The socks for Christmas Budget - better than nothing, but not much

Friday, 20 May 2022

Like getting socks for Christmas, you'll take the hand-outs in this year's Budget but they weren’t on your list, Josie Pagani writes.

Josie Pagani has worked in politics, aid and development.

OPINION: Saturday, and you’re bored with the Budget. It's that “two days after Christmas” feeling. Expectations were high. Now your small pile of presents looks decidedly average.

Take the headline cost-of-living announcement of a bonus $27 per person per week over a three-month period. If you earn $70,000, you’re already $50 a week worse off after tax than a year ago, thanks to inflation.

You will only get it for a few months anyway.

Every bit helps, I guess. Like getting socks for Christmas, you'll take the Budget handouts. It’s just not what you had on your Christmas list.

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Here's what I like: More money for Pharmac. Our drug-buying agency does a great job for New Zealand, and it is always under pressure to make tough choices. This is not enough to buy all the drugs on its list, but it helps.

Post budget interview: Julie Ann Genter

I like more money for dental care. The cost of seeing a dentist is a scandal, and an inexplicable gap in our health system. But an increase in the emergency grant from $300 to $1000 won’t get you much more than a couple of fillings.

The Government is pushing ahead with a study of moving the Auckland port to Manukau. A brilliant idea. It’s a chance to build a better Auckland for the next 100 years.

There are decent cash sums for new hospitals, extra help for air ambulance services, and more for GPs and community care. Schools and housing get some extra money.

There's enough there to please most people a little bit, but no-one very much.

That's a problem for the National Party too. It can't accuse the Government of a ‘’lolly scramble’’. It's more one lolly for each person. And once eaten it’s gone. But neither can the party accuse the Government of doing nothing for the “squeezed middle”. A lolly's a lolly.

Finance Minister Grant Robertson will be pleased. His challenge was to help people buy an expensive packet of mince without further stimulating the economy. He's achieved that.

The growth of the electric vehicle market is being planned for in Taupo, with five electric vehicle charging stations installed on Rifle Range Road near the lakefront.PHOTO: ROBERT STEVEN/STUFFNOTES: EV; electric car; telsa; charging Generic stock file.

Labour didn't need an election-winning Budget this year, but it did need to reverse its decline in the polls. Voters won’t reward the party for this Budget.

Trying to be all things to everyone looks like avoiding hard decisions. Was this a climate change Budget, a health Budget or a cost-of-living Budget?

A little of all of the above sounds incoherent. Money to get people out of dirty petrol cars into clean electric vehicles. But an extension of cheaper petrol to make it easier to drive said dirty petrol car.

These are unique times. A pandemic. The highest inflation in three decades. A war. The social impacts require more creative solutions.

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Here's what I would do.

A tax switch. I would have an income tax-free band at the bottom, paid for by a wealth tax. Most people would have more cash, but it would be fiscally neutral so no further inflation and interest rate hikes.

This Labour Government was never going to do that, so it could have done a carbon tax dividend instead. The proceeds of the Emissions Trading Scheme (or a carbon tax) could be returned to households as cash, worth more than $27 a week.

Cash in our pockets helps with the cost of living, and builds support for reducing carbon emissions. We would grumble about the cost of petrol, but know we benefit in the long term.

Compare that to what the Government is actually trying to do:

It is spending $10 million to remove coal boilers from schools to save about $2.4m worth of emissions. In other words, it could have saved four times as many emissions doing something else for the same cost.

The Government could have funded close to free dental care for every New Zealander by increasing the retirement age by just one year. That would reduce one universal entitlement by replacing it with another. I know there are drawbacks to increasing the retirement age, but there are terrible consequences from mostly leaving dental care out of our health system. Most people would work an extra year to pay for their family to have free dental care for their whole lives.

National Party leader Christopher Luxon called it a ‘’backwards Budget’’. It's not really. But neither is it a forwards Budget. It's just treading water.

The prime minister’s promise that she was in politics to end child poverty will have to wait. Next year, perhaps.

Housing has become so unaffordable for poor families, food essentials so expensive, and the economy so close to recession, that by the end of next year child poverty will be heading back to 1990s levels.

The children of the 1990s are the new parents of today and intergenerational hardship is disappearing from the political agenda. Delivering more requires courage, and tough choices. Just handing out cash to the squeakiest wheels is easy.

We want more than socks for Christmas.