Week in politics – The Budget and the ERP: How they went down

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Analysis – It was the government’s biggest week of the year with the Budget and the Emissions Reduction Plan coming out, and neither was given much of a welcome.

Finance Minister Grant Robertson holding a copy of the Wellbeing Budget 2022.
Photo:

Finance Minister Grant Robertson presented his Budget to Parliament on Thursday with record spending spread over a wide area. The focus was on helping people cope with the rising cost of living.

The headline-grabbing initiative was the $350 payment for more than two million people earning less than $70,000, part of the Budget’s $1 billion cost of living relief package.

It will be paid over three months at $27 a week.

The petrol excise cut was extended and so was the half-price fare on public transport as Robertson pledged the government’s support for those being squeezed by inflation. Half-price fares have been made permanent for those with community cards.

A massive $11.1b has gone on transforming the health service which Robertson said had been failing for years.

There was much, much more and the best way to get your head around where the money is going is to read RNZ’s Budget 2022 at a glance: What you need to know.

How did it go down? National Party leader Christopher Luxon panned it, branding it the Backwards Budget.

In his best speech to Parliament so far Luxon rarely looked at his notes as he reeled off a litany of woes facing New Zealanders hammered by cost of living increases and having to put up with poor outcomes from a big-spending, wasteful government.

It was only going to get worse under Labour, he said.

Robertson and Luxon could have been talking about two different countries.

“Kiwis are going backwards, the books are going backwards, outcomes are going backwards,” Luxon said. The $350 was “a temporary payment to a small group of people”, a band-aid response.

Luxon pledged a National government would turn the country around when it came to power in 2023 and give young Kiwis opportunities and reasons not to go overseas.

The Greens backed the Budget but co-leader Marama Davidson said it did not do enough for low-income families. “We wanted to see rent controls to stop the increase in rents we are seeing right now.”

Te Pāti Māori co-leader Rawiri Waititi said Māori had been left with the crumbs. He worked out that the share for Māori had gone up from 0.3 percent last year to 0.6 percent this year. He wanted GST taken off food items and a capital gains tax for people who owned more than one house.

ACT leader David Seymour said it was “a brain-drain Budget” and he had not imagined Treasury would forecast a lower population than it had forecast in December.

“We needed to reduce expenditure, we needed to reduce taxes to give people relief against the price increases we’ve already seen,” he said.

“Instead the Treasury’s forecast said we will have 5.2 percent inflation next year. It was going to be down to 3.1 according to the December forecast – it’s got worse.”

Media reaction was lukewarm at best.

Stuff’s political editor Luke Malpass said Robertson had tried to thread the political needle, balancing immediate political and pay packet pressures while also providing significant amounts for longer term Labour reforms.

“There is a definite risk it is all a bit too-clever-by-half, trying to show the government cares while not doing anything that might risk pouring fuel on the inflation. The question will be whether voters are grateful,” he said.

In an editorial, Stuff said it could be called the Better than Nothing Budget.

“Payments of $350 over three months don’t add up to a lot of relief. It boils down to just $27 a week… it even feels a bit tokenistic.”

The Herald‘s political editor Claire Trevett took a similar line, quoting an unidentified 20-year-old saying $27 was “not even one Uber Eats order” and a 24-year-old woman saying her weekly supermarket bill had increased by $30 “and $50 of petrol doesn’t even fill half a tank”.

Business editor at large Liam Dann said Robertson was essentially rolling the dice on New Zealand’s economic fate in the coming year.

“If the inflationary pressure subsides, then the government would have been seen as helping Kiwis when they needed it most,” he said.

“On the flip side, if the pressure persists the government could face having to pour more money into the issue – only leading to further criticism from the opposition.”

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Photo: RNZ / Angus Dreaver

The second biggest deal of the year came out on Monday when Climate Change Minister James Shaw released the government’s Emissions Reduction Plan.

It set out a strategy to achieve the reductions demanded by the 2022-2025 emissions budget and includes $2.9b of spending funded through the Emissions Trading Scheme.

There’s a vast amount of detail in the 343-page document which can best be understood by reading RNZ’s article Govt reveals first emissions plan.

As with the Budget, there was something amid the mass of information for the media to latch onto – a $569m scheme to help low-income families scrap their old car and buy a low-emitting model instead.

Agriculture escaped, actually helped by $339m to accelerate technology and set up a Centre for Climate Action on Agricultural Emissions. No curbs on cow numbers, no pollution charges.

If the plan was designed to upset the least possible number of people, it seems to have succeeded.

Environmentalists did not think it went far enough, which the government would have expected, and RNZ summed up their reaction like this: “Climate activists say the government’s landmark plan to curb emissions is light on detail, full of fluff, and lets the worst polluters off the hook.”

The worst polluters were, of course, the farmers.

A common complaint was the lack of detail around the initiatives – the “cash for clunkers” scheme doesn’t say who will be eligible or how much will be paid to get old cars off the road.

“It is massive and complex in areas, full of labyrinthine recommendations, targets, initiatives and suggestions that ‘could’ make a difference,” Stuff’s Malpass said.

It is, nevertheless, the first time a comprehensive plan has been set out to cut emissions to a level that has been accepted by both the main parties.

For the first time, the argument now is not about by how much emissions should be cut but how to cut them.

So benign was the plan that National didn’t have a lot to say about it, and what it did say was surprising.

Luxon described the $650 million to move businesses away from using fossil fuels as “corporate welfare”.

The business-friendly party didn’t think they should get it.

Luxon said it “didn’t feel right” and on Morning Report the next day he explained why.

Some businesses that would receive funds were hugely profitable, such as the multi-national Heineken, owner of DB Breweries, that might get up to $3m to remove a coal-fired boiler, he said.

Luxon said corporates should reduce their emissions on their own.

That begged the question: What if they don’t? Herald columnist Simon Wilson picked up on that.

He said Luxon was right, corporate New Zealand should be leading the way to a low-emissions future.

“But in what universe is that going to happen?” Wilson asked. “So the government is offering carrots. Is Luxon saying National would prefer to get out a big stick and beat them into line? Can’t see that.”

Wilson said it was great that National had accepted the carbon budgets which set the amount of reduction. But Luxon had called the ERP “classic Labour”.

“Presumably, Luxon has a plan for faster decarbonisation and he will be sharing it with us shortly.”

National’s climate spokesman, Scott Simpson, said his party was sceptical about the government’s ability to actually deliver on some of their very big promises.

“This is a plan that has taken nearly two years to prepare and frankly there’s an awful lot of waffly stuff in it,” he said.

*Peter Wilson is a life member of Parliament’s press gallery, 22 years as NZPA’s political editor and seven as parliamentary bureau chief for NZ Newswire.

https://www.rnz.co.nz/news/political/467533/week-in-politics-the-budget-and-the-erp-how-they-went-down

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