rate of inflation in the costs of education put on them. We need to restore a free education system as a core building block of opportunity.
This Budget should also take the long-term view to invest in our future. Labour has proposed three years of free post-school training and education as the starting point for setting up New Zealanders to face the rapidly changing future of work. To ensure every New Zealander has the chance of decent work we need to invest in new and added-value industries, support our regions and small businesses, and increase our research and development. And as ever we need to ensure that everyone pays their fair share, to ensure we can give everyone a fair go. This Budget should see an end to the free ride of tax avoiders and evaders. This is English’s eighth Budget. In his early days he had to deal with the end of the global financial crisis and the Canterbury earthquakes. That was difficult. But now we need to do better than just manage, we need a plan for a better tomorrow where we measure our success by the hope and opportunity given to every New Zealander, not just the fortunate few. Grant Robertson is Labour’s finance spokesman and Wellington Central MP.
Whatever the positives and the negatives of the 2016 Budget, one thing is certain. It will do nothing to stop the drift toward economic division in New Zealand society.
Left alone this drift will lead to the kind of political upheaval and instability we are already seeing in the United States, Australia, Europe and Britain.
The reason for this is clear. Western democracies, like New Zealand, agreed years ago to deregulate their economies, accepting privatisation, globalisation, flexible labour markets, cutting welfare services and elimination of budget deficits as the new way forward.
Unfortunately, most nations failed to understand that deregulating their economies required them to adopt a range of other policies to ensure that everyone gained from the new approach.
International rules should have been drawn up to govern the behaviour of business and promote a fair deal for all. In addition, domestic policy should have ensured a job and decent wage for all.
Investment should have been made in education, lifelong learning and retraining, healthcare, childcare, support for business start-ups, information technology, higher minimum wages – policies that would provide people with the environment they needed to thrive.
In practice, many nations can point to some investment in such policies. Yet the problems mount. Targeted measures are introduced but things just get worse.
After some four decades of following the deregulation agenda, a majority of voters in many countries have begun to wonder when they are going to get the share of the pie they were promised.
Disappointment has turned to anger and the results can be seen on both the Left and Right of politics. This is where United States presidential hopefuls Donald Trump and Bernie Sanders have come from. Trump champions a dangerous line in nationalism while Sanders asks supporters to believe that they can return to the 1950s.
I believe that the past is the past. Trump and Sanders represent positions that rest on a world that no longer exists. This is why those who understand the disaster that is slowly taking shape in Western democracies have to put forward clear workable arguments about how to run a country in the 21st century.
This begins by acknowledging the serious mistakes made during the deregulation era. People were promised their lives would improve. For the majority this has not happened.
This was predictable and should have been understood by governments. The rich got richer because they earned their living in the global economy where returns are inevitably higher. Meanwhile, those who earned their living in the domestic economy were not going to be able to access these bigger rewards.
In fact, many people found their income stagnating and falling because they were being asked to help make the economy ‘‘competitive’’ by accepting the lower living standards of other countries. In these circumstances governments needed to convince the winners from the new approach that they would have to share their growing wealth with the wider society. In practice, this meant paying enough tax to enable the government to make the investments needed to ensure the rising tide did indeed lift all boats.
This has not been done. Instead, governments have sought to cut tax wherever they can in the name of rewarding the winners even more. This has left them with too little money to make a difference. This can only go on for so long before new voices offering a way forward are listened too.
The United States is often said to be the trendsetter. If that is true get set for trade wars, protectionism, banning migrants on the basis of their religion, building walls, militarism, racism, sexism, bullying and everything else Trump has succeeded in letting loose.
It is to New Zealand’s credit that stability and optimism can still be found. But it would be naive to assume New Zealand can remain immune from what we see elsewhere when we have followed the same policy mix. Urgently, governments need to start implementing a new social contract. It will require political courage and a great deal of skill. Steve Maharey is Vice-Chancellor of Massey University, a sociologist and former politician.