Robertson’s path clears for 2019

Not everyone is winning in the New Zealand economy, but the Government’s coffers certainly are. Although forecasts are just an elaborate form of guesswork, in Budget 2018 the Treasury is pointing to billions more flowing to the Crown compared with what we expected back at Christmas.

While the term is generally used as satire, this may be what the ‘‘rock star economy’’ looks like.

Homelessness is rising as inequality grows. But companies are making bigger profits than expected, meaning more is being paid in corporate tax.

Salaries and wages may not be growing at a rate that excites anyone but there are just so many of them that PAYE receipts are unexpectedly large.

For years, the economy has been adding thousands of jobs a month and, while the rate is expected to slow, another 203,000 jobs will be created over the next five years.

For all the surveys showing business confidence has plunged, there are few signs that anyone in the real world would notice it making a blind bit of difference.

As BNZ head of research Stephen Toplis said, for years finance ministers have been publishing Budgets with rising surpluses and falling debt. ‘‘I think New Zealand’s the envy of the world in that regard and this was no different.’’

Grant Robertson, in the biggest day of his political career, finds himself in both an enviable position and in one with an immense challenge.

He could be forgiven for seeing his first Budget as vindication.

Just a few months ago, he was facing accusations of an $11.7 billion ‘‘fiscal hole’’ as he was forced to defend what appeared to be an unrealistic spending programme. Whatever the truth of the fiscal hole was, it matters little now.

Since December, the amount of money at Robertson’s disposal over the next five years has climbed by $5.7b, according to Treasury forecasts. Come 2022, the amount of tax the Government is taking will be close to $100b a year.

Businesses may not feel as good about Labour in Government as they did about National but, as Robertson said, they are working hard.

Coupled with taking longer to fulfil his promises, suddenly the path for Robertson to reach his debt target looks far more realistic than it did just days ago.

We’ve been told, over and over, that Labour’s numbers would never add up. Yesterday, that appeared to change.

The major criticism for Robertson’s first Budget was what it left out. For all of the restraint that National preached during its nine years in Government, almost without fail there was a populist surprise on Budget day. For Labour, which swept to office with huge expectation, the surprise was that there was no surprise. This was very likely to be deliberate. Finance ministers are always facing massive demands for money, and after a decade in the abyss, this Labour Government is under more pressure than National ever was.

Almost every day, it seems, some organisation is announcing it is planning industrial action, or joining action.

By delivering an unexpectedly restrained Budget, Robertson may do at least a little to temper expectations.

He may also do something to improve confidence among businesses, if not business confidence itself, by showing he is able to make some of the hard decisions politicians must make to keep the state in check.

But this will only take Robertson and the Government so far. Where the 2018 Budget was tagged as ‘‘foundations for the future’’, Robertson has already promised that 2019 will be about ‘‘wellbeing’’.

After National told the country it had to do without as it worked its way out of the global financial crisis and the Canterbury earthquakes, the pressure for people to catch up will not go away.

But, at least for his first Budget day, the news is that Robertson appears to be in a position to do the spending he promised while getting debt to come down as he promised.

The surprise was that there was no surprise.