Willis’ fiscal medicine gets spoonful of sugar
There’s been a lot of repealing and trying to gear up the state to be more efficient, but yesterday the Government announced the real start of its much vaunted cost-of-living relief.
Families earning under $180,000 will now be in line for a new child care rebate of up to $75 per week, or a quarter of total costs. While not as generous as the universal scheme for over 2’s Labour took to the election, for low income – and single parents in particular – this policy could make a considerable difference to the weekly budget.
Because of the difficulty getting Inland Revenue to administer it across the sector – which is nowhere near as uniform as, say, the primary sector – parents will have to submit invoices to IRD and be paid quarterly.
In amongst a lot of speculation and reality of budget cuts, this was the first move ahead of the May Budget of the Government actually doling out some cash. It is basically what was promised at the election, but paid out differently. The exact arrangements will confirmed at the May Budget.
The Government’s Budget Policy Statement, which sets out the broad parameters and emphasis of the Budget, will be released tomorrow. This will be a strong indication of just how tight the eventual fiscal belt-tightening will be come May.
Meanwhile, Labour leader Chris Hipkins has obviously spent the past few months casting around for a good place to start Labour’s rebuild. It began on Sunday with his big speech on values.
There were grave warnings that the country has apparently been in the grip of an “aggressive drive towards individualism and dog-eat-dog competition that has prevailed since the 1980s”.
Hipkins talked about the 40th anniversary of the fourth Labour government and the achievements of nuclear free NZ and environmentalism, but also the “much more mixed feelings on the economic reforms of that and subsequent governments, and the four decades of growing inequality and societal decay that has followed”.
While the speech had some new personal anecdotes for Hipkins and some strong points, its underlying message did hint at a Labour Party still caught in nearly theological time warp – where the 1980s reform period is the equivalent of original sin that fallen politicians have been trying to fix ever since.
This analysis is fine as far as it goes – depending on your view – but the fact that some of the choicest words of the speech were saved for events that occurred four decades ago suggests a Labour Party drawing dubious lessons from the past.
Buried, however, was a good line that Hipkins used in the run up to the last election.
“In the modern economy, contribution and reward aren’t as linked as they used to be.”
This is a theme, and reality, that is fully worth Labour unpacking. If the party allowed itself, it could take it to new and interesting places.
However, alongside it Hipkins says he is keen to breathe fresh life into both “collectivism” and people trusting the government.
“Labour’s mission is that of the fairer society, where everyone has the chance to get ahead, inequality is confronted head on and faith in the role of government is restored,” he said.
On the one hand, the speech identifies real problems to tackle that could be turned into interesting political products. On the other hand, the 80’s was the problem and more government was a reasonable wodge of the answer.
If Labour is genuinely wanting to rebuild fast, the “what” will need to be significantly more defined and the “how” will need to have more than one answer.
In any case, the Government is currently running the board and for the next two months leading into the Budget it is likely to deal Labour further out of the agenda. And, alongside warnings of necessary fiscal turpitude, spending announcements will continue to gear up, with May tax cuts still the centrepiece.