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.
“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.