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Guy Trafford sees a Budget low on ambition or transformation. He wonders if we will ever get the impetus to make the serious changes needed. This Government isn't engaging in the goals it set for everyone else

Guy Trafford sees a Budget low on ambition or transformation. He wonders if we will ever get the impetus to make the serious changes needed. This Government isn't engaging in the goals it set for everyone else

It feels a little mean spirited to criticise the government for the just-released 2021 Budget, but apart from last years “Covid” budget, yet again, it feels underwhelming.

Part of this comes from the fact we are still waiting for the “Transformational Budget” that was promised in 2018.

This year’s Budget does go a little way to redressing some inequalities in society but by and large the poor will still be poor, the rich will get richer and it feels like an opportunity to really make some meaningful changes to the economy have yet again been passed up.

Nothing major has been done to drive New Zealand towards a green economy.

While the $1.3 bln going towards updating old rail infrastructure and locomotives is spread over 4 years, nothing seems to be in the pipeline for electrification and certainly there doesn’t appear to be anything meaningful to encourage the public to give up fossil fuel vehicles. Given that New Zealand is way behind where it needs to be in reducing emissions to meet future commitments it could be a signal that agriculture will remain as the sector which is going to wear the bulk of having to reduce emissions.

Agriculture has received some funding, about $62 mln which is targeted as;

  • $37 mln towards national integrated farm planning system for farmers and growers.
  • $24 mln towards agricultural greenhouse gas mitigation research and development.
  • $900,000 to collect vital statistics on agricultural production, such as greenhouse gas emissions.

To those who are wondering what this actually means Damien O’Conner has said;

“The Government is backing initiatives to help reduce costs for farmers and growers, boost returns, and help achieve lower on-farm emissions”.

Given that the Government is on record as saying it wanted to see agricultural exports doubled it is obviously not going to happen with the help of Government support.

To put this into some form of context the $62 mln for the sector that producers nearly $50 bln, or 76% of total exports, pales in comparison to what is being spent on Scott Base (over $300 million). The 40,000 farm businesses if paid the $62 million would each receive $1550 each or $29 per week, (less than the ongoing minimum benefit increase). Given that MPI farm auditors for compliance (such as cheese making etc) charge around $250 per hour the $29 per week is not going to trigger any change. This is hardly a realistic signal that this Government is serious about supporting any real transition in the sector. Lacking any sort of carrot, it increases the chances of a stick being the next tool out of the box.

On the positive side agriculture has not been singled out for special neglect, as no productive sector has received anything that could be seriously regarded as incentivising change.

New Zealand seems to be beset by decades of underspending on key areas by governments of all hues and this year, given the low cost of money and need on so many fronts, it could have provided the opportunity to make some real inroads. Unfortunately, all of our Finance Ministers have been more concerned about not doing the wrong thing rather than trying to do the right thing and so we continue to muddle along. Perhaps not the worst option but just don’t expect New Zealand to stop its decline on almost every social and economic measure against other OECD countries.

Commentators have said that the budget will appeal to the Labour base by upping benefits, however, I suspect once the dust settles, and it can be seen very little of anything else has changed and certainly nothing to improve New Zealand’s productivity which was meant to be a priority for the Government a month or so back, as was climate change etc. Then the knives will come out. Unfortunately, at the moment there is only a Hobson’s Choice in the political arena with National unable to offer alternatives or gain any traction at Labour's expense. Even the Greens seem to be, at least publicly, accepting and following the party line.

At the personal level I did manage to learn a new word - Cheugy - which is worth looking at.

P2 Steer

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60 Comments

17
up

Government lacks ambition, courage and drive to improve lot of bottom 30%
To do that, you have to speak bout the mechanisms by which wealth moves up the scale and what you will do about that. Labour has never done this. Incrementalism does nothing to reverse the mechanism by which the top 30% continue to make money by doing next to nothing - ie money generates money. Work by contrast simply attracts taxation, which rich can evade.

Incremental is definitely how to describe it. The only "good" thing about it is that it's not an austerity budget. But not being that daft is such a low bar...

Incremental, NO.
Excremental, YES.

Government lacks ambition, courage and drive to improve lot of bottom 30%

Because genuinely improving the lot of the bottom 30% will piss off enough of the upper 70% to cause them to lose the next election, and any changes that were made would just be rolled back by the winners of that election.

National (whenever they do get back in, if they ever get back in) won't be rolling back any of the socialist largesse that Labour are deploying, cutting back on anything has been demonised. All the next government can do is make the best of the cards that have already been dealt.

Labour is not 'socialist' by any stretch of the imagination. People bandy that word around without understanding what it actually means.

Exactly. Centrist, with a few tokenistic left wing gestures.

won't be rolling back any of the socialist largesse that Labour are deploying, cutting back on anything has been demonised

Sure, but that's because Labour aren't genuinely doing things to help the lot of the bottom 30%. If they did, then National would roll those things back.

National has already pledged to roll back practically all of the changes to tenancy rules, for example, even though those rules are to benefit those in the bottom 30% (who aren't home owners).

Benefit increases don't help many in the bottom 30%? Maybe you are playing with semantics around the word 'help'.

I am replying to someone who said the incrementalism in this budget - which includes the raising of benefits - is insufficient to help those in the bottom 30%.

I think that is only partly right.

The changes to the tenancy rules mean that tenants will now be subject to very thorough verification before they sign the lease. This will mean that those tenants who landlords may have taken a chance on (young, waged workers in the main) will not be given that chance.

Conversely once a tenant has made it to signing the lease they can now be in that house pretty much until the landlord sells it or has a major refurbishment.

So its not all good news for the bottom 30%.

Your example illustrates the exact opposite of your statement - which that Labs will/cannot not do things likely to be rolled back by the Nats .

No, because the tenancy changes don't genuinely help those on the bottom 30%, as outlined by JustAnOpinion above.

This specific point was in reply to Tom Valen who said National wouldn't roll back any of Labour's legislation - so this is an example of legislation they have already promised to roll back.

Lan. Its about enabling, providing pathways for - your words - the "30%" to transition through to join & be of the "70%"

And like mentioned last night, with covid closed borders this was once in a generation, once in a century chance to transition folk into employment any form of employment..

Be it 1 hr a day, 1 day a week, work from home, or accommodation provided, childcare provided, education, training provided etc....

The empowerment, self esteem, examples set for children, established would be priceless.

But. Opportunity lost because of some self-indulgent idea around a budget of 30 years ago.
Just proof these folk are living in the past. Deadbeat thinking, just stinks.

your words

No, they aren't my words. They're the words of the person I replied to.

My point is the changes required to truly bring these 30% up would require a large wealth distribution from the top 70% (aka, higher taxes to fund all of the intensive social and health services required to truly make a difference). Enough of those top 70% would vote against it to ensure the situation were reversed at the next election.

I think your number are a bit out. Even if more wealth distribution was key (which I disagree with) the majority of tax is paid by a small voting block. For example 48% of the actual tax paid is paid by 12% of the working population. The 12% that pay almost half the tax are not a big enough block to affect the voting outcome.

This is an oft quoted number which I believe is false. It's true if you only look at income tax, but include GST and other taxes and the picture changes significantly.

And if you use the "net tax", which is bollocks because that tax is infact paid but given back as social spending.
Just a good way to make the higher resource users look like saints.

I think you kind of missed the point.

The situation right now may be as you say, with a small number paying most of the tax. My point is that they would need to raise taxes for a wider range of people, ie more than that small 12% group. And thus by raising taxes on such a broad group, and using the money specifically to help the bottom 30%, enough people would have their taxes go up, and be upset about it, that they'd vote Labour out. You only need a swing of about 12% from Labour/Greens to right-wing parties to achieve that.

wealth distribution is as naive a concept as oppressors liberating the oppressed -- The rish will always be rich and get richer -- nothing on earth has ever stopped that -- except maybe cutting off their heads!

The focus needs to be in ensuring the poorest have the means to improve their quality of life, their ability to earn or generate and income, to budget, reduce waste and for society to ensure that it does not have as many fit healthy people contributing nothing or next to nothing to our society -- only then will we be able to ensure that those peopel with genuine needs for state support - can get the amount of support needed to give them a good quality of life !

11
up

Well put Guy. A mediocre budget.
Yet most of the media rhetoric is it was s good one or a bad one depending on vested interest and political persuasion.
But it simply fails to engage with the transformation that this government promised.

16
up

Transformational not. Aspirational not
Benefit rates will further discourage low skilled workers from entering anything but the cash work force.
The middle class will continue to be hammered.
The multiple owning property class will continue to suck the economy dry.
Cripes I wish National would step up. They don't need to do much - just promising to turn down the immigration tap would be almost enough.

just promising to turn down the immigration tap would be almost enough

And anger farmers, property investors, low-value business owners, old retirees living in aged-care facilities, etc. aka all National voter bases.

National is as likely to promise curbs on low-skilled immigration as it is to commit to raising taxes on the rich.

So should the immigrants waiting for residency in this article be allowed to stay Advisor? There are many such examples like this of immigrants who have come to NZ to work on farms.
https://www.scoop.co.nz/stories/BU2105/S00249/2021-new-zealand-dairy-ind...
Perhaps it is the high skilled immigrants we should be reducing - from comments on here in the past it sounds like doctors etc end up as taxi drivers and the like.

17
up

'I wish National would step up. They don't need to do much'. I sadly disagree. Mainstream media are now almost universally emotive advocates, currently of leftist and culture wars ideology, rather than the dispassionate observers and disseminators they ought to be. The narrative is tightly controlled by them, contrary views suppressed. During the election the MSM was openly hostile to Collins and her ideas. Seymour, a clear thinking and articulate alternative, is routinely sidelined by the wokeish MSM arbiters of right and wrong.

nail on the head.

Seymour, a clear thinking and articulate alternative, is routinely sidelined by the wokeish MSM arbiters of right and wrong.

RNZ has routinely used ACT's low polling an single MP in Parliament as a reason to not give him a lot of air time. Which seems reasonable to me.

So by that measure he should be able to get a lot more airtime over this current term, and leading up to the next election especially.

Media coverage based on voter support proportionality. A sure recipe for suffocation of new and challenging ideas, status quo preservation and political sclerosis. And we'd never get to hear Rawiri's latest attention seeking outburst or view his latest hat.

..can't disagree with your comment as such. For me however, immigration tap turned off would get me back. Some exceptions of course, but I've had enough of these crazy numbers.

I think you're right.
The big stick coming and productive sector is seen as having plenty of cash to sort out the solutions on their own (even if they don't they can leverage up or get out all together)
Not very inspiring.

11
up

Without a huge increase in the supply of affordable homes pretty much all of the increase in benefits will flow straight into the pockets of the land lords.
This budget did a lot for the property speculators.
Principally a big increase in their victims ability to be screwed further and a return to the 40,000 immigrants per year to keep up the demand for property, infrastructure and government services well beyond our struggling ability to supply.
One has to question are they doing this on purpose and who's interest are they serving, or are they almost certifiably stupid.

Our politicians are stuck in a morass of neo-liberal dogma where the government is just another currency user and dependent upon the private sector to finance it. This of course is a complete reversal of the truth and the problem can be laid purely at the feet of the orthodox economists who inhabit our halls of power.

Our politicians are stuck in a morass of neo-liberal dogma where the government is just another currency user and dependent upon the private sector to finance it. This of course is a complete reversal of the truth and the problem can be laid purely at the feet of the orthodox economists who inhabit our halls of power.

Agree. But I don't think the 'prescriptive' from your 'descriptive' ideology is going to happen.

Bang on, they should be going huge in supporting more productive farming, we are creating solutions for this right here (https://halterhq.com/) and they are still turning their noses up at them.

I actually loved the re-investment into Scott base. Science and technology forms the basis for much of our productivity gains. Having a science presence in Antartica with a big purpose built science base is fantastic and could bring untold future gains. Not only that, it supports and commits to our ongoing presence in Antartica as a partnership with others interested in science. I actually wished they had spent more!

The quality of governance in New Zealand has been declining every term since 1984.

The speed of this decline accelerated when this Labour government was made into the office by Peters.

1984, you would know all about that Xingmowang.

To be fair, the intellect of the Chinese leadership is well above our team. Politics aside Xi seems like an impressive and interesting man -

The son of Chinese Communist veteran Xi Zhongxun, he was exiled to rural Yanchuan County as a teenager following his father's purge during the Cultural Revolution, and lived in a cave in the village of Liangjiahe, where he joined the CCP and worked as the party secretary. After studying chemical engineering at Tsinghua University as a "Worker-Peasant-Soldier student", Xi rose through the ranks politically in China's coastal province

The mystery to me is how this CCP bot garners 7 upvotes...

Might it be because he is making a fair point - in this instance ?

I can't separate his pro-CCP leaning from anything he says unfortunately.

Chinese communist yells at democracy.

The quality of governance in New Zealand has been declining every term since 1984. I think this statement is correct. No prime minister since 1984 has had the intellect and goodwill of Robert Muldoon. Some have had goodwill, but goodwill without intellect is misguided. Intellect without goodwill (John Key) is inhumane.

Interesting article. The Prime Minister has always shown a preference for incremental, even glacial, change over major stepchange and transformation. The PR machine in Wellington spits out a lot of announcement (or even announcements about future announcements!) but in terms of legislation and delivery it seems Labour are struggling to gain traction.

I'm not sure if that's due to institutional inertia within the civil service or government itself is struggling to make progress. To date New Zealanders have tended to be willing to overlook the delivery gap.

Have faith. Ardern's new high power ministry of deliverance will get the ministries delivering the deliverables they are paid to deliver.

Poor old Scott Base seems to be under attack. Whoever wanted more funding, they compare it to the Scott Base budget.
Yet, science is one of the few things we're still (relatively) good at. It's not a lot of money in the scheme of things.

It's not exactly science, it's just upgrading some buildings in Antarctica.
Meanwhile Pharmac only got an extra $200 million and kids will die as a result.

It's not exactly science, it's just upgrading some buildings in Antarctica.

The buildings are being upgraded so that we can continue to do science in Antarctica. Because the current buildings are seriously unfit for purpose and if they aren't replaced soon, we'll have to drastically scale back or abandon our science efforts in Antarctica.

I favour saving kids lives over 'science in the snow' thanks.

Despite what your comment is implying, I haven't offered an opinion either way on the subject.

No science, no medicines.

We can care about more than one thing at a time, believe it or not. You present a false dichotomy.

"the poor will still be poor, the rich will get richer"

Well that's stating the obvious, there are reasons why the poor are poor and the rich are rich and these reasons have nothing to do with the government

Correct, its called the RBNZ coupled with spacetime.

Wait for the rent controls and watch the private rental market evaporate.

"Watch the rental market evaporate" you say. no more rental houses huh, 100'000's of renters homeless, what a grand idea

and no, these 100'000's of renters will not miraculously, suddenly have the money to buy these houses

If ihumatao was anything to go by, private property may not be so private in future (if you catch my drift)

No just more on the state house waiting list and in emergency housing.

If a landlord can get a better return elsewhere chances are they'll exit

This budget confirms for me what I have known for a while - I will never again vote for Labour. Or National. They are small variations on the same theme - centrist populism with a healthy sprinkling of can kicking.

Getting rid of a large swathe of tourism jobs. Spending tens of billions with no tangible increase in assets or infrastructure. Increasing unemployment benefits. I think that's all pretty transformational.