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New Zealand finance minister Grant Robertson’s pre-budget speech dampened hopes of a radical offering on 20 May. Photograph: Fiona Goodall/Getty Images
New Zealand finance minister Grant Robertson’s pre-budget speech dampened hopes of a radical offering on 20 May. Photograph: Fiona Goodall/Getty Images

New Zealand moves on from ‘wellbeing budget’ to focus on Covid recovery

This article is more than 2 years old

Grant Robertson foreshadows 20 May announcement with speech outlining focus on economy, housing affordability, climate change and children

After successfully weathering Covid-19 without a public health or financial catastrophe, New Zealand’s finance minister is putting a cap on expectations for radical public spending in the country’s next budget.

The finance minister, Grant Robertson, gave a glimpse of the vision for New Zealand’s post-Covid economy in his first major pre-budget speech on Tuesday morning.

“Against the backdrop of Covid, budget 2021 will take a balanced approach that continues to emphasise investment where it is needed most, alongside careful fiscal management,” Robertson said, in the speech to the commerce commission.

The actual finances will not be announced until 20 May. But Robertson’s carefully worded speech will dampen hopes of a radical offering later in the month. Robertson branded 2021 the recovery budget, and outlined three core goals for the government’s term: “In addition to keeping New Zealanders safe from Covid-19, we are focused on accelerating our economic recovery and addressing the big three foundational challenges, housing affordability, climate change and child wellbeing.”

When the Ardern-led Labour government came to power, one of its most internationally celebrated announcements was the first “wellbeing budget” in 2019. Alongside the budget itself, the government announced a reshaping of the way future spending would be approached: rather than using purely economic metrics such as GDP, government and Treasury would use a much broader range of outcomes, including human health, safety and flourishing, to assess the success of policies. The new vision included a full dashboard, known as the “living standards framework”, to track how the country was performing. In his speech in 2019, Robertson said that “not only has this budget measured our success differently, we have embedded wellbeing at every stage of the creation of this budget – from setting priorities, to analysing proposals to making the inevitable trade-offs that come with the privilege of being in government”.

The approach won New Zealand international headlines at the time. It also prompted hopes that adopting a different set of measures would reshape policy and spending priorities from the inside out – incentivising governments to take radical action on some of New Zealand’s enduring social and environmental problems, even when that came at a cost to measures such as GDP.

But GDP, unemployment and net government debt were the figures at the forefront of Robertson’s budget 2021 speech. There was no mention of the living standards framework, which some commentators hoped would transform the country’s approach to budgeting for years to come. Instead, the minister emphasised the Labour government’s commitment to careful fiscal management and reducing debt. “From a fiscal perspective budget 2021 will continue our careful and balanced approach,” he said. It’s possible the wellbeing framework was still being embedded “at every stage” of this budget’s creation – but in Robertson’s presentation, it was largely out of sight.

“It is simply not possible to fulfil every promise or commitment that we made or address all of our long-term challenges in a single budget,” Robertson said.

Copies of the 2019 ‘wellbeing budget’. Photograph: Hagen Hopkins/Getty Images

His outline walked a narrow line between prudent spending and austerity. Despite a repeated focus on fiscal caution, he said that “a turn to austerity measures will simply mean it takes longer for us to rebuild society in pursuit of numerical goals that ignore the real world we are living in. It is all about getting the balance right”.

The government had already spent less on Covid relief and response than it had expected - $926m less, across government. Robertson said those savings could now be funnelled into the country’s Covid recovery.

In terms of social issues spending, Robertson outlined three main priorities: housing affordability, child wellbeing and climate change. The minister gave away little in terms of how spending on those priorities would be met, but hinted at further investment to try to meet recommendations from the Independent Climate Commission.

“Almost every sector of our economy is affected by the carbon budgets that have been outlined by the Climate Commission,” Robertson said.

“I will have more to say at budget time about our approach to meeting the targets we have set, but we will continue to look for not just the measures we must take to reduce emissions but the possibilities and opportunities that exist to create high-paying and sustainable jobs.”

To try to meet its goals, the government would be setting up a new “implementation unit” headed by Robertson and based in the prime minister’s office. That unit would monitor whether government departments were actually implementing their programs, and spending appropriately. The unit would make Robertson “the government’s informal minister for delivery,” Stuff’s senior politics reporters wrote, and is based on a similar unit developed by Tony Blair. It comes after some high-profile government projects, including for light rail and the “KiwiBuild” initiative to create more affordable housing, struggled to progress.

“At a time where the government is playing a much greater role in supporting the economy and investing for the future, it is crucial that we ensure that we are getting value for money,” Robertson said.

Having the country’s borders closed by Covid-19 had also prompted the government to look at overhauling the tourism sector. In late 2020, tourism minister Stuart Nash said the country needed to reshape its tourism offering, to cater to a smaller number of “high value” visitors, who would spend more and put less pressure on infrastructure. “Now is the opportunity to look to reset this industry,” Robertson said. “Pre-Covid many in the industry and outside were concerned that the growth in tourist numbers was not sustainable, from an economic or environmental perspective.”

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