Catch-ups and three big misses
This is welcome and should not have been done in the first place. When the economy is weak, government spending should increase to provide a stimulus, particularly in infrastructure.
Infrastructure investment has increased and some of it will go to rail, which is very welcome.
Increases in roading infrastructure in fast-growing places like Auckland will not be enough – we also need demand management through congestion pricing and a massive increase in rapid transit.
For me there were three big misses. There are clearly no big ideas on housing. And the Government isn’t really investing in its social investment approach. Climate change barely rates.
There were no new commitments to fix the housing crisis.
A modest increase in Housing New Zealand funding by not taking a dividend (which is bizarre in the first place when there is a significant shortage of social housing) will not be large enough or fast enough to reduce housing pressures for New Zealand’s most vulnerable.
The housing issue also requires a greater focus on solving local government’s infrastructure funding. Sadly, there is no progress on this front.
The Budget committed $321m to social investment. The social investment approach, where an early intervention costs more but has lower costs later, has been much hyped. But the Budget showed that it is a low priority.
This compares with $304m for film subsidies and $763m to build more prisons. I am a fan of the investment approach, but there is simply not enough investment.
Climate change was buried in the details. Additional $4m for climate change seems pretty small, given the huge task ahead to meet our obligations under the Paris Agreement.
For most punters, the Budget will seem like a sweet deal. For those looking for aspiration and real moves to resolve crises in housing, infrastructure and the poverty trap, it came up short.
Shamubeel Eaqub is an independent economist and consultant. Follow him on Twitter: @SEaqub.