Delivering payouts to cohorts of swing voters and politically connected industry sectors is a bad way to run a country, writes Danyl Mclauchlan – but it’s an excellent way to win elections.

The budget is one of our most elaborate political rituals: a single day that stretches out over six weeks. There are budget pre-announcements in which the government tells us what it intends to announce; countless press releases from interested parties about what the budget should announce – businesses endorse tax cuts for business; Federated Farmers would like deregulation in the agricultural sector; nurses and teachers hope there will be more money for nurses and teachers. Families want more support for families. The opposition makes up policies to get mad at, predicting what might be in the budget and then thunderously condemning the government for their imaginary recklessness. And every year the finance minister solemnly swears there will be no surprises and then unveils a string of surprises. These usually take the form of income transfers targeting a desirable voter demographic and some form of corporate handout – subsidies, an “investment” fund – to whatever sectors successfully lobbied the government that year. 

This year the strategically vital video games industry won $160 million, while parents with young children seem to be the median voters. Back in March National announced a childcare rebate and the Labour government has countered with an extension of the 20-hour a week early childhood education subsidy, at a cost of $1.2 billion over the next four years. Neither party seems interested in the question of why childcare is so expensive, or what’s to stop its providers simply raising its prices to match the subsidies. Labour are also fully subsidising public transport for under-13s, which is nice and would be even nicer if the public transport systems in our major cities weren’t in such a state of collapse. Free bus rides are a good start. Now they just need to deliver actual buses. Then they’ll really have something. 

The US political scientist Stephen Teles calls this style of government “kludgeocracy”. A kludge is an engineering term, defined by the OED as “an ill-assorted collection of parts assembled to fulfil a particular purpose… a clumsy but temporarily effective solution to a particular fault or problem”. In many complex engineered systems kludges accumulate until: “you get a very complicated programme that has no clear organising principle, is exceedingly difficult to understand, and is subject to crashes”. Budgets in New Zealand politics are increasingly kludgeocratic: random collections of payouts and transfers piling on top of each other with rapidly diminishing coherency. 

There are still sensible components: this year they’ve lifted the trust tax rate to bring it in line with the top income rate the government introduced two years earlier, leaving a bizarre inconsistency that is now resolved. And it waives the $5 cost for prescription drugs, a fee some health campaigners have long opposed, arguing that it disincentivised people from medicating for mild illnesses which then turned into major health problems, costing vastly more money to treat. 

But it’s not clear that New Zealand’s system of collecting taxes at higher and higher rates as inflation lifts wages into the medium and top brackets, then redistributing them back to workers and companies via a byzantine complex of funds, rebates, credits, transfers and payments, makes much sense. It doesn’t seem to promote economic growth – GDP growth is predicted to languish at 1% next year – or make a substantial difference to welfare metrics. Probably because they’re not supposed to do either of these things: instead they deliver payouts to cohorts of swing voters and politically connected industry sectors, because these are in the immediate interests of the politicians, pollsters and strategists who design our budgets. It’s a bad way to run a country but an excellent way to win elections. 

The major parties – the prime kludgeocrats – are unusually unpopular this year: voters are drifting to more radical alternatives. It’s not hard to see why. National and Labour dominate our politics because they have established brands, sophisticated campaign machines and hundreds of thousands of permanent voters. Imagine them launching tomorrow as new movements competing with the existing minor parties. Labour’s leader likes sausage rolls, National’s used to run an airline; neither have much to say beyond that. They have competing childcare rebate policies; one wants to subsidise video games, the other wants to use artificial intelligence to mail out tax receipts. It’s difficult to imagine either coming near the 5% electoral threshold. 

The ritual of the budget is not yet done: there are still ceremonies to be performed, sacred rites to be observed. Back in 2005 Winston Peters won rapturous acclaim for dubbing Michael Cullen’s election year budget “the chewing gum budget”, so pundits and opposition MPs will spend a few days spitting out budget nicknames in honour of this occasion. And governments like to conceal announcements, hiding them behind innocuous names so they can win some more media cycles in a week’s time. There will be post-budget polls in which the government often enjoys a post-budget bump as the demographics they’ve rewarded feel briefly noticed by the powers that be. This usually falls away when they realise the policies won’t make much of a difference to their lives.  

Perhaps those voters will be won then lost and then won again in our democracy’s most profound ritual: the upcoming general election: that mighty contest of tax bracket adjustments and roading announcements and squabbles about billion-dollar accounting holes that has yet to come.