Simon Wilson: Chewing over the Budget with Judith Collins and poverty researchers

Leader of the Opposition Judith Collins flanked by shadow treasurer Andrew Bayly at the Hilton Hotel in Auckland, responding to Labour's 2021 budget. Photo / Alex Burton

It was club sandwiches and little slices of quiche at the Mt Albert Community Centre on Friday, where the Child Poverty Action Group (CPAG) was holding a debriefing "brunch" to explain its take on the Budget.

Downtown at the Hilton Hotel, Business NZ members tucked into their chicken and two veg as they waited to hear guest speaker Judith Collins, the National Party leader.

Honestly, the sandwiches looked a better bet.

Khylee Quince warmed up the CPAG crowd. She's the newly appointed dean of law at AUT University, the first Māori so honoured by any law school in the country, and she made a point of saying she was not only proud of that, but also proud to be a local.

"I grew up in Mt Roskill,"she said, which is close enough to Mt Albert to qualify. "I was a Brownie here, so if you want your socks darned or someone to light a fire with a couple of sticks, come to me."

She called the Budget the Hau Ora Budget: the breath of life, for introducing the largest increase to benefits in a generation.

AUT dean of law Khylee Quince. Photo / Jason Oxenham

"Courage," she said, quoting kaumatua Moana Jackson, "is the deep breath you take before doing something difficult."

Then she said she thought the budget was "adequate but not transformative, which in my line of work as a teacher, means it gets a B-".

Judith Collins kicked off her speech with a joke, too. A cosmetics industry conference was in the room next door and she said she'd thought hard about which event to go to. Maybe it was the fact there were almost no women at the Business NZ lunch, but the joke didn't land.

Several times in her speech, it felt like Collins was making a point of exploding old National Party ideas.

"Don't get me wrong," she said, referring to the new spending on benefits. "I actually think some of it was needed."

Boom. That was an old idea blown up. Judith Collins is not Ruth Richardson.

But then she said, with that Collins twinkle in her eye: "We've got a Budget that looked down, not up. Eyes down, don't look aspirational."

What did that mean? The Budget looked down, to address the problems of people at the bottom, so therefore wasn't much help to anyone else. Also, Jacinda Ardern and Grant Robertson are not aspirational.

But also, if you look down you see beneficiaries but it's only when you look up that you see people with aspirations, aka the people in the room today: businesspeople.

It's an odd idea, that "aspiration" is a state of mind that belongs to business.

Collins noted that there was also a focus in the budget on debt. "I'm not so worried about debt," she said, and gestured at the room. "You're in business, you understand the role of debt."

Leader of the Opposition Judith Collins at the Hilton Hotel for a post-Budget business lunch. Photo / Alex Burton

Boom. Paying down debt was the golden rule of the Key/English Government.

"But," Collins added, "the Budget had nothing in it about expanding business with that debt."

It's another odd, if very common, idea that business is affected only by policies explicitly targeted at business.

Economist and former National MP Marilyn Waring had a letter in this paper the next day pointing out that raising benefits is very good for local businesses, because it leads directly to increased spending.

Neither Collins nor Business NZ boss Kirk Hope mentioned that on Friday.

Collins talked a lot about "IT" and "high tech". This was a central theme in her election campaign last year and she's still strong on it. New Zealand's future lies in its potential to build a modern, science-based, future-focused economy fit for the 21st century.

Advances in dairy are her go-to example.

After the speech, Phil O'Reilly, who used to be the boss of Business NZ, got up to ask a question. The OECD had just published a survey, he said, asking businesses in its member countries to name "the number one issue coming out of Covid".

He paused. Collins waited. The room waited.

"The answer," O'Reilly revealed, "was climate change."

Collins hadn't mentioned it once.

She responded to O'Reilly by pivoting back to the importance of science and suggested it was "an interesting fact how green our dairy industry is compared to the rest of the world".

National's finance spokesperson Andrew Bayly was there, and he took the mic.

He said: "There's no doubt we have to decarbonise the economy".

Boom! Coming from National, was that the most explosive idea of the day? He made the remark with such a throwaway delivery, it was hard to know.

Technology is Collins' answer to the most intractable problem in the economy: low productivity. That, and keeping migration open to provide low-paid labour in sectors like retirement homes and horticulture.

The trouble is, although she's trying to dispense with some old ideas, her formula for success is also old. Dreams of technology accompanied by low pay have been the orthodoxy in this country ever since the Knowledge Wave conference in 2001, and that orthodoxy has failed.

Leader of the Opposition Judith Collins at the Hilton Hotel for a post-Budget business lunch. Photo / Alex Burton

It's not that the value of high-tech is misplaced. On the contrary. But just saying the words doesn't change anything. And as Collins now knows, the Government has embarked on a different approach to boosting productivity.

The new policies – higher benefits indexed to wages, fair pay agreements and limits on low-paid immigration – are related. They will, in theory, combine to push up wages, forcing employers to get more from the workforce by investing more in training as well as technology.

The result: an economy with higher wages and greater productivity, and probably better tech too, alongside the social good of having fewer people in poverty.

We don't know if it will work. But Labour has a reform plan now.

What's Collins got? She's stranded in her own party, between the old Key regime, where she was never in the inner circle, and the new generation pushing up behind her. It's going to take more than praise for dairy farmers and Rocket Lab to nail her purpose, and it doesn't help when she forgets about the climate crisis.

Back at the CPAG session, researcher Janet McAllister said the Budget was like a movie in three genres: blockbuster, unexpected romance and horror.

Blockbuster, because benefits are finally getting a real boost.

Unexpected romance, because the new benefit rates will especially help a group that has been badly left behind: couples with kids.

"There are people who split up just because they can't afford to live together," she said. "Maybe they won't have to now."

And horror? That's the "social insurance" the Government, unions and Business NZ are working on.

McAllister said insurance that pays you a proportion of your former salary might work for people who have been in regular employment with reasonable pay, but could be disastrous for everyone in casual work. There's an awful lot of people in the gig economy now.

And she pointed out that welfare reform is not just about benefit levels. The culture of the Ministry of Social Development and many of its regulations are still geared to punishment, not support.

And yet. The Budget was something new and almost giddy for her audience: mainly social scientists and activists, many of whom have spent the past 30 years working to undo the damage done by Ruth Richardson's benefit cuts in 1991.

Khylee Quince said it with her Hau Ora remark: hope was in the air. The Government had started to listen.

"We have got this far," McAllister said, "because of the people in this room."