Prime Minister Jacinda Ardern and Finance Minister Grant Robertson. Photo / Mark Mitchell
Prime Minister Jacinda Ardern and Finance Minister Grant Robertson. Photo / Mark Mitchell
OPINION:
Of all Grant Robertson's Budgets this term, this will almost certainly be the easy one in terms of decisions.
Lifting the incomes of the poorest Kiwis on benefits had to happen, for several reasons other than alleviating suffering.
With Prime Minister Jacinda Ardern having created the Child Poverty Reductionportfolio in 2017, having put herself in charge of it, and having made underwhelming progress, it was clear something had to change this term to maintain her credibility, no matter what state the books were in.
It was certainly a decision that has pleased the Labour left which has been worried that the former National voters who gave Labour an outright majority at the 2020 election might lead to moderate spending decisions.
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A $3.3 billion decision to lift benefits could not have been made without broad public support because ultimately it is a political calculation.
Child poverty advocates have played a big part in keeping the issue in focus. They won't be satisfied with the Budget but we would expect nothing less from them.
Finance Minister Grant Robertson shows off the cover of his Budget earlier this week. Photo / Mark Mitchell
Public support has also come from the sense that while things may not be great, they could have been a lot worse here. Appalling forecasts have been downgraded to awful forecasts.
The books are only $23 billion in deficit instead of the $28 billion forecast in last year's Budget, and net debt is forecast to peak at $184 billion instead of last year's forecasts of $200 billion.
The sheer volume of spending in the past year, $57 billion from the Covid fund, has also inured the public to usual concerns about splashing cash around.
There is a sense of fairness in the Budget – or "balance" as Robertson and Ardern prefer to use - that the massive state support that business received to get through the Covid crisis is now directed at the marginalised.
The Covid fund is not being used to lift benefits – although the much-vaunted training incentive allowance is being reinstated for four years through the Covid-19 fund and is not baked into baselines.
One of the most important signals in Robertson's Budget speech was his reference to the forecast that the operating balance was forecast to be back in surplus in just six years – roughly the same time it had taken National to get back to surplus following the global financial crisis.
That suggests a desire to make it happen.
But with only $5 billion left in the Covid contingency fund and with new operating spending allowances for the next two Budgets sitting at just $2.7 billion, the word that Robertson may well have to get used to is "restraint".
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