Budget 2021: It’s budget day and political editor Justin Giovannetti looks at what we know, and what we don’t, about Labour’s spending plans for the next year.
For the first time in a generation, finance minister Grant Robertson will stand in the house this afternoon and table a majority government’s budget. Free of coalition haggling or ideological compromise, the spending document will be Labour’s to own.
Robertson has already unveiled the name of what he’s colloquially called the recovery budget and the cover art; the rest of the document remains a closely-guarded secret. However, the government has dropped enough hints on the “Securing our Recovery” budget that we broadly know what to expect.
On the breakfasts-and-businesspeople circuit over the past few weeks, the finance minister has repeatedly set out the government’s goals: Keep out Covid-19, help the economic recovery, deal with the housing crisis, climate change and child wellbeing.
Here are five things to pay attention to when the budget is released later today.
A serious attempt at reducing child poverty
The government’s latest child poverty figures came out last week and they make grim reading. One in five children in New Zealand live in homes that run out of food, either sometimes or often. More than a third of families spend more than 30% of their disposable income on housing, often of low quality. That makes for a tough job balancing the household budget.
Some of the statistics have improved marginally since the government started trying to move the needle on child poverty, but it’s nearly imperceptible. Of the areas Robertson has highlighted as government priorities, this has received the least attention and support over the past year.
Robertson has spent months now telling most ministers that they can’t get the money they want for new programmes. Child poverty could be the exception, both because it’s so clearly a pressing issue and also because the minister for child poverty reduction is prime minister Jacinda Ardern.
Covid-19 response minister Chris Hipkins is one of the few people around the cabinet table who has had his wish list ticked off. He needed about $1 billion to purchase millions of doses of Covid-19 vaccines and the Treasury cut a cheque.
With a few billion dollars remaining in the government’s Covid-19 response fund it’s likely that much new pandemic spending will be added. Some of the country’s epidemiologists have called for big-ticket items like a new dedicated quarantine facility for future outbreaks, but Hipkins has been reluctant to spend on something that could be of limited use in a few years when construction would be completed.
Any money for climate change
After a draft programme released earlier this year by the climate change commission, 2021 is the year of climate change planning in New Zealand. The government has until Christmas, give or take a few days, to release a detailed plan on how to meet the country’s climate goals.
Real spending on climate change isn’t likely to accompany the planning this year. As a portfolio that’s been loaned out to Green co-leader James Shaw, climate change hasn’t seen much cash. The government has already revealed that $67 million will be in the budget to support low-emission cars and to remove more coal burners from public buildings. That won’t make a dent in emissions.
This one might need to wait until 2022.
A plan for the housing crisis
There was a time in the middle of summer when the government had intended to wait until the budget to introduce its full housing package. But that changed as housing affordability cratered in the first weeks of the year. In late March, the government doubled the bright line test to 10 years on property investors, slightly improved an ineffective programme for first-time buyers and created a new $3.8 billion infrastructure fund.
That money will be in this budget.
One of the only leaks out of Ardern’s cabinet since the election has been the disclosure that there was a major argument between Labour’s Māori caucus and the government over the lack of money for Māori housing. Robertson has indicated that a “significant” new Māori housing package will be announced later today as well.
The focus on debt
While the government might look to celebrate new spending today, Robertson is just as likely to talk about his penny-pinching. In a world where governments are spending incredible sums of money, with Australia and Canada announcing plans in recent weeks for a decade of deficits, Robertson wants to get this government into surplus by the decade’s mid-way point.
Other governments are taking advantage of what might be a once in a lifetime opportunity to spend freely with the cost of borrowing money currently at record lows. However Robertson has shown no appetite to borrow billions more like his colleagues overseas.
The country’s economy has roared back to life in recent months, giving the government far more money than it had expected when fears of a deep Covid-19 recession dominated. Budget watchers will be looking to see whether that extra cash will go to eliminating the deficit any earlier or put into significant new spending. Don’t expect a big increase in benefits or help for parents, but there might be one-off spending on infrastructure.
All will be revealed when Grant Robertson delivers his budget at 2pm today. The Spinoff will have rolling coverage of the budget announcement in Live Updates, and response and comprehensive analysis from mid-afternoon.