Economist: Wellbeing Budget 'last throw of the dice' for Government

Grant Robertson will deliver the first Wellbeing Budget next week. Photo / Stephen Parker

The Government is running out of time to prove it's committed to change and next week's wellbeing Budget may be "the last throw of the dice", says economist Ganesh Nana.

Nana, executive director at independent research group BERL, says he is concerned the Government is using a slowdown in the economic cycle to backdown from meaningful economic reform.

After conservative calls on a Capital Gains Tax, the cannabis referendum, teachers' pay dispute and welfare reform this was looking like a "business as usual Government rather than the transformational Government we were promised," Nana said.

Speaking to the Herald earlier this month Finance Minister Grant Robertson reiterated his commitment to fiscal responsibility. He acknowledged slowing global growth and ruled out more radical economic approaches.

"We always have a mind to economic conditions," he said. "We're keeping an eye on that and calibrating that but the principles of fiscal responsibility will always be important for this Government."

Nana believes that kind of thinking is keeping the current Government locked into a conservative policy approach.

"The argument that we can't afford it or that we need to spread it out over a number of years - that to me is a political argument," he said.

Worrying about the slight shift in the economic cycle this year was unduly cautious, he said.

"It's not a recession in any way and we are still well placed. The fiscal forecasts still have strong surpluses projected out...even if you overlay a slower growth path."

Most economists say the domestic economy is slowing but will rebound later this year.

Forecasts are for New Zealand to hit a mid-year low point, with annual GDP growth somewhere between 2 and 2.5 per cent.

"Next week's Budget is a critical signal for the Government," Nana said. "Is it going to retreat into the bunker?

"It's almost the last throw of the dice for this Government. From an economic point of view is it going to push those Budget responsibility rules a bit further or signal how it will treat them going into the next [electoral] cycle?"

He conceded that it did take time to get things done but argued that additional investment was needed in infrastructure - social and community rebuilding, housing and transport.

Nana said he wanted to see the Government to bring forward a some of its long-term spending and "take on the Treasury and officials who are innately conservative."

"You can see that in the decision making around Wellington transport funding," he said.

Last week the Government ignored Treasury advice for further business case studies, to announce $6.4 billion in long tern funding for Wellington transport infrastructure.

"I know the value of business cases and cost benefit analysis, but I'm pretty certain that if we'd waited for the business case we'd never have built the Auckland Harbour Bridge," Nana said.

"That's where you need a Government to act, and that's the difference of whether we are transformational or not."