Heather Roy

17 May 2018

Finance Minister Grant Robertson is looking pretty pleased with his first budget, presented in the NZ Parliament this afternoon. It will keep Labour supporters satisfied – lots more money for the public service: health the big winner, top ups for education (especially early childhood), more money to house prisoners, more social housing funding and struggling families receiving a boost. NZ First and the Greens have had their own wins, in areas largely announced in the days leading up to today’s Budget. For business there is a focus on Research and Development with $1b allocated over four years giving eligible businesses 12.5 cents back for every dollar they spend on R&D.

Treasury forecasting of around 3% per annum growth on average over the next four years and wages rising on average 3.1% over the same period are pleasing statistics. The previous National government can of course take some of the glory – it was their fiscal responsibility that has given Labour a strong base to operate from. However it is interesting to see how the Government’s spending has been reached.

New Zealand Herald Political Editor Audrey Young reported “Among the Budget documents is breakdown of how the Government’s extra spending has been funded: 38 per cent from adopting a slower debt track than National; 33 per cent from reversing National’s tax cuts; 23 per cent from extra revenue from growth in the economy; and 6 per cent from cutting previous programmes and greater compliance on tax collection”

Over the next day or two the details of funding for each of the Votes will be discussed, but as an initial analysis I believe we’re seeing symptomatic relief, but no cures. A governments’ first budget gives a strong indication of the type of government they will be. Despite the work going on in the multitude of working groups investigating different policy areas, this isn’t going to be a reforming government.

Here are some examples, all health related, of what I mean by “no cures”:

  • An extra $2.2b over four years for District Health Boards to relieve increasing cost pressures. Currently 19/20 DHBs are in deficit. They will be pleased to have the extra money, but this just provides the incentive for DHBs to keep doing what they are doing now. No thought seems to being given to delivering health services differently, better community care, using technology advances to provide more efficient and user friendly care. And still 20 DHBs – far too many for a country the size of New Zealand – duplicating and costs in different ways in different parts of the country.
  • $750m of new capital to tackle some of the most urgent building problems facing hospitals. What thought has been given to whether the current hospital model best caters for our people? Our default focus on treating the sick rather than keeping people well means we aren’t looking to evolve healthcare to the next level.
  • The promised lower cost GP visits across of the boards were deemed to be unaffordable and perversely we have ended up with the right result! Targeted lower cost GP visits for community card holders is exactly where the assistance should be. Why should those who can afford healthcare be subsidized when there is a limited amount of money to go around?
  • Additional funding for 600 pop-up prison cells – this is no different from the Judith Collins shipping container prison cells. It is just another accommodation measure, catering to demand when what is needed is an examination of how to stem the increasing numbers flowing into our prisons. I wrote an article earlier in the week on why (and how) we need to treat the mentally ill and rehabilitate those with drug and alcohol addictions while they are in prison. A dedicated rehabilitation prison of 300 – 500 beds would provide much better long term value and address repeat offending.
  • Customs received a $54.2m boost over four years to tackle international drug trafficking. This will be used to enhance its policing function by employing an extra 127 staff and new equipment (an inflatable boat, mobile x-ray vans and resources for detector-dog teams). But no announcements of treating drug addiction as a health issue or tackling the manufacture and dealing of drugs (the gangs) by legalizing the environment in which they operate. The “War on Drugs” is lost but the legislators don’t seem to have noticed and keep pouring more and more money into policing a lost cause.

The Prime Minister has commented “Budget 2018 builds a better future for New Zealand children”. Symptomatic relief can provide a better short term future but a secure future can only be assured when a cure is found to what ails us as a nation.