Herald political editor Audrey Young takes a look at what will be announced on Thursday.

So far, nothing about her reign has been predictable. From becoming the country's youngest prime minister in 150 years to her pregnancy announcement three months later.

But yet the word Jacinda Ardern settles on for her Government's first Budget is predictable.

Though she doesn't want it to be billed as boring, she doesn't expect anyone to be surprised by it.

Ardern speaks to the Herald about the Budget at her office in the Beehive this week. Photo / Marty Melville
Ardern speaks to the Herald about the Budget at her office in the Beehive this week. Photo / Marty Melville

"There are no deep, dark Budget secrets and there is something good about predictability," she tells the Weekend Herald.

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"We have been flagging for months now about the things we've thought were a priority."

She is sitting at the head of the huge table in her boardroom, a meeting room next to the
Prime Minister's office on the ninth floor of the Beehive where discussions with ministers and party leaders have been held in the lead-up to the Budget.

Pre-Budget announcements are gathering pace before the formal revelations next Thursday.

What is clear is that this first Budget will be different from the Government's next two. It's more of a quantity budget, not necessarily the quality budget. It is the one that will restore base funding from what it often called nine years of neglect.

So is this Budget the rescue mission which will be followed up further down the track with reviews of baseline spending?

"I think that is a fair characterisation," says Ardern.

Ardern arriving for her press conference after becoming Prime Minister with Robertson, left, and Kelvin Davis, at Parliament. Photo / Mark Mitchell
Ardern arriving for her press conference after becoming Prime Minister with Robertson, left, and Kelvin Davis, at Parliament. Photo / Mark Mitchell

She insists that quality of spending is top of mind, which means she is sure it will reach the people who need it and who have felt "squeezed".

"But most of the Budget focus tends to be on the way you use the additional operating allowance rather than the core baseline funding that sits underneath it.

"We want to get our services back in a good place so that actually the conversation is in and around the fact that these are really depleted services, that we can get them in a good space, to then say 'actually, are our health services world class? Are we keeping on top of those big demographic changes and technological changes?'

"But it is pretty hard to have that conversation where you have people saying 'actually my work environment isn't safe right now'."

She mentions District Health Boards, which are going to get a shot in the arm from the promised $8 billion additional spending in health over four years.

She also mentions early childhood education in terms of underfunding – despite the fact that ECE received $860 million in Labour's last Budget in 2008 and $1.8 billion in National's last Budget in 2017.

"That [funding increase] was participation," she says dismissively about those figures.

"That doesn't speak to the quality of the services or necessarily whether or not you were funding to keep pace with the costs they were experiencing.

"You could say the same for health. We've had population growth and an ageing demographic. It doesn't mean you are keeping pace with the true costs."

It meant that costs were passed on to users, the parents.

Ardern and her partner Clarke Gayford at home in Auckland after announcing that they are having a baby. Photo / Greg Bowker.
Ardern and her partner Clarke Gayford at home in Auckland after announcing that they are having a baby. Photo / Greg Bowker.

Ardern said she was mindful of giving people the certainty of having a plan.

"This is the first step of a plan… as long as you don't bill it as a boring Budget.

"We have been banging on about the areas of need for years so, of course, that means there will be a certain amount of predictability about what we do."

Ardern herself has been delivering some of the Budget's happy news and tomorrow is expected to deliver some more to the education sector on special education when she speaks at the Education Summit in Auckland.

Labour promised $6 billion of extra spending on the education sector over four years, although $2.5 billion of that has already been taken up to fund stage one of the universal free tertiary fees and training policy.

That means that there is only an extra $3.5 billion for additional education spending over four years - or an average of $875 million a year, which will have to fund new measures such as counsellors in schools, inflation adjustments and pay increases.

The fees-free funding was baked into the Government's books in December - and Ardern makes a plea about that event five months ago, the December mini-Budget.

"I wouldn't want people to forget that, " Ardern says.

The effects of its centrepiece, the families package, won't begin until July.

"This Budget alone isn't the complete signal of where we are heading. The mini-Budget and the Budget together is."

Well she may be promoting the mini-Budget because it was essentially Labour's biggest-ticket items this term, concentrated in the 100-day plan: the families package ($5.5 billion over four years), Kiwibuild ($2 billion), resuming contributions to the Superannuation Fund ($3.3 billion), and the tertiary funding package ($2.5 billion).

All up, Labour's 100-day plan will cost $4.9 billion over four years, as costed by Treasury in the mini-Budget.

Some of the biggest ticket items in next week's Budget will be for coalition and support partners.

Ardern with Robertson and Davis, as friends and colleagues gather at a barbecue at her home in Pt Chevalier, Auckland, the day after the election. Photo / Brett Phibbs
Ardern with Robertson and Davis, as friends and colleagues gather at a barbecue at her home in Pt Chevalier, Auckland, the day after the election. Photo / Brett Phibbs

The grandaddy of this week's Budget announcements, Winston Peters' $900 million over four years for Foreign Affairs, will deliver 50 new diplomats and a $700 million boost in overseas development assistance.

But even that pales compared to Shane Jones' fund for regional development projects, $4 billion over four years.

The Green Party will get some big gains from the Budget, including the $100 million Green Investment Fund to stimulate the growth of low-carbon investments.

And Conservation Minister Eugenie Sage is today set to announce the first of the boosts to her portfolio negotiated in the confidence and supply agreement.

After six years of deficits from the effects of the GFC and Canterbury earthquake, former Finance Minister Bill English delivered surpluses, and Finance Minister Grant Robertson has pledged to continue with surpluses.

Simon Bridges, the new National leader, says Labour has National's economic management to thank for it being so flush.

"Despite their whining about how hard it is to be a minister and do things, they've got $34 billion in new funding that they can allocate over the next four years.

"But what is also true is that they have also made a lot of promises… they are vigorously at the moment trying to lower expectations.

Bridges expects to see more of what he calls "lazy spending" in next week's Budget, meaning universal instead of targeted spending at people most in need.

Within that definition, for example, he includes the new winter fuel payment of $700 for couples and $450 for singles, available to millionaires aged over 65 as well as the needy, as well as a free year of tertiary study or training, and child benefit payments for all newborns.

"It's easy to spend other people's money," he says.

"Grant Robertson has the most enviable books that a finance minister in the Western World can boast at the moment.

"It is New Zealanders' hard work and, if we do say so ourselves, the good economic management of National that has got us to the position of where we are."

The Budget next week will set out more than $85 billion in operational spending for the next year to run schools, hospitals, Government departments and for public sector pay rises.

Over and above the baked-in funding for the 100 days policies, the Government has $34 billion in discretionary funding to spend over the next four Budgets, according to the allowances it published in December – which may be adjusted in next week's Budget.

Back in December, it set itself an extra $2.6 billion allowance for this year's Budget – but unless it is just a one-off, it has to be allocated for future years as well.

The cumulative effect of this $2.6 billion, and operating allowances of $1.875 billion for the following three years, is an additional $21.65 billion. National's equivalent figure from pre-election updates is $17.53 billion, or $4.12 billion less.

Likewise, for capital allowances, Labour has allocated $12.6 billion in new capital allowances over four years for new schools and hospitals, transport and other infrastructure, $1 billion more than National.

But overall, the Budget will allocate $42 billion for capital spending over four years, $10 billion more than National had been planning.

Robertson has had several sources for extra spending money than National.

The Government stopped National's tax cuts, which would have taken effect in May this year, which freed up $8 billion for future Budgets.

It has identified $700 million of spending over four years as not worth continuing and has been reallocated, and that climbs to $1.4 billion when estimated gains from the so-called Amazon tax, going after tax dodgers and multinationals are factored in.

The Government coffers have had a $900 million windfall higher than forecast in the December opening of the books.

And the slower debt track (getting net debt to 20 per cent of GDP by 2021-22, which is two years longer than National) allows Robertson to borrow more money if the economy is growing fast enough.

While the Government wants to see the Budget framed in terms of addressing underfunding, former ANZ chief economist Cameron Bagrie, now of Bagrie Economics, disputes that, certainly in terms of capital spending.

Ardern gives a pre-budget speech at an event in Shed 6 last Thursday. Photo / Marty Melville
Ardern gives a pre-budget speech at an event in Shed 6 last Thursday. Photo / Marty Melville

Examining capital investment of the last National and the previous Labour Governments, he says it was a fairly constant 2.5 per cent of GDP under both Governments.
For operation spending, there were tougher decisions to be made.

"New Zealand went through a double-dip recession," he said. "We got whacked once because the economy blew up domestically because interest rates were ratcheted up, and then we got hit by the GFC, and then we got knocked down again by the Canterbury earthquake."

The books were not in great shape and tough choices had to be made.

"The luxury that the incumbent Government has got is that the books are in damned good shape so that provides options, and you are better to have options than not have options.
"Unfortunately between 2009 and 2015, we didn't have too many options."

Unlike Ardern, Bagrie does not think the Government has a plan that gives sectors under transition enough certainty.

"They don't have a plan. They've got aspirations and they've got goals and the goals are admirable," he says.

"We know we've got major problems in regard to income inequality, housing affordability, environmental and climate change issues need to be a lot more front and centre," he says. "Everybody is with the programme… The only issue, how are we going to get there."

Simon Bridges, the new National leader, says Labour has National's economic management to thank for it being so flush. Photo / Mark Mitchell
Simon Bridges, the new National leader, says Labour has National's economic management to thank for it being so flush. Photo / Mark Mitchell

The longer uncertainty rolled on, the greater chance that firms wrapped themselves in cotton wool and did not invest.

"And the last thing we need at this juncture of the cycle is for businesses to wrap themselves in cotton wool."

Ardern is mindful that business confidence is not what it could be and changing perceptions of Labour is a "personal crusade" of hers.

Her message was that her Government was "rebuilding some strong foundations".

"But I equally know that we have to demonstrate, whilst it is possible to reinvest in those core services, that it is easier for someone to access a hospital when they need it or to be assured that their kids' local school has everything they need to do the best job they can, that they also want to know that I'm going to keep the economy in check.

"That's the balance of this Budget and that's what this Budget does."

LABOUR

-Boost to special education
-Boost to early childhood education
-Homeless package $100 million
-Health funding boost ($8 billion over four years)
-Transport funding plans

NEW ZEALAND FIRST
-Provincial Growth Fund $4 billion over four years
-Overseas aid $714 million
-1800 new police officers
-Free annual health check for seniors
-100 million trees a year

GREENS
-$100 million Green Investment Fund
- oost to conservation funding
- Incentives for sustainable land use
-Family violence funding $76 million
-Insulation of more houses