By Dr Muriel Newman NZ Centre for Political Research, originally published in the NZCPR May magazine, and redacted for Local Government magazine.
The release of government budgets used to be memorable affairs. Crowded around the radio or telly, it was excise tax changes on petrol, alcohol and cigarettes that exercised Kiwis the most.
Some, car keys at the ready, would make a mad dash to try to beat any price rises, while others simply resigned themselves to lamenting yet more tax hikes!
Nowadays, budgets are more about the narrative and less about the numbers. Getting the narrative right is something the Labour Party understands only too well – as former Labour Cabinet Minister Richard Prebble explains:
“It was in 1981. I was on the campaign committee. We did a party poll and found the electorate thought that Labour had no practical positive solutions. The Labour party’s policy machinery takes months and the election was only six months away. So what to do.
“I instructed every MP to include in every speech and radio and TV appearance the statement ‘Labour has practical positive solutions’. There were prizes for MPs who managed to get the line onto the TV news. Heaven help an MP who gave a speech in parliament, no matter what the topic, who did not include the line. We changed not one policy.
“We polled three months later and asked, ‘What is a good thing about Labour’. Even a majority of National voters said that Labour had some practical, positive solutions.”
These days Labour employs an army of public relations advisors and communications experts to poll continuously and run endless focus groups to ensure hot button issues are identified and messages shaped to resonate with voters.
So, it’s really no surprise to find that contrary to Labour’s record of abject failure in virtually every area of governance, a narrative of success and sound economic management is being run.
After Labour swept into power in 2020, it was widely acknowledged that their majority was due to some 400,000 former National supporters voting for Jacinda Ardern. National’s long-term challenge has been to win back those voters, and their steady increase in the polls shows they have gone some way towards achieving that.
By using the Herald’s “poll of polls”, political commentator Matthew Hooton has calculated that for Chris Hipkins to win the election with the support of only the Greens and not the radical Maori Party, he needs to regain just 35,000 of those voters from National.
Matthew believes Labour’s Budget was designed with those mainly women swing voters in mind – hence, 20 hours of free early childhood education for 2-year-olds, free bus rides for primary school children and half price for secondary and tertiary students, and free prescriptions.
In examining what the Prime Minister said in the Budget debate, it’s interesting to note he didn’t use “Aotearoa” for the name of our country, and keeping well clear of the ‘Maori issue’, he focussed on middle New Zealand:
“This is a great day for New Zealanders. It is a great Budget for Kiwi families. In a cost-of-living crisis, New Zealanders know that they can trust this Government to have their backs and to work to ease the pressure that they face, because that is exactly what we have done today.
“We know that families are under the pump at the moment, they are feeling the pressure. We know that household budgets are stretched, and the answer to that needed to be a Budget that is going to support families not just now but also in the future, one that lays the foundations for a better future for New Zealand, because that is what this Budget does.
“This Budget, unashamedly, is about balance. It is a proudly Labour Budget, about making targeted and affordable investments in the cost of living, in providing relief for New Zealanders who are needing that, and it is also about making sure that the future can be better.”
Let’s unpick what he said.
Firstly, Chris Hipkins, failed to acknowledge that it’s been Labour’s profligate spending that fuelled inflation in the first place, triggering the cost-of-living crisis and forcing the Reserve Bank to increase interest rates to bring inflation under control.
Nor did he acknowledge that, at a time when New Zealand families are having to tighten their belts, he’s just authorised another massive spending spree funded by debt.
Under Labour, Government spending has exploded from $76 billion in 2017 when they took office, to $137 billion by June next year. As a result, the Government’s books are sinking further into the red, with net government debt increasing from $59 billion or 20 percent of the economy in 2017, to $179 billion – or 43 percent – next year.
This blowout in debt caught economists by surprise. Net debt for the 2027 year is now projected to be $21 billion higher than predicted less than six months ago in December’s Half-Year Economic and Fiscal Update.
The Herald reports, “Wholesale interest rates rose sharply in response to moves outlined in the Budget, which has been dubbed by rating agency S&P Global as ‘expansionary’. As they see it, expansionary also means inflationary, so wholesale rates have responded accordingly.”
There are now predictions that the Reserve Bank will be compelled to raise the Official Cash Rate higher than the 5.25 percent forecast [it went to 5,5 percent].
The flow-on effect of higher interest rates will be significant, forcing up costs throughout the whole economy, hurting the very families Labour says it is helping.
Some of Labour’s Budget spending promises are bizarre.
Chris Hipkins made a big deal of scrapping the $5 prescription co-charge. Costing $600 million over four years, he said, “Our Government recognises that when times are tough, making sure Kiwis can access the healthcare they need is one of the most important things that a Government can do. And that is exactly what we are doing. Reportedly, 135,000 New Zealanders went without collecting their prescriptions because they couldn’t afford to collect them.”
But that argument doesn’t stack up. Grants are already available to ensure low-income families who can’t afford prescription charges don’t need to pay, and in many parts of the country pharmacies are waiving the fee as an incentive to attract customers. Thanks to Labour, one of the biggest pharmacy chains in New Zealand, the Australian-owned Chemist Warehouse, now stands to gain a multi-million-dollar taxpayer-funded subsidy every year!
New Zealand’s real health story is one that Chris Hipkins doesn’t want to discuss – it’s the plight of the hundreds of thousands of people who are suffering because they can’t “access the healthcare they need”.
The reality is that the $500 million restructure of the health system, that Labour launched during the pandemic – to abolish District Health Boards, centralise services, and introduce Maori co-governance – has destabilised the entire health sector.
As a result, all health indicators have gone backwards – whether it’s cancer treatment, specialist appointments, surgeries, emergency department assessments, accessing a GP, or even child immunisation rates, everything is in decline. And when the shortage of doctors, nurses, medical specialists, and GPs is factored in, New Zealand’s health system is failing to deliver critical healthcare and is costing lives.
Yet in response to this health crisis, Labour has cut next year’s funding by almost $1 billion from $29.527 billion in 2023 to $28.653 billion in 2024.
In his Budget speech, Chris Hipkins claimed Labour’s policies to alleviate the cost-of-living crisis are “targeted”. But that’s nonsense. None of the Budget’s main ‘cost-of-living’ policies are targeted specifically to families in need – they are all available to all families.
So why didn’t Labour simply target the $5 prescription charge subsidy to Community Service Card holders? The answer is probably that the 35,000 voters Labour is attempting to win over from National are not Community Service Card holders!
This week’s [May 22-26] NZCPR Guest Commentator, economic analyst Frank Newman, points out yet another misrepresentation by the PM in his Budget speech:
“The Prime Minister said his Government had focused on ‘creating the conditions for a growing economy’ but there is nothing in the Budget that substantiates that rhetoric. He seems to forget that governments consume wealth they don’t create it. The best way for a government to grow the economy is to create an environment that inspires and encourages others to grow their businesses – and then get out of the way.”
Frank then adds, “That may be too much of an attitude change for socialist politicians who are doing very well out of growing dependency and squeezing those who have done well for themselves.”
In the Budget debate, the Prime Minister said: “On this side of the House we believe if you work hard, you should be able to get ahead.”
But, if he really believed that, wouldn’t he inflation-adjust tax thresholds so working families can also ‘get ahead’ – since he’s already done that for welfare beneficiaries and super-annuitants?
When he claimed in his speech, “We have been focused on keeping our community safer”, Chris Hipkins failed to mention that ram raids and robberies are now out of control, occurring on a daily basis in broad daylight in close proximity to families and children. It will only be a matter of time before someone gets killed. With gang memberships at an all-time high and the prison muster now 20 percent lower thanks to iwi leaders convincing Labour not to lock up ‘their people’, the PM’s answer to this crisis is to cut the Police budget from $2.528 billion this year to $2.460 billion next year!
In an act of profound hypocrisy, on the one hand the Prime Minister told Parliament, “I want to live in a New Zealand where the circumstances into which you were born do not dictate the opportunities that you have in life or hold you back.”
While on the other hand he authorised $825 million of policies that use race to determine outcomes: $200 million to build and repair homes for Maori; $34m for two years of kapa haka so it matches the combined funding of the Symphony Orchestra and the Royal New Zealand Ballet; $18m for the Matariki holiday; $168m for the unaccountable Whanau Ora slush fund; $132m extra for Maori health providers and customary healing; $51m for Maori media; and $8m for Maori tourism ‘to help alleviate cost-of-living pressures’.
In discussing that budget allocation, the Minister for Maori Development Willie Jackson revealed, “We’ve got the by Maori, for Maori Budget, but let’s not forget most Maori are not attached to a lot of our Maori organisations.”
In other words, he’s confirmed that while the leaders of those multi-million-dollar iwi business development corporations that provide most of the Government’s race-based social services contracts give the impression they deal with all Maori, in reality, it’s only a tribal minority – most Maori prefer to be part of society’s mainstream.
The Prime Minister also claimed: “Our Budget is backing our exporters”. That will be news to our leading export sector, agriculture, which has been subjected to excessive regulations restricting progress and limiting production.
But perhaps the biggest of the litany of lies in the Prime Minister’s Budget speech was the one he made at the beginning: “New Zealanders know that they can trust this Government.”
Former Prime Minister Jacinda Ardern was forced out of office because the public had lost trust in her and her Labour Government. We now know that Labour under Chris Hipkins is no different.
New Zealand now faces a tsunami of serious problems – but the biggest problem is Labour itself.
The burning question is whether Labour’s false assurances and flagrant lies are convincing enough to win them a third term in government. And with $5 billion set aside in the budget still to use, the promises yet to come will be massive.
Budget 2023 has kicked off the election campaign. With advance voting starting on October 2, the countdown to our future has begun.