Outside of Parliament, the cold water thrown over the Wellbeing Budget should dampen Robertson’s rapture

Finance Minister  Grant  Robertson   could not disguise the rapture that had seized him, when   he was questioned this week in  Parliament  on reactions  to   the budget.

He  was  excited,  apparently,   because  the government  had received  an  “overwhelming”  response from the people of  NZ to the  wellbeing budget.  There had  been a   vast  amount of  correspondence.

He cited   the  Salvation Army as  seeing the budget as   “a step on the path towards lifting New Zealanders out of poverty”  and the Children’s Commissioner  likewise  believing  it “takes seriously the need for a step-change in the way we support the wellbeing of NZ children”.

Good stuff, then, even though it  may  sound a bit  weird  to Kiwis   who  had believed their  country’s living standards  rank  reasonably   well  against  those of  other  developed  nations.  But Robertson  had  other evidence  of  the splendidly  reverberating  reaction to  his  budget.  He pointed to the comment of  someone  he  regards as a  “global  business leader”,   Richard  Branson, whom he  quoted as  asserting the budget  to be  “a brilliant blueprint for the rest of the world.”

And then  this  from international  credit  rating agency Moody’s:

“… [the] budget highlights [this government’s high] fiscal flexibility, demonstrating its ability to raise spending while maintaining its commitment to preserving budgetary surpluses and reducing debt further over the next five years. This underpins the government’s very high fiscal strength and supports the broader credit profile.“

In contrast to those  florid encomiums,  Point  of   Order  did  happen  to  note  rather  different  responses  to the  budget.

For example, in the NZ Herald, there  was  an  op-ed feature  from  Robert MacCulloch, who holds the Matthew S. Abel Chair of  Macroeconomics   at the  University of  Auckland.

“The  well-being budget was a profound  disappointment. It  will weaken the cause of those well-intentioned  campaigners  who are fighting  for improvements in the quality of life of all Kiwis. Why? Because it  did little to strengthen the facts that actually support well-being in NZ.

“NZ has  long  ranked highly  out of  149 countries  in terms of  national  well-being…On the other hand  NZ  rates poorly   in terms of productivity growth. The  result has been a  large gap  in GDP per capita  opening up over the past several decades between this country and  Australia, as  well as the US”.

MacCulloch   goes on to  contend  the country  is at a  crossroads. The living standards of  many Kiwis, he argues,  lie under  severe  threat.   Kiwis  now  spend longer at work than the OECD  average to make up for  their low productivity — a  good way to depress well-being.

He concludes:

“The government’s  well being agenda should build on the country’s strengths. It should sharpen  incentives for individuals to maintain the social fabric of the nation and  resurrect our eroding   status as a spacious and  affordable country that is easy to travel around. The  budget achieved few of  those things”.

MacCulloch   was  not the only authority disappointed  by the budget.  The  same  day  as  his analysis was published, the  Dominion-Post  gave space to  Bruce  Cotterill, a  company  director and  author  of  the  “The Best Leaders Don’t Shout.

The  Finance Minister   may have  choked on his morning coffee if he read Cotterill’s piece.

“The  well-being budget  left me uninspired and disapppointed.  Don’t get me wrong. There have been big allowances made for improving mental health services, which are long overdue. A substantial investment into the hospitals of our growing population is a good thing too.

“It’s just that when it comes to government services, and health in particular, I’m not convinced that much of the new money will get to the patients, and the others that need it.  To me, critical to well-being is a society where people are able to have aspirations and the education to support those goals.  It also means economic growth powered by business and industry that’s supported by global demand for the goods and services we produce.

“When business is growing and people are capable, we get a society that looks after itself.  Against that background, the trouble with the budget announcements is that we just parked another raft of expensive ambulances at the bottom of the cliff.  In other words, while I don’t want to diminish the real needs in terms of mental health for example, the budget focus seeks to help those who have developed mental health problems, rather than stopping those problems from occurring. 

“Firstly, governments throwing a lot of money around is a inefficient way to get things done.  The trouble with most of this spending is that a lot of it will be chewed up with establishment costs and bureaucracy.  By the time they set up a couple of new departments within various ministries, design a new logo and letterhead, lease some offices and refit them, and establish the ministerial reporting lines, there could be little left for those who need the help.

“What if we put some funding into ambulances at the top of the cliff?

We can fix a lot what’s wrong, or even stop some mental health issues from occurring in the first place, by building an economy that is aspirational and growth-minded.The foundation of doing so is education.

But education is a mess….

“Our economy suffers from having a plethora of businesses doing low value stuff at a low level of productivity.  We continue to export logs with the bark on while we import kitset timber furniture or modular houses.  If you have the luxury of owning a house, and you need new window frames, just ask why they will take 12 weeks to be delivered.  It’s because they’re made overseas. And this is a country that exports timber. Lots of it. How stupid is this?

“This need to build a productive economy is where governments, and the Budgets they so willingly trumpet, should start, but often fail.  Let’s get education working. Build kids up. Make them believe in goals and aspiration.  Feed them accurate information on the state of the world and give them the skills to participate in that world. Enable them to chase and achieve their dreams. 

“And then let’s support and build a business community that can take on those youngsters, give them a career, encourage their greatness and celebrate what they can achieve.  Wellbeing doesn’t happen because governments throw money at underprivileged minorities.  Wellbeing happens when you create a society and an economy that enables people to help themselves”.

Point  of  Order   doesn’t imagine  Robertson  and other ministers  will be losing any  sleep  over these  commentaries.   But  the hard truth is that  NZ’s  low  productivity needs sharp  improvement if  the well-being goals are to be  reached.