(Image: Getty Images)
(Image: Getty Images)

The BulletinMay 7, 2024

Messy press conference prompts correction over Corrections funding

(Image: Getty Images)
(Image: Getty Images)

It took a post-post-cabinet statement to confirm that 810 new beds will be built at Waikeria, writes Stewart Sowman-Lund in this extract from The Bulletin. To receive The Bulletin in full each weekday, sign up here.

‘A shambles of missing numbers’

We’re just a few weeks out from budget day, which means the focus on the economy is especially heightened. As is the focus on numbers, of which the government appeared to struggle with during a particularly messy post-cabinet press conference last night. What should have been a fairly straightforward pre-budget announcement about support for Corrections instead drew headlines – like this from Newshub – focusing on the government’s “worst performance” at a press conference. “Journalists left there confused – worried about what to report because nothing was clear and in fact, nothing they said was right,” said Jenna Lynch on last night’s 6pm bulletin. Stuff’s Tova O’Brien was slightly more generous, labelling it “confounding”. The Spinoff’s Joel MacManus was there too, and told me as much. “It was a relatively simple announcement that turned into a shambles of missing numbers, unclear funding, and recycled campaign rhetoric,” he says. So what happened?

A billion dollar boost 

Restoring law and order was a key pillar of National’s election campaign, so they’ll be kicking themselves that some of the attention has been on the delivery of the announcement, and not the announcement itself. The Herald has the key details. In short, Corrections minister Mark Mitchell confirmed a $1.9 billion boost for his agency. Of that, $442m comes from cost savings identified by Corrections as part of the government’s efforts to find “back office” savings in the public service. The remaining $1.5b was new money.

Mitchell said the funding would ensure the government could deliver an 810-bed extension to Waikeria Prison, along with 685 new Corrections staff. But that’s where things got confusing, as both Mitchell and the prime minister struggled to accurately articulate what was “new”, and how much had already been pledged by the previous Labour government. The Post’s Anna Whyte and Thomas Manch reported that confusions over the number of new beds “dominated the announcement”. RNZ’s Jo Moir and Craig McCulloch said Luxon and Mitchell contradicted themselves when trying to explain the correct details. One area the pair handled well: Getting rid of slushy machines was a “low priority”.

A Corrections correction, and where the confusion lay

Opening Morning Report today, Corin Dann said they’ll “try to get to the bottom” of the new announcement. Let’s do the same. In 2016, the last National government pledged 1,500 beds would be built at Waikeria. In 2018, then Corrections minister Kelvin Davis said the Labour government would instead build a new 500-bed high-security prison, with an attached 100-bed mental health unit (so 600 beds all up). Many watching along yesterday would have been left with the impression that yesterday’s announcement falls somewhere in the middle, with the government boosting Labour’s plan by 200-ish beds. Instead, as a statement sent through to media from the government later clarified, there will indeed be 800 new beds, with Waikeria to boast capacity of 1,865 beds all up by the time the extension’s been completed. What went wrong? There were simply “a lot of numbers” in the ministers’ heads, a Beehive source told Tova O’Brien.

While we’re talking budget, AAP’s Ben McKay has comments from Nicola Willis confirming there will be a boost for both defence and foreign affairs on May 30. As he notes, that’s sure to please our international allies.

State of the economy in the spotlight

Yesterday’s pre-budget announcement came shortly after the government was praised for its cost saving drive – and issued some warnings. A new biennial report from the OECD was released, highlighting the state of the economy. It’s timing is unfortunate for the government, just weeks out from the budget, though there were few surprises. BusinessDesk (paywall) has the key details, reporting that the OECD put government spending over the last few years in the spotlight, noting that spending increases sometimes lacked a clear explanation. And it suggested creating a fully independent body to assess the cost of policy proposals from political parties. That’s an idea that is regularly floated, especially in the lead-up to elections, as this report from RNZ’s Craig McCulloch last year showcased.

Economist Shamubeel Eaqub told The Bulletin that the OECD’s recommendations boiled down to a request for “more consistent evidence-based policy – something that we struggle with very much”. So what could the government be doing?

Government urged to fully fund tax cuts

Two key findings were latched onto by the media. Crucially, ahead of budget day, the government was warned against borrowing to pay for its promised tax cuts, as the Herald’s Jenée Tibshraeny explains. Instead, any tax cuts should be “fully funded” and come from spending cuts or new revenue sources. Last month, finance minister Nicola Willis promised no extra borrowing would be needed to deliver tax cuts. While Willis welcomed the OECD’s insights on Monday, she said the government did not agree with every suggestion – one of those almost certainly being the call for a capital gains tax. The NBR has more on that here (paywalled), noting that a recent International Monetary Fund report also urged New Zealand to introduce a CGT. Asked about this in parliament last week, Willis said: “I can confirm there are three things that are certain in this world: death, taxes, and the IMF recommending a capital gains tax.” This piece from Interest.co.nz looks at the IMF and its “groundhog day” recommendation for a CGT. Politik’s Richard Harman examines how the OECD put Willis “between a rock and a hard place” here with some of its recommendations.

Another major suggestion, as explained by The Post, was to break up big businesses – including New Zealand’s supermarket duopoly. Eaqub told The Bulletin that this was a “big call”, though something that New Zealand’s done in the past such as for telecommunications. Willis told RNZ’s First Up today that the government was “very supportive” of market competition, and was keeping a close eye on it.

Finally, in other sad news for Big Supermarket, The Spinoff’s Joel MacManus explains how Foodstuffs lost a legal challenge to stop a new cycleway outside their store.

Keep going!