Government's Budget takes wind out of Opposition sails

The budget announced this week was one that certainly took the sting out of the ability for the Opposition to gain ground in the lead-up to the 2014 election.

Labour and the Greens have, over the past couple of years, sought to regain control over the battlefield of social welfare and housing. Just as it appeared they were the parties offering the greatest change, the Government used its advantage of incumbency to propose measures that addressed those areas, but did so in a way befitting a realistic government rather than an idealistic opposition.

At the Labour Party conference in November 2011, David Shearer announced his big housing plan: to build lots more homes for lots less money.

Apparently, he was planning on capitalising on economies of scale that no other private investors could envisage or access and thereby drive down prices by around 25 per cent. Most rational observers debunked that as a pipedream. That said, it was the type of policy that would win easy votes, appealing to instinctive desires for cheaper housing.

National's Budget capitalises on the same policy area, but in a manner that seems far more sensible. The Government affirmed its commitment to a housing accord agreed with the Auckland Council to allow for the fast-tracking of the consenting process for new subdivisions. That will likely be applied to other areas of the country as well. The Government also indicated a willingness to take more active measures to reduce the risk of a housing price bubble.

The initiatives presented included a memorandum of understanding with the Reserve Bank to give the Government the opportunity to place limits on housing debt where and when necessary. That is the type of measure which pre-empts problems that can occur as the outlook improves and we move toward surplus with, currently, a limited housing supply.

The Budget was not perfect - policies such as that making it easier for start-up companies running at losses to reclaim those losses through research and development can be hazardous, reducing the necessary downside risk to police investment decisions.

That said, it was politically astute, gaining ground on the leftist parties in social welfare areas of policy, too. Bill English indicated a potential expanding of the interest-free loan programme to low-income households and the Government is planning on using mass purchasing schemes to supply cheaper whiteware for beneficiaries.

The efficacy of such programmes is questionable: by what measure will the need for specific items of whiteware be weighed against other needs of beneficiaries?

But its intention to diffuse the storm of populist policy on the left from Labour and the Greens was made clear from the reaction of David Shearer. The leader of the Opposition responded with a speech packed with pre-prepared sound bites.

He began by claiming English had presented a "blackjack budget ... that ... stacked the deck against ordinary, hardworking New Zealanders". The speech lacked substantive response to the key areas of the Budget, focusing on old ground of pokie machines and convention centres, for example.

That was understandable given that the Budget claimed a lot of Labour's traditional ground - that which Shearer had clearly planned to speak more strongly on, evidenced by his anecdotes about "the couple I know of who are approaching 40, with two kids, who still cannot get into their own home". But his expectations of stable ground there were shaken by English's speech.

Mr Shearer's anecdotes and metaphors were eloquent, at times annoying, but certainly were delivered with the heart required to actually re-affirm his desire to lead. He spoke with passion, but content-wise the National Government won the day. Labour's leadership may have become more fortified as Shearer sat down to the exuberant applause of his caucus.

This Budget may have pushed forward David Shearer's position as leader of the Opposition, but its substance was strategically sound in pushing back the Labour Party's drive toward government.