Why several Labour MPs (whose futures are in electoral jeopardy) will be hoping for miracles in this year’s Budget

Finance Minister Grant Robertson managed  to  put  a  bold  face on  his  fiscal management  last week  when he  presented  the  latest set of Crown accounts, saying they   “are continuing to reflect the strong position New Zealand is in to manage the challenging global environment”.

Tax revenue in the  nine months  to March  was $2.7 bn above forecast at $78.6bn, due to better-than-expected corporate profits and a strong jobs market.  This was partly offset by lower GST returns.

Core Crown expenses were close to forecast at $92.6bn.

The operating balance before gains and losses (OBEGAL) deficit was $8.1bn, $4.1bn  below that forecast in December’s Half Year Economic and Fiscal Update.

Robertson commented approvingly:

“This result shows the strong position New Zealand finds itself in, despite the uncertainty and volatility of the Ukraine war, the pandemic and ongoing supply chain disruptions in critical trading hubs like China. It is further evidence that our strong health response has been the right one for the economy”.

Robertson concedes there are significant challenges for families and business right now.

“But we face those challenges with record low unemployment, good growth levels, lower debt than most and the Government books in a strong position”.

 Robertson’s  sunny  optimism cannot  hide  the  dark  clouds  on  the  horizon,  nor  indeed  the moaning  at  the  bar  whipped  up  by  the  Opposition over the cost-of-living  “crisis”.

As    the  Newshub  Reid  Research  poll  last week  showed, 68% of  NZ’s  those  sampled  are looking  for  a  tax  cut in  the  Budget.

The  issue  has  become so  intense,  some  of  NZ’s  most  alert pundits  reckon Robertson’s  credibility  as fiscal manager  hangs   on it.   And  Labour, already  behind  National  in  public  polls,  could  find  itself  sliding further.

The  problem for  the  Ardern  government  is  that elections  in  the  MMP  era   are  won,  and  lost,  in   the  middle  ground — and  these are the electors who  are  the  hardest hit  by  surging  inflation.  It  is  running  at  its  highest  rate  in  31  years, something  so  unfamiliar to  many New Zealanders they  cannot believe  the  price  tags on  goods  at the  supermarket.

They  tend  to  become  quite  savage  when  Robertson  tells them “2022 continues to be a challenging year for many New Zealanders facing the impact of global inflation”  and  then  adds “but our fiscal position is strong”.

Robertson   will  be  adding    salt  to the  wounds  when  he  announces   a  big   spend-up  on  infrastructure   and climate  change  measures  in  the  Budget.

When  the  AA  warns  that  petrol might  reach  $4  a  litre  and the  Reserve  Bank signals  it  will  continue to  raise  interest   rates,  it  seems  Robertson’s  assessment  the  current  surge  in  prices   will be  short term   will  echo  hollowly  in the  ears  of  New  Zealanders.

So  those   Labour  backbenchers  facing  foreshortened  political  careers as  the  polls show the  Ardern government’s  popularity fading sharply  will be  praying  for Robertson to  work  a  financial  miracle  in  the  Budget.

Sadly,  Point  of  Order thinks  miracles  may  be  out  of   reach  for the  Finance  Minister –  despite  the  competence  he    has  shown.

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