May 30, 2019

Wellbeing Budget 2019 – Is It Transformative?

Is it transformative? Sadly, not really. However, it is an impressive spending budget – with $3.5bn new spend across the range of previously identified priorities.

My comments following last year’s Budget began with “Responsibility won the day. But, for many, a shift to a truly Wellbeing Budget probably cannot come quick enough. The tagline for the Budget documents was ‘Foundations for the Future’, but the need to register short-term surpluses and meet debt-repayment targets remained paramount.”

Now, we come to Budget 2019 and its headline billing as the Wellbeing Budget. Budget 2019 sits well with the wellbeing perspective with significant new investments across mental health, child wellbeing, and supporting Māori and Pasifika.

See What does Budget 2019 tell us about wellbeing? for further details.

Further, there is a strong capital spend programme – with hospital and school building topping the list. A boost to KiwiRail, investments to improve land use, and a boost from 150 to 2000 places in the apprenticeship “Mana in Mahi” programme do signal significantly long-term perspective on decision making.

But, is Budget 2019 transformative? Sadly, not really. Admittedly, it is an impressive spending budget – with $3.5bn new spend across the range of previously identified priorities. However, debt is projected at a meagre 18.7 percent of GDP in 2023 – and there is a surplus track of $1.3bn, $2.1bn, $4.7bn, and $6.1bn. With these numbers it is somewhat surprising that this Government did not use more of this elbow room to trigger a dramatic transformation in business, economy, and communities across Aotearoa.

With debt projected at a meagre 18.7 percent of GDP in 2023 – and a surplus track of $1.3bn, $2.1bn, $4.7bn, and $6.1bn – it is somewhat surprising that this Government did not use more of this elbow room to trigger a dramatic transformation in business, economy, and communities across Aotearoa.

Unfortunately, the priority investments will take some time to generate visible benefits. But a sense of urgency remains missing. The announced indexing of benefit payments to average wages is an example. While laudable, the gain of between $10 to $17 per week by 2023 does little to address the current shortfall where many families receiving benefits, according to the Welfare Expert Advisory Group, were at least $90 per week short of an adequate level of income.

Similarly, the funds for improved and additional building for hospitals and schools is part of a 10-year programme. Further, the climate change challenge is huge, but the funds committed oozes a sense of marginal adjustments. Yes, there are a range of new initiatives – $229m to encourage sustainable land use, $8.5m investment in the Global Research Alliance on Agricultural Greenhouse Gases, $3.2m into Agricultural Climate Change Research Platform. But the scale of these investments continue to underwhelm.

Without doubt, the words and intentions are well signalled. The Budget Speech statement “… Government … is not satisfied with the status quo” is in line with the Minister’s statement at the lockup “the old ways of doing things have left many behind”. These are laudable. And his strong “we are taking mental health seriously, … this is just the beginning” will reassure many.

However, over time there are likely to be influences that will encourage governments, businesses, and communities to resort to the conventional ‘we can’t afford it’ mindset. That risks derailing these investments (again).

The economic picture is fairly stock standard, for a summary see The Treasury’s Economic Outlook.

Looking ahead, embedding the wellbeing approach requires changing elements of the Public Finance Act and the State Sector Act. These changes will be critical.

Perhaps our expectations for transformation were raised too high. Or, maybe our own expectations were unrealistic. But this Government has done little to rein in those expectations in its use of the transformation narrative.

In the interim, however, the importance of budget ‘responsibility’ continues to throw a dark shadow over this administration’s desire to truly transform New Zealand.

You may also be interested in reading our Budget 2019 commentary for Community Networks Aotearoa, June 2019.