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The BulletinMay 15, 2023

Budget week kicks off with early spending announcements


Major cash injections for cyclone recovery and forestry slash clean-up have already been announced. So what else can we expect on Thursday, asks Catherine McGregor in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.

A billion, and more, for cyclone recovery

On Friday we discussed whether $4b – the sum the government’s cost-cutting bonanza has netted – is or isn’t a large amount of money. The same question could be asked about the $1b announced on Sunday for flood and cyclone recovery. It’s a big number, but when put beside the estimated $9b-$14.5b in damage from Cyclone Gabrielle and the Auckland floods it loses some of its impact. The suite of initiatives announced yesterday include a $100m flood protection fund for infrastructure such as stopbanks; $35.2 million for employment programmes; and $10 million to fund mental wellbeing support. Notes the NZ Herald, the package is “aimed at trying to ease the flow-on effects of the cyclone on people’s lives as much as the actual physical damage”. While welcoming the funds, Hawke’s Bay Today editor Chris Hyde notes the “one word missing” from the announcement: homes. “For those who’ve lost everything, there’s no budget rescue this year,” he writes, adding the package will also “leave a sour taste” for orchardists who sought $750m, and “have been given a mere fraction of that”.

A damning report on forestry slash, plus funding to address it

A second pre-budget announcement yesterday saw $10.5m earmarked for the clean up of forestry slash and other woody debris in Tairāwhiti and Hawke’s Bay. There is some 70,000 tonnes of woody debris in rivers and catchment areas on the East Coast, and forestry minister Peeni Henare says the clean up effort needs to start “straight away”. The announcement follows the release on Friday of Outrage to Optimism, the report from the “slash inquiry” headed by former minister Hekia Parata. The panel found that much current land use in the region is “unsustainable” and “the loss of soil is perilously close to being irretrievable”. Further, the forestry industry “has lost its social licence in Tairawhiti due to a culture of poor practices – facilitated by the Gisborne District Council’s capitulation to the permissiveness of the regulatory regime – and its under-resourced monitoring and compliance”. Gisborne mayor Rehette Stoltz says the council is “extremely disappointed” in the panel’s finding and has “serious concerns with the unsubstantiated commentary in the report”.

Budget predictions kick into overdrive

This weekend’s focus on infrastructure will be reflected in Thursday’s full budget, says Mike Munro, former chief of staff for Jacinda Ardern, who thinks its “political flavour“ will be “expressed through the four R’s — restraint, responsibility, recovery and resilience”. Writing in the Herald (paywalled), he says infrastructure spending is key to addressing New Zealand’s resilience deficit, particularly in light of the floods. Stuff’s Vernon Small thinks that “moves to lower everyday costs such as groceries, transport, fuel, housing, health and childcare” are most likely to make it into the budget. The Herald says “health is likely to feature strongly: it is one of the few big areas in which there has as yet been no pre-Budget announcement”. Economists Brad Olsen and Cameron Bagrie tell Stuff they both expect a “tightly-targeted boost to Working For Families​”, while their colleague Shamubeel Eaqab tells Toby Manhire in The Spinoff he wouldn’t be surprised by a budget in which “everybody gets a little bit, but nobody gets a lot”, all framed as “being responsible and prudent but doing what we can”.

Stubbornly high food prices adding to government’s worries

Addressing the cost of living while “avoiding pumping much, if any, inflationary energy into the mix’, as Manhire puts it, will be the budget’s primary focus. But what of food costs, one of the main ways we all experience the cost of living crisis? The Herald’s Liam Dann (paywalled) notes that while the cost of commodities is dropping globally, the deflationary effect on food prices is taking a long time to arrive in New Zealand – and that’s a problem for the government: “A year ago we were in the same place as most other comparable economies. Attacks by opposition parties blaming Labour for inflation didn’t really seem to hold much credibility… [but now] the argument that inflation has been exacerbated by government spending is starting to hold more weight.”

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