If you are asking whether today’s Budget will win Labour the election in October, you are asking the wrong question.
Budgets are more about narratives and less about numbers, especially in an election year.
And the narrative around this year’s Budget will certainly
not diminish the chances of Chris Hipkins and Grant Robertson getting a third term.
They are betting that voters are realists and pragmatists and accept that this is not the time in which there can be jam for everyone.
The massive demands on the public purse to deal with the cyclone recovery have constrained the Government just as the country was emerging from Covid.
A great proportion of new spending in this Budget is just on paying for the basics. A full 79 per cent of new spending this year is just to keep up with cost pressures, compared with 69 per cent last year.
Hipkins was right to dub it the bread and butter budget at the outset. But the discretionary spending has been well targeted. There is jam for some, marmite for others, and plain bread and butter for most.
The expansion of 20 hours’ free early childhood education from 3- and 4-year-olds to 2-year-olds could mean a weekly saving of $133 a week for affected families.
Free buses for kids aged under 13 will be popular.
It is a Budget in which few people go backwards, except for the very wealthy whose income is funnelled through trusts.
This was the Budget surprise in which the tax rate for trusts operated by the very wealthy will increase from 33c to 39c except in a few circumstances. The boo-hoos for them will be minimal.
Everyone will benefit from the move to scrap the $5 co-payment for prescriptions.
There was very little hoopla over health spending because it got $11 billion in multi-year funding last year.
There has never been greater pressure on a Government to simultaneously spend more on cost-of-living relief and to spend less to dampen down the global phenomenon of rampant inflation.
Treasury’s forecasts of inflation falling to 3.3 per cent in the coming financial year, followed by 2.5, 2.3, and 2.2 give genuine cause for optimism.
While they might seem rather heroic forecasts, they are Treasury’s, not Robertson’s or Hipkins’ - and the last time I accused Treasury’s forecasts of being heroic, they came true.
The big spending is predictably on infrastructure and in the immediate term, on cyclone recovery. But the $6b tagged for the new National Resilience Plan will also look at longer-term infrastructure planning.
As Robertson said, it is a straightforward and practical Budget for less than simple circumstances.
But it is a sound platform on which Hipkins will be able to launch an optimistic plan in an election campaign.
