Analysis by Dr Bryce Edwards.
How radical or transformative is Grant Robertson’s 2020 Budget? Opinions are divided over this week’s landmark economic package. Some are viewing the big spend as a return to traditional Labour – or even socialist – politics, while others see it as “business as usual”, albeit on a grander scale.
Seeing red
Leftwing political commentator Chris Trotter has declared that the Budget represents an historic turning point. He says the Labour Party has finally ditched Rogernomics properly, and Finance Minister Grant Robertson has led the party back to its socialist principles – see: The day Labour came home.
RNZ’s Tim Watkin stresses how lucky Robertson is to have been presented with an opportunity to spend “on a scale he could hardly have imagined at the start of the year”. He says Robertson has responded by spending up large in sectors that will “motivate his base and be popular with voters” – see: Robertson’s role – spend like a drunken sailor to keep economy afloat.
Here’s Watkin’s main point: “The spending promised in the rest of the $50b represents a more normal Labour Party budget, but on a grander scale. Apprenticeships, state housing and green projects stand out as the winners. Heck, millions of dollars will also be spent to send people in need to work out into the countryside to eradicate pests and pines. If that doesn’t create echoes of Mickey Savage and the sugarbag years, when a Labour government won the hearts of a grateful nation, I don’t know what does.”
In the Herald, Simon Wilson lists the various progressive merits of Thursday’s package, saying “transformation” has been “baked in” with this Budget, and it gets gets strong marks for “articulating a vision” – see: Finally, a Budget for a ‘green and pleasant land’ (paywalled).
Wilson believes important elements missing from the Budget – such as welfare and tax reform – may be coming for the election campaign. On the promised new state housing, he points out it’s “more than twice the number built by the Government in its first two years combined.” And he declares the new environmental job creation scheme “so splendid, I may have run around the garden jumping for joy.”
For another very positive leftwing account of the Budget, former Ardern spindoctor turned corporate lobbyist, Clint Smith, writes in praise of the Budget, saying it has delivered: “In times of crisis, voters want strong action to keep them safe and protect their livelihoods” – see: Sugar-hit vital but fix underlying ills too.
Pink prevails
Political commentator Morgan Godfery tweeted his surprise that the Budget was so conservative: “Despite the worst pandemic in more than a century, despite crushing economic losses and the potential for some kind of social disorder, the Labour-led government just delivered a budget not dissimilar to what Bill English might have delivered in the same circumstances”.
Others on the left have pointed to a lack of transformative change. Max Rashbrooke laments what is missing: “most striking is the absence of anything substantial on welfare: no increase to benefits, no system overhaul, no transformation of the life chances of the most vulnerable” – see: Robertson goes for repair, not rebuild.
In general, Rashbrooke explains that the Budget “concentrates on repairing the roof of the metaphorical house in which all New Zealanders live, responding to immediate needs, rather than rebuilding the foundations”. The problem is, “the country clearly faces problems that cannot be resolved with a few tweaks here and there”. He argues that supporters of the Government will want to see more than this short-term approach in the upcoming election.
Some critics on the left have been much more scathing. Blogger No Right Turn says that despite what has been promised the Budget “isn’t a reset” but “barely a mild change in direction”, and “if this is all Labour has to offer, they’re a failure as a government, and a failure as a party” – see: The timid budget.
As well as outlining everything he thinks is missing from the Budget, he explains why a more progressive programme should have been unveiled: “We’re in the middle of the biggest crisis in a century, which calls for new policies to both ride it out and pay for it. It’s a golden opportunity to change the direction of policy for a generation, to show how government can work for people.”
Similarly, on the radical left, Steven Cowan declares it A rotten budget, arguing that the “Budget talks of rebuilding the neoliberal economy ‘together’ but together means throwing billions of dollars at the corporate sector while the victims of the failed neoliberal economy are denied an increase in benefit levels and condemned to poverty and subsistence living”. He complains that Robertson has “chosen not to take the economy in a new direction and instead is attempting to shore up a failed economic model that has only benefited the few.”
Unionist Mike Treen says the status quo will be embedded by the Budget: “The government is telling us that it will more than double the national debt to around $200 billion over the next few years and all we will achieve is to keep things unchanged” – see: An extraordinarily underwhelming budget.
Robertson has proved to be “a safe pair of hands for big business”, according to Treen. Meanwhile: “There is simply no vision in this budget. There is no promise of a new, fairer, more egalitarian, more equal New Zealand where everyone pays their fair share. There is no commitment to rebuilding New Zealand in a manner that allows us to genuinely address climate change.”
It’s the failure to help those at the bottom, especially through welfare reform, that has Gordon Campbell declaring the Budget to be “indefensible” – see: On Budget 2020. He argues that “behind the chirpy talk of ‘recovery’ and ‘rebuilding’ there’s a strong Darwinian ‘survival of the fittest’ theme running right through much of Budget 2020.”
Economist Rod Oram draws parallels between the Budget and the post-earthquake rebuilding of Christchurch, in which “all we’ve done is create a pleasant replica of a mid-20th century city. Not an exhilarating example of a 21st century city, with all the amenities, technology and liveability that would offer” – see: If we are going to borrow, let’s buy the best (paywalled). He asks: “Why lavish billions on the ‘same old, same old’?”
Oram complains that the Government has been unable to rise to the occasion and address the need for bigger change. He says the Budget fails to live up to the name of “Rebuilding together” and should instead simply be called “Spending together”.
A number of journalists and commentators have also noted the lack of transformative elements in the Budget. One of the best is Henry Cooke’s column, Grant Robertson isn’t using this crisis to transform the country. He argues the Government had talked up transformational change, especially of the economy, and had an opportunity to do so in this Budget, but simply didn’t take it. They could have tried to deal with inequality, or even had some welfare reform, but chose not to.
Cooke says the Budget is mostly about retaining the status quo: “Most of its settings remain about the same. There are no changes to taxes. There are no changes to the welfare system. There are no big new entitlement programs – no free dental, no more years of fees-free, no burst of helicopter money. It’s a budget that is consequently hard to be really mad at, or massively happy with.”
Similarly, I argued in a column for RNZ that there’s nothing much for Labour’s opponents to hate, and so it’s a “politically-astute Budget” – see: A Budget with big numbers, but little vision. I argue that despite the huge increases in expenditure – mostly directed at business – this Budget is in line with the previous two Robertson budgets which have also been very cautious.
I also point out that as a sign of just how conservative the Budget is, it gives a bigger boost to Defence spending ($1.77bn, mostly for new Hercules military planes) than it does for trades training ($1.6bn).
Other political commentators agree the Budget is a middling one. Stuff political editor Luke Malpass says that not only is it “short on grand ambition” but “is unashamedly aimed at middle New Zealand” – see: Labour goes back to basics.
Rather than a “rebuilding” Budget, Malpass says “it is definitely a recovery budget. The apparatus of the state is not being reimagined, and any new progressive initiatives have been left on the budget cutting floor. It has been designed to keep enough cash flowing to keep the economy afloat while financing this quite conservative Government’s vision for the future”.
Business journalist Pattrick Smellie writes there is plenty in the Budget “to assist the private sector, but “Beneficiaries and pensioners see nothing more in this Budget, apart from some targeted programmes aimed at social dysfunction” – see: Is it enough? (paywalled).
Despite the big spending, it’s certainly not a radical budget according to Smellie: “There is very little in the way of the transformative vision that some may have hoped to see from the epochal disruption of a pandemic. Perhaps that is a good thing, but this is a big-spending Budget that is remarkably operational, almost managerial, in its decision-making.”
Former Cabinet Minister Peter Dunne is very positive about the Budget, but calls it “pedestrian”, and notes that Robertson has “resisted the urge to delve into Labour’s ideological back-pocket to fund his solutions” – see: An extraordinary but pedestrian Budget. He concludes that “the Budget is primarily a marking-time document, aimed first at getting through the coming election”.
As to why a more adventurous Budget didn’t eventuate, Dunne speculates that coalition and electoral politics prevented this: “This is, after all, a government of three parties facing an election in a few short months. Each therefore needs to be able claim some achievements in the budget as its own… With each party having its own audiences to appeal to, it makes the task of presenting an overall coherent Budget theme that much more difficult.”
Herald political editor Audrey Young has also emphasised that the Budget was hardly a radical one, saying that, although the “political messaging was based in nostalgic references to the role of the First Labour Government in responding to the Great Depression”, in reality “The Budget is one of least overtly political Budgets in recent years”, with Robertson even paying tribute to Bill English in his presentation of it – see: Robertson keeps fingers crossed as he gives himself options (paywalled). Young suggests it would be unrealistic to have expected a more detailed plan for the rebuild.
In another column, Young also stresses how orthodox Robertson’s Budget really is: “Most of it is unsurprising – jobs, training, infrastructure, housing, subsidies – and most of it could have occurred to varying degrees under a National Government in a bid to keep workers attached to work and businesses afloat. The alternative would be higher spending on social welfare benefits and a slower recovery. Spending big in an economic downturn is not in dispute. It is the orthodox thing to do” – see: Simon Bridges vs Jacinda Ardern over $20 billion blank cheque (paywalled).
Newstalk ZB’s Heather du Plessis-Allan also argues the Budget is mainly about extending the status quo rather than building something new, but she says this is a good thing: “there is no vision in this budget. It’s not a criticism. This budget does what it needs to do: it saves jobs, it retrains workers, it pumps money into health and infrastructure. It keeps the computer on, but it doesn’t ‘reset’ it” – see: The Budget is simply extending ideas.
Conservative commentator Liam Hehir embraces Robertson as a fellow “conservative” and potentially “the new Bill English” – see The great Spinoff hot-take roundtable. Here’s his general take on the Budget: “Grant Robertson’s job today was to make it clear he understands the need for prudence. For the most part, he hasn’t done too badly. There was no Keynesian tax relief. There was no UBI or fundamental break with the post Muldoon consensus, either. The temptation of helicopter money was largely avoided. That was never to be expected from a disciple of Clark and Cullen.”
Finally, rightwing commentator Matthew Hooton commends Robertson for not being too radical or attempting to be visionary. He celebrates that “Robertson is showing no signs of using Covid-19 as an excuse to radically depart from the post-1984 consensus, as many on his left want him to” – see: Grant Robertson conservative despite huge numbers (paywalled).
Overall, Hooton pronounces that Robertson is still very much in line with the neoliberal settings of the 1980s and 1990s, even in this Budget. Here’s his key point: “Robertson likes to invoke Peter Fraser and talk a big game about the ‘carnage of the 1980s and 1990s’ being based ‘on a tired set of ideas’. But more important are his regular tributes to Bill English and Michael Cullen for their fiscal prudence. As Minister of Finance, Robertson has done nothing to substantially reverse the basic economic framework put in place by Roger Douglas, Ruth Richardson and Bill Birch of an open and competitive economy; a low-rate, broad-based tax system; price stability through an independent monetary policy; fiscal responsibility and paying off debt; and a relatively flexible labour market.”
