Bryan Gould: First budget always a critical moment for a new government

The 2018 budget provides us with a secure basis from which to launch "a great leap forward" to chase more ambitious goals. Photo/file

The first budget is always a critical moment for a new government.

They have no control over the resources available to them and the laws of arithmetic never change; they have little time and opportunity themselves to increase output, so they are therefore totally constrained as to how much (or little) they have to play with.

And, in the case of the present government, they had already imposed on themselves the goal of maintaining "fiscal responsibility", which meant that they had (perhaps unwisely) accepted in advance the constraints and priority given to the government's own books that had, in the case of their predecessor, led to the various under-funding crises which had so displeased the voters in last year's election.

Despite these limitations, yesterday's budget has been described as "rock solid" which sounds like an improvement on, because longer lasting than, "rock star".

It was less an indication of whether the government could produce rabbits out of the hat and more a guide to the priorities it chose in spending the money it has available.

On the basis of what we already knew, those priorities were likely to focus on increased spending on health, education and housing – which are the obvious pressure points, and the areas which the previous government was seen to have under-funded.

The government had of course already announced some of its spending plans – the Provincial Growth Fund, the families package to lift nearly 400,00 poorer families out of poverty, and the increase in overseas aid, particularly in the Pacific.

The budget continues with the expected themes – an emphasis on targeted improved access to effective primary health care (especially visits to the doctor), the focus on mental health (with the suicide rate, particularly among Maori youth, of particular concern at present), capital spending to upgrade our hospitals, measures to improve the sustainability of our environment, increased numbers of teachers and classrooms, extra resources for early and special education, help with heating costs for the elderly, and the programme to build more (and affordable) houses, for rent as well as sale – 1600 new state houses will make a real difference.

Identifying and acting on these priorities will be welcomed by many, even if the resources currently available to act on them are constrained.

There is some limited but welcome new thinking – the already announced proposal to help first-time buyers through government-subsidised shared equity schemes is a good example.

And there will also be (or should be) a welcome for other measures, such as lifting the minimum wage, that will achieve a fairer distribution of spending power across the population as a whole.

This government's first budget was a model of prudence and care for the future, so much so that it should leave its predecessor shame-faced with embarrassment.

Contributions to the Super Fund are to be resumed, so as to protect our ability to look after our future pensioners (the National government had short-sightedly and irresponsibly stopped those contributions).

There is to be substantial capital spending on badly needed new infrastructure.

Not everything can be done at once - the Minister of Finance has made a point of saying that he will maintain and grow a fiscal surplus which will allow further increased spending in future budgets and will act as a fiscal buffer available to meet future shocks.

The new government was able to afford much of this new spending on social purposes because it scrapped National's proposed untargeted tax cuts (which produced big gains for the wealthy) – a diversion of resources that, according to the polls, was supported by the majority of Kiwis and that will help to re-balance our economy and society.

What we have yet to see from the new government is any plan as to how to improve our abysmal productivity record and to reverse our slipping down the OECD tables in terms of living standards.

To achieve success in this respect, the government may need to take a wider view of what well-being might mean, and give less emphasis to earning approval from those who care less about social justice and environmental sustainability – but the 2018 budget provides us with a secure basis from which to launch "a great leap forward" so as to chase these more ambitious goals.