Photo: RNZ / Richard Tindiller
By Brigitte Morten*
Opinion – It’s Budget week, basically Christmas for political insiders.
But there is a reason for that excitement – you can tell a lot about a government, particularly a new one – from the choices they make in their Budget.
In April we saw the Labour-NZ First-Green government begin to manage expectations about what we will see on Thursday. Their rhetoric during the election campaign last year set high expectations – more money for health, higher wages for teachers and more spending on public transport.
And they have already delivered on some of those promises. Shortly after taking power they provided for fees-free tertiary study and in April they announced their transport package that invested heavily in light rail in Auckland.
However, Budget Day is when the public can see at how much those promises would cost, and what can’t be paid for now because the money has already been spent on fees free and light rail.
Labour has repeated their commitment to the Budget responsibility rules over and over again – despite murmuring from their coalition partner the Greens that they should rethink them.
Labour signed up to these rules in the campaign to demonstrate to the public that they could be strong fiscal managers. The rules hold them to paying down debt and limiting their spending.
This means that they will have had to make tough choices to deliver on the expectations that they have set. Labour’s traditional base won’t let them forget that they got in to government with their support.
You won’t see how much Labour will need to set aside for wage negotiations with police, teachers and nurses over the next 3 years in the Budget on Thursday – the funds available are always kept secret to ensure that the government maintains their bargaining power. However, the need to satisfy these expectations will have weighed heavily on Minister of Finance Grant Robertson’s mind.
Labour has also got a more complex set of decisions to make over what to spend on now, versus what to spend on in the future. Their coalition partners have high expectations themselves of being rewarded for their support and also for generally being a cooperative partner in government up until this point.
We have already seen New Zealand First leader and deputy Prime Minister Winston Peter’s win for diplomats and aid in the Pacific, and the Green Party’s significantly smaller announcement for pest control. There will be more that they claim as their wins on Budget day – that is the cost for Labour of being in government.
There is, of course, always a cost for coalition governments. The minor partners must prove to their supporters that going into government was the right decision. Over the last National term, the Māori Party always received funding for their initiatives – usually Whānau Ora, and the ACT party prided themselves as being a low government spending party and just got new charter schools.
However, the bargaining power of National’s partners compared to Labour’s current partners is significantly different – NZ First and the Greens are in a much stronger position.
Ultimately only a few will know which initiatives were traded off against each other. The opposition, and media will make their own calls on what deals were done. For example, this rural initiative was stopped, so an urban initiative could proceed. This school was built, but the hospital down the road will have to wait.
And so on.
We have already seen the National Party highlighting these trade-offs with their ads showing cheaper GP visits being traded for more diplomats.
This close to Budget day, the choices have been locked in and it is just the final media lines to get right. Press releases will be flying between government departments, ministerial offices and Treasury all to ensure that Budget day goes smoothly. A wrong dollar amount, an incorrect calculation of the number of people who will benefit, or a vaguely worded initiative all put at risk Labour’s narrative that they can be trusted with the Budget.
The new government will want to demonstrate that their coalition government can deliver the funding they think New Zealand needs, while still keeping the budget under control.
Political insiders will then make their calls on whether the government made the right or the wrong decisions to achieve this.
* Brigitte Morten is a Senior Consultant for Silvereye. Prior to that she was a senior ministerial adviser for the previous National-led government, and an adviser and campaign director for Australia’s Liberal Party.