Budget 2018: our experts react

Tim Hazledine: All supply, no demand

This was a one-handed budget - the right hand that Finance Minister Grant Robertson will tirelessly use to sign the government’s $100 billion of cheques this year. It was not an economist’s budget, for sure. We would always want an even-handed approach – demand as well as supply. So, they will pump another $3.8 billion into our desperately overstrained residential building sector, further pushing up housing costs for everyone. Why not work on the demand side of the story? Last year 100,000 non-Kiwi long-term new residents turned up here. Try halving this, and see what 50,000 fewer new bodies to shelter each year would do to house prices. $3 billion hurriedly ear-marked for our “health” (actually, sickness) sector. Why not ask and act on why so many of us are unfit and unwell? $300 million more for the police – why so much crime? A ten-year $28 billion spend-up on transport infrastructure in Auckland – why so many trips? Could active demand management improve the situation at a fraction of the cost? Against these whopping numbers, the $6 million cut in Tourism NEW ZEALAND’s promotional budget is just a tiny step in the right direction.

Hirini Kaa: New money no cure for old pain for Māori

This budget is Māori coming up gasping for breath. But the old weights that were tied firmly around our feet are still there, waiting to pull us back down. Some of this budget is crucial buoyancy. The Prime Minister’s visit to the North was a powerful beginning for this government, and the Provincial Growth Fund addresses the promises made in the North and puts kai on the table in Te Tairawhiti and other areas of immense need. Injections of funding for health, housing, welfare and education is going to help address the presenting crises for Māori, even though it retains some of the stigma around beneficiaries in spite of claims of manaakitanga.

Regardless, the old weights of colonisation remain, however rusted they may be. $300m in extra funding for police comes regardless of the police policy to reduce “unconscious bias” (racism) not working so far – and the impacts will be felt hard in our communities. The Waikeria mega-prison could still go ahead as New Zealand’s latest living statue to colonisation.

The government’s innovation in the form of the Māori Crown relations portfolio is a nod towards the Waitangi Tribunal’s magnum opus report Wai262 Ko Aotearoa Tenei and fulfilling the potential of Te Tiriti o Waitangi post settlement. However it is just that: a nod. The risk is this innovation becomes a messaging exercise to keep the Māori seats in thrall. And there is noticeably no significant mention of Whānau Ora, the Māori Party-led experiment in cutting those weights away. As noted, this is a problem as old as New Zealand. Once in power, governments of all stripes believe ideologically in the power of the State. And in Māori experience, that State has been weight.

Originally published in The Spinoff.

Susan St John: Why aren’t the poor more of a priority?

Let’s be clear, the family poverty inherited from the last decade of entrenched poor policies, sheer neglect or deliberate attacks on living standards won’t be fixed overnight.

The budget delivers much to applaud: better access for low income families to primary healthcare; housing; social services, and critical infrastructure. But does it really show a grasp of the enormity of the income and wealth gaps?

Grant Robertson talked of surpluses and debt reduction to future-proof the economy for future shocks. We have a massive social shock of unsustainably low incomes that needs urgent attention. An earthquake might dislocate society in an instant, but this social shock has crept up on us with nonetheless comparable significant and disruptive effects.

The budget speech insists: “Our economy must be more inclusive, too. This means a society where everyone has an equal chance to fulfil their potential, to contribute, and to live meaningful, connected, healthy and fulfilling lives.”

The 140,000 children that live in families under the very lowest of poverty lines need inclusion. They will be helped only marginally in July’s families package. These families can’t wait for tax and welfare working groups to report next year.

Originally published in The Spinoff.

Read another comment piece on the budget by Susan St John published in The Guardian.

Rod McNaughton: R&D balancing act needed to lift our game

The 2018 budget held few surprises in the Business, Science and Innovation portfolio. The government had already signalled its focus on lifting R&D spending, currently around 1.3percent of GDP, to 2percent of GDP over the next 10 years. The Labour-led coalition is betting on the introduction of an R&D tax credit of 12.5percent to help stimulate business investment.

A six-week public consultation on the new R&D credit was launched last month, in a bid to have the tax credit ready in a year’s time. Today’s announcement reiterated some of the key elements of the policy outlined in the consultation document, especially the rate, and that the credit will be available to firms spending more than $100,000 a year on R&D.

The budget announcement forecasts the cost will be $70 Million in the current year, rising to $350 million per year in 2021/22. However, this is partially offset by reductions in targeted business R&D funding, which co-funds R&D investment by firms. Getting the balance right between the use of tax credits and targeted grants is important, and as yet, we don’t have a clear picture of how the government sees these two policy tools working together.

It is also important to keep in mind that the majority of R&D spending goes into salaries; so the capability of managers to innovate, and labour force issues around education, training, and attracting the best and brightest talent to make New Zealand their home are also critical to lifting Aotearoa New Zealand’s game in R&D.

Mark Barrow: What about the teacher shortage?

The Budget has shown recognition of the teacher shortage that the profession faces, and which have all known about for some time, but it has done little to address it. The allowance for an extra 1,500 teachers is very welcome, but begs the question – where will they come from? The high salaries offered by other sectors have drawn trained teachers away from the profession in droves and affected our ability to recruit.

I had hoped for more concrete measures to establish a foundation for addressing this huge issue in the medium term. It is disappointing that there are no push factors to encourage people to train as teachers – for example, additional support to encourage people to enter initial teacher education programmes. Nor are any pull factors obvious – for example, commitments to improving the pay, conditions and status of the profession which are needed to attract young people to teaching.

On the plus side though, the government has announced a comprehensive package of reviews and reforms in education, and is carrying out widespread community consultation. It is to be hoped that in this mix of changes, a more ‘joined-up’ approach to addressing teacher supply emerges.

Jennifer Curtin responds live to the Budget reading

Professor Jennifer Curtin gives a running commentary on the 2018 Budget on the 1 News 2018 Budget Special with Corin Dann.

Alexandre Dmitriev: Fund police through alcohol tax

The Government’s intention to “significantly increas[e] police numbers to support stable and safe communities” is most admirable. But, who should be paying for this increase in spending? It is a matter of police records that at least a third of all offences in New Zealand are committed in the aftermath of alcohol consumption. Why not finance additional police numbers by raising the excise tax on alcohol rather than by introducing the Amazon tax? Like any consumption tax, a tax on internet purchases is regressive. It will be most burdensome for those who have lowest income levels. For example, university students hunting for cheaper textbooks will be disproportionally affected. Perhaps, the government could wait with that embassy in Stockholm.

Senior Lecturer Dr Alexandre Dmitriev (Economics), Business School

Peter O’Connor: The budget doesn’t deliver on the transformational promise for education

There were enormous expectations within the education sector that the Budget would redress years of neglect that has crippled New Zealand schools. At one level these expectations were unrealistic, at another they were perfectly justified. Chris Hipkins is a Minister who is respected and trusted by the teacher Unions. That’s unusual. Today for some of the unions it was payback day. And it seems they feel weren’t fully paid for their support in last year’s election.

The growth in Early Childhood Education funding and in learning support will be welcomed, although it won’t really be enough to begin repairing the multiple crises facing New Zealand schools.

The biggest issue is that although there might be funding for extra teachers, it’s a profession that is having a devil of a time attracting people into it. There is little in the budget to change that. The big-ticket item is teacher salaries and what the Labour government does there will determine whether teachers keep faith with this government.

But in comparison to how education fared under the previous government, this is enormously good news for the sector.

Gone are the increases to private education and funding for ideological experiments such as charter schools. The miserly less-than-inflation adjustments have been replaced by a genuine increase in operational funding.

This budget doesn’t deliver on the transformational promise for education. But it is a beginning, a significant shift from the past and the game changer will be teacher salaries which might just come from some of that large surplus.

Robert MacCulloch: More boring, head-in-the-sand budgets?

The Prime Minister has signalled this week's budget will contain "no surprises". It may even be seen as "boring". Are the nine years of boring budgets delivered by National going to continue under the Labour Party? Is it also going to bury its head in the sand? Already more transfers to tertiary students who come from wealthy families have been announced. But these kinds of payments to the chosen ones should instead have been used to develop a long-term savings plan to empower every one. The Prime Minister should be signalling that an altogether braver solution to our failing welfare systems is to be delivered. One that enables workers to build sufficient capital of their own to fund their retirement and improve the quality of their health-care.

Read about his idea for compulsory, universal individual savings in the New Zealand Herald.