Willis would not say whether they would be what National had promised in the last election.
The only clue as to their size was that Willis said the operating allowance would be “less than $3.5 billion” for this Budget, and tax cuts would come out of that allowance.
It is possible even Willis doesn’t fully know the full details of tax cuts, given they have not yet made it to Cabinet, and are quite possibly still bogged down in talks with coalition partners, who have been sceptical about how to pay for them in the past.
On that note, Willis said they would be in line with “coalition commitments” rather than “campaign commitments”.
In terms of other hints, Willis noted front line services would benefit (naming health, education and law and order), while Pharmac also needed a hefty injection and would get it.
Otherwise, the Budget Policy Statement did not give many answers as to what the Budget would contain, or how much the Government was going to let itself spend in new funding or when it aimed to get back into surplus.
But it did give a steer on Willis’ approach to Budgets.
Willis went to some lengths to emphasise that she intended to take a slow and steady approach to wrangling the books back into order after the economic shock of Covid-19.
It was a clear attempt to dampen any perception she was launching into austerity measures or slashing and burning for the sake of the figures in the books. She said the Government would not “overreact” to changes in the forecasts.
Instead, beyond tax cuts, she dampened expectations of which of the Government’s policies might get the go ahead in this year’s Budget.
Both the spending – and the cutting – would be spread out over time.
On the return to surplus, Willis said “we won’t be chasing a surplus in any one year at any cost. Particularly when that cost would be to front line public services.”
It led to the question whether she was trying to distance herself from any comparisons with former National Finance Minister Ruth Richardson and her benefit-slashing 1991 Budget.
Willis didn’t even hesitate before saying yes.
However, there were some echoes of another former Finance Minister: Sir Bill English, who built the books back up after the Global Financial Crisis.
Willis’ approach is similar to his: try and chip away at debt, try to ensure you leave a cushion in the event of any future economic shocks, don’t change too much all at once.
Willis has done some things differently. For a start she has shed the traditional but not always useful Holy Grail of setting a target date to return to surplus.
Willis was blunt about the prospects of a return to surplus, pointing to figures showing a sharper, earlier economic downturn than previously expected and $13 billion less than previously expected in tax revenue over the next five years (even before the tax cuts come into effect).
She said getting back into surplus by 2026/27 was “almost certainly not achievable” and getting there by 27/28 was “achievable, but not a given.”
Willis also shed the practice of setting a maximum Crown debt level: instead she said the goal was first to get it to below 40 per cent of GDP and then keep it between 20 and 40 per cent.
One other potential difference could come in the approach to surprises. English didn’t like to spring Budget surprises (with the exception of the GST increase to pay for tax cuts). Asked if there would be any tax moves that might take people by surprise, Willis said she didn’t think so.
Asked to sum up the Budget in a word, Willis said it would be a Budget that “delivers.”
The tax cuts were a non-negotiable for National: it does not want to put “broken promise” down on the ledger for the first quarterly action plan that Prime Minister Christopher Luxon has said he will soon announce.
Claire Trevett is the NZ Herald’s political editor, based at Parliament in Wellington. She started at the NZ Herald in 2003 and joined the Press Gallery team in 2007. She is a life member of the Parliamentary Press Gallery.
