The competing versions of political reality
You can tell a lot about a Government by the way that it presents its various programmes and policy announcements. The difference between Labour and National was clear to see on Tuesday when Nicola Willis presented her Budget Policy Statements – the document which sets out the priorities and broad parameters of the Budget. Compared with Grant Robertson’s last one, Willis’s effort was shorter and to the point.
Robertson’s final BPS ran to some 34 pages, while Willis’ was about a third of that length, coming in at 12 pages.
While Willis did not make anything of this on the day, it was clearly deliberate. And it reflects the pared-back approach taken by the new Minister of Finance.
The job which she considered she was elected for – at least in the short term – is to reduce government spending and set the Government’s accounts back on a path to surplus in order to reduce debt, while having the longer term goal of reducing the size of government as a proportion of the economy to under 30%.
Both stylistically and in content, it is chalk and cheese from the previous government. The previous government gave significant emphasis to the objectives of its wellbeing framework, and talked at length about them. Willis had a few short paragraphs about this Government’s objectives and most of the document was the Treasury’s economic and fiscal commentary, and how it fits with the new priorities. Basically, money will be set aside for health, education, law and order, and tax cuts.
While this might seem like a trival thing, it does speak to a wider point. The coalition Government’s goals, while ambitious in a broader economic sense, are simple in a fiscal sense.
Many ministers bristle at some of the criticism they are copping for continuing with tax cuts, or bringing in RMA reform, cracking down on gangs or whatever else it is. “What did they think we were going to do” is the general refrain.
And it isn’t like anything the Government has done has been a particular surprise. It’s a centre-right government doing centre-right things.
Whether that’s good or not is another matter, but it shouldn’t be a surprise.
But of course, some of it is still contentious. The budget cuts that have been required across the public service have led to some uncomfortable headlines.
In particular, it emerged that Whaikaha, the Ministry of Disabled People, had cut funding for respite care. The decision had evidently not come to Cabinet, and it blindsided senior ministers. Clearly, front line services were being cut.
This was compounded when the responsible minister, Penny Simmonds, was effectively stripped of her responsibility for dealing with it, with the announcement that all decisions related to this funding would go through Cabinet.
Simmonds is a diligent person who a number of people around National rated and thought would go places (including the Prime Minister). It appears to have been a case of cuts going through a new minister with an insufficiently attuned political radar to recognise the risk or knowing to kick it upstairs.
By the end of the week Labour had its tail up and its MPs would gladly tell anyone who was listening what a shambles the new Government was.
The Opposition is in pretty good form, all things considered. Labour MPs seem pretty happy where the party is at compared to National. There has not been a ritual bloodletting. Most Labour MPs also consider that with the sheer volume of stuff the Government is doing – which on their reckoning could or will be unpopular – they will be able to make serious inroads in the polls.
Luxon is till considered a key weakness for National, and Labour figures point to his drop in personal popularity in some polls after claiming and then rejecting a $52,000 living allowance as evidence that, at baseline, his public goodwill is limited. And that his political radar is off.
That’s the Labour thesis and it is the Opposition’s job to believe, but of course, Labour was smashed at the last election, and it wasn’t just because of inflation. It also underrated Luxon then..
Now, Labour will try to use the crimped fiscal situation to attack whatever taxrelief package comes out at the Budget. But if the tax cuts are anything like those promised at the election, the argument against them is not that they are too big, but that they are not big enough. They will only hand back about two years’ worth of bracket creep of the 13 years since tax thresholds were last adjusted.
The Government is not unduly worried about some of the messiness of this week, while understanding that a firmer hand will be needed for political management. Its ministers mostly reason that a lot of the things Labour gets excited about are only of interest to those in Wellington’s Molesworth Triangle.
This was certainly the case with the Budget Policy Statement. It has been practice for a reasonable period for the Government to outline operating allowances for the coming Budget and the out years. Willis did not do so this year, instead saying it would be revealed on Budget afternoon – presumably because it is still being worked out.
In reality, that doesn’t really matter. What matters is the quantum of new spending on Budget day and whether the Government actually spends what it says it will. This was a key Willis criticism of Grant Robertson.
It all points to a political debate that has become weirdly bifurcated. Essentially, National, ACT and NZ First think that what they are doing will be both good for the country and popular. The Opposition thinks that mostly it will be bad for the country and that it will be unpopular.
In other words: National thinks the public understands the need for restraint and that people worry about high national debt. Labour’s view is that voters may think they want that, but will not actually like it when confronted with the reality.
There are two competing versions of reality here.
Luke Malpass is political editor.
The Government is not unduly worried about some of the messiness of this week