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A beginner’s guide to the bewilderments of budget day

Budget 2017: What does it all mean and why should we care? Over to you, Morgan Godfery


Read all our Budget 2017 coverage here.


The only thing duller than accounting is government accounting. What’s an “OBEGAL”? Why are politicians debating “appropriations”? What kind of terrible person would volunteer for the “budget lock-up”? For “ordinary New Zealanders” – sometimes known as “mainstream New Zealanders” or “mum and dad investors” – the government’s budget is impenetrable. Journalists do their best to make things interesting, inventing cute nicknames like “the chewing gum budget” in 2005 or the “the block of cheese budget” in 2008 – the early favourite for 2017 is “the Labour Party budget” – but the budget’s meaning and context always seems to remain out of reach.

No one’s telling you what an OBEGAL is.

In fact, it’s hard to figure out what “the budget” itself means. In a simple sense it’s the money the government plans to spend and receive over the next 12 months. In a constitutional sense it’s a government bill, the Appropriation (2017/2018 Estimates) Bill, that parliament must approve. In a political sense it’s a media “set piece”. Ministers drop hints during breakfast, state sector leaders spend weeks talking in metaphors – “every ice age ends”, said RNZ CEO Paul Thompson, referring to the public broadcaster’s expected funding boost – and opposition politicians pull all-nighters hoping to uncover a golden “gotcha” in the budget documents.

Bill English poses with a copy of his budget speech during the printing of the budget on May 24, 2016. (Photo by Hagen Hopkins/Getty Images)

But for outsiders, those documents are sometimes difficult to interpret. Appropriations – spending categories – are usually general. Each category is given a vague, new age-sounding designation like “Relationships and Information”. The preface to the figures usually touts how much Government is spending on, say, Whānau Ora over the next four years rather than the next 12 months. Bureaucratic measures like OBEGAL – the “operating balance before gains and losses,” which is one measure the Government uses to help determine the deficit or surplus – sometimes go unexplained. It’s also unclear in most years whether, say, funding for health is going up in real terms or merely nominal terms.

That said, in New Zealand the budget is as transparent and accessible (if not more so) than anywhere else in the world. In one sense this is terrifying – if you think our budget is hard to understand, try decoding US federal budgets – but in another sense it’s reassuring. It’s pretty hard for any New Zealand Government to pull a swifty. The Accounting Standards Review Board reviews and approves “generally accepted accounting principles” for the state sector, budget documents are based on accrual accounting and they’re audited according to a life-cycle auditing approach. The Public Finance Act also establishes a tight framework for how Governments borrow and spend public money.

Granted, this might be as good as meaningless, further proof the only thing more boring than accounting is Government accounting. But also: politics! The budget helps determine whether your school or your children’s school is forced to make decisions between hiring teacher aids or buying library books. The budget helps determine whether one paramedic or two paramedics are taking care of you or someone you know in an emergency. In fact, in one pre-budget announcement the Minister of Health promised almost $60m to end single-crewed ambulance in rural areas. The catch: most of that money will go towards training and hiring “assistants”, not paramedics.

Finance Minister Steven Joyce looks over a copy of his budget speech during the printing of the budget at Printlink on May 23, 2017 in Wellington. (Photo by Hagen Hopkins/Getty Images)

This is the interesting thing about the budget: it’s all about the big things. The small details – that is, how the big money is spent – are the act of governing. When, say, the Minister for Māori Development presents the budget for Vote Māori Affairs, he’s simply proposing an appropriation. He’s not explaining, line by line, account by account, the precise details of his policy and political choices. He’s announcing how much money there is to spend in the next 12 months under each appropriation type. But the work of allocating money within those budgets, say the act of funding papakāinga housing, that’s the day to day work of governing.

In other words, the most important choices aren’t just made on budget day. Important choices that impact people’s lives are made every day. The Minister for Immigration can alter the “Immigration Instructions” making it harder for people to enter New Zealand to work or care for their family. The Minister for Social Development can amend welfare entitlement regulations making it harder for people to secure the support they need when, say, they’re between jobs. The controversial Sky City Convention Centre, where the Government scored a sweet convention centre deal through regulatory and legislative concessions, never appeared on the Government books.

Budget day gets blockbuster coverage – Paddy Gower is going to be amped – but every day in politics should receive the same kind of intense scrutiny.


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