Budget surpluses are Robertson’s aim but well-being pressures will test his prowess

Finance  Minister Grant Robertson has headed for Washington for the spring meetings of the  IMF  and  World Bank,  as  well as  for  talks   with other   finance  ministers  and  senior  US  government  officials.

Despite  the darkening cloud  on the global  economy   Robertson  is  gung-ho  about the  state of the  NZ  economy,  although  he   concedes that, as an outward-facing export nation,

“ … NZ is not immune to this global uncertainty, and we have to bear that in mind as we transition to a more productive, sustainable, and inclusive economy”.

In  Parliament  before   his  departure for  Washington  he cited reports which indicate the NZ economy continues to out-perform its international peers. 

He  reckons  it is great to see the relevant strength of the economy recognised,

“ .. but we are conscious of the impacts of a global slowdown, and we are getting on with implementing our plan for a more modern and resilient economy that is fit for purpose in an uncertain global environment”.

Brushing  aside  an interjection  from  National’s  Gerry  Brownlee (“who will run the government?”),  Robertson  says   his  mission  will provide an opportunity to discuss current and potential challenges to the international economic outlook and what this may mean for NZ.

It is a timely trip to gauge thinking as these clouds gather on the international economic horizon, but also to reinforce the strong fundamentals of the NZ economy and our credentials as a place to do productive investment  and business”.

With   his  “well-being” budget  now  very  much in  the frame,  and  due  for delivery in late  May.  Point of Order  believes the Finance  Minister – for  all his  ebullience – may be  under-estimating   just  how  difficult   it will be  to  deliver  on  his promise of  a   “productive, sustainable  and  inclusive economy”.

Critics   have been  banging on  for  some  years  about  NZ’s  inability to  raise  its productivity rates, and  many see  an inherent  conflict   between  raising productivity and  increasing  sustainability (if the  latter means reducing agricultural  emissions, eliminating  fossil fuel production and cutting irrigation).

Labour  elements  in the coalition  have  made no  secret  of  their drive   to  increase  spending  on  education, health  and the  social  sector generally.

But  as  Education  Minister  Chris   Hipkins  is finding,  meeting  the demands of teachers  could prove  far  more expensive than  he ever imagined.

Similarly  Health Minister  David Clark  is  scrabbling to  stretch the  health budget to  meet  not only the  government’s  goals  but  satisfy the  demands   of  doctors,  nurses,  midwives,  and  whoever,   in the  health sector  as  well  as  easing the pressures on  DHBs  and  Pharmac.

Then  there’s  the  unexpected  costs  – for  example – of the  buyback  of  weapons  under  the  proposed   new gun laws.  Some estimates put that  as  high  as  $500m.

And  what about all those inquiries  and taskforces, with their $1000 a  day chairpeople? Plus the expanding budgets   for   Royal  Commissions?  (Let’s  not  mention  the soaring costs   for   such   schemes  as light  rail in Auckland  and the  Kiwibuild   wreck).

For  Robertson,  who  has  made  sticking   to  budget surpluses a  priority   in his  oversight of  the economy,   it must feel  as  if they are coming at him  from  all  directions.  He   could  be  regretting  the  $1.3bn   splashed   out  on  student  free  fees,  or  the  $3bn  on the  provincial  growth  fund  (which  Shane  Jones appears to  be using as a  re-election  fund  for  NZ  First).

In the  wake  of  the  Christchurch massacre,  the  pressure  on  the  police  budget  will be  severe.  Extra allocations  will have  to  be  made  for  the huge   security  screens  having to be  mounted for  events  like Anzac  Day.

There  are  question marks,  too,  about   the  funding  of  other security  agencies   such as  the  SIS.

Labour    has  made   a rod  for  its own back   with    every   minister  parroting   rhetoric  about  under-funding    by   the  previous  government in   virtually   every  state  activity.  That  means    ministries  will be  demanding  more funding  this time  round  (except  for   Foreign  Affairs    where  Winston Peters  got  in  his  bid  last year).

 The  education  sector  offers  an  interesting  case  study.   For  teachers  in  the primary  sector,  the government’s most recent offer amounted to almost $700m over four years, with an average increase of around $10,000 after 24 months for the vast majority of teachers.

The Employment Relations Authority described the offer as “handsome and competitive” and the NZEI claims as “unrealistic”.

Nevertheless teachers are threatening  more industrial  action.  The  NZEI  insists the  government’s offer  still  leaves  teachers   trailing  by  3.9%  with  their peers  (whoever they are)  in pay parity.   The NZEI argues  their claim  would  mean an outlay of  $900m  over  four years.

The  following  exchange  in Parliament  is  instructive:

Nikki Kaye: Is he completely ruling out increasing the government’s funding envelope for primary teachers; and if not, how does he expect to break the stalemate?

HIPKINS: Yes, $700m is worth more than all of the settlements reached under the previous government put together.

Kaye: Why won’t he reduce teacher ratios and provide the further additional learning support that he promised in Opposition; or is he just a lion in Opposition and a mouse in government?

 HIPKINS: This government—

SPEAKER: Order! Order! No—the member will resume his seat. That question’s ruled out.

HIPKINS: I raise a point of order, Mr Speaker. I should be allowed to answer the first part of the question, otherwise it becomes a very one-sided exchange.

SPEAKER: Ok.

HIPKINS: This government has already spent half a billion dollars extra on learning support, so I utterly reject the premise of the member’s question. This government is delivering where the National government chose many, many other things to prioritise well ahead of teachers and kids.

Kaye: Is he saying to parents and students who are facing a third round of strikes that the ministry won’t settle because he refuses to shift on further additional funding for learning needs, workload, and recruitment issues?

HIPKINS: No.

The  minister  went  on  to  detail the pay increases currently on offer as part of the negotiations: for around 30,000 primary school teachers, they would receive three lots of 3% pay increases, plus an additional higher salary step for those on the top of the salary scale, (which is the vast majority of primary school teachers),  amounting to an additional 3%—so around 12% overall.

The teachers have also been given the choice between bringing forward the timing of some of those pay increases and having additional classroom release time—an extra 10 hours of classroom release time.

For the  record,  if  the NZEI demands  were  to be  met in full,  it would cost around  $2.5bn annually.

The teachers’  union,  now  one of the  most  militant in the country, seems to be convinced  a   Labour  government will  succumb  to  its pressure.   It  may even  see  it  as  payback  for the  support  given to  Labour in  the  last election.

The  pressure in  the education  sector  for  extra funding  is  not coming  just from the  teachers.  The reforms  proposed  by   Bali   Haque’s  taskforce,  with the  establishment  of   about  150  hubs,  would  add  substantially to  administrative  costs. And the  polytech  sector  is pushing  back  against  the  costly changes  proposed  in that sector.

All  a  bit of  a headache  for  those  writing  this year’s  budget.

So  good  luck  to  Robertson  as he works on  his  sums.  Let’s hope  he can succeed in putting  NZ’s  economy  on  the road to  a more productive, sustainable and inclusive  future.

We  are not holding our breath.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.