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NZ POLITICS DAILY: National's Labour-lite Budget

Why would National focus its Budget on traditional Labour concerns such as housing, health, education, and welfare? Simply because the Budget exercise is an important part of National's re-election campaign, which requires that the Government be seen as ideologically centrist and pragmatic. To do this it needs to carry out what political spindoctors and strategists refer to as 'inoculations' - getting rid of any potentially unpopular policies. At the moment National is vulnerable on those traditional Labour concerns. By addressing them with new policy and additional expenditure, this leaves the Opposition with significantly reduced opportunity to criticise the incumbent government. 

The best that Labour will be able to throw at National is the idea that the Government is stealing from it, as foreshadowed by Labour's blogging spindoctor Rob Salmond in Budget 2014: The Labour-lite budget. He jokes that 'National loves outsourcing, and this year they outsourced their vision to Labour'. Salmond says that Labour should be credited with forcing these concessions, as Labour has 'put significant pressure on the government, forcing them to dance to the left's tune in a critical election year. It is another sign of a government that is out of ideas'. He also makes a good argument that although National will have a new housing initiative, there won't actually be much money for it, perhaps only about $100m.

A boring and moderate budget

Most political commentary on the upcoming Budget emphasises that it will be moderate in nature.


One of the best analyses comes in Liam Dann's National needs to dish up comfort. In this he labels the announcement the 'Cheese-on-Toast Budget' with the following argument: 'Cheese on toast: comfort food - cheap, uncomplicated but satisfying and hard to argue with. It doesn't overpromise and always delivers'. Dann says that Bill English's 'job will be to provide a healthy dose of boring and sensible but with a stern reminder of what is still at stake for the New Zealand economy'. And he points out that 'The appetite for wholesale change just isn't there'.

The Budget will not be 'radical' according to Vernon Small - see: Steady as she goes with 6th Budget Education, health, housing boost likely. As well as attempting to 'spike some of Labour's big guns' by advancing into Labour's territory, the Budget will continue with relatively big spending according to Small. He points out that National Government spending has increased from $57b when it took office, to about $72b this year. Hardly austerity economics.

This week's Budget might give the public a better idea of what National would do if it gets re-elected in September, although John Key has signaled that it will largely remain business as usual: 'if we get a third term we will not be changing what we've done in the past six years. We are confident about what this country can succeed and achieve' - see: Health to receive biggest Budget boost.

The NBR's Rob Hosking will be disappointed if the Budget just signals more of the same: 'Budget 2014 has to give some indication what National will do with a third term. At present, we know nothing about what Mr Key's government will offer for the next three years. Measures aimed at the politically sensitive housing market look most likely but any programme will have to do more than slap some fiscal calamine lotion on that particular economic, political and social sore' - see: Budget 2014: a surplus but then what? (paywalled). Hosking also proposes some reforms: 'Measures to remover impediments to saving - the over-taxation of income from savings being the most glaring - need to be looked at. If National wants to get really ambitious - economically and politically - it could revisit the Savings Working Group's idea of indexing tax brackets to inflation'.

A lucky comparison with Australia

Whether by luck or design, Bill English's attempt to paint his economic management as moderate has been given a boost by his Budget coming just two days after the extremely austere Australian budget. As the Herald points out,Australians must envy our Budget. The 'Severe cuts to health, welfare, education and other sensitive areas of spending' across the Tasman almost make Bill English look like a socialist. And Prime Minister John Key has been saying that the New Zealand Budget would be in stark contrast to that of Australia's.

Referring to Tony Abbott's first Budget, Tracy Watkins says 'This is the budget Key and English never had. Yet it is one that that many of National's more Right-wing supporters hankered for after Key and English were elected to power during the dark days of the global financial crisis.... It was also the sort of budget that many of National's opponents to the Left hankered after for obvious reasons. Had it pursued that path, National could well have been a one-term government' - see:NZ Budget defies Aussie gloom.

Similarly, Gordon Campbell says, 'Look at Australia, Key can validly tell his own caucus hardliners and corporate cronies, and see how politically suicidal the policies of ideological extremism would be here too, in practice. For this entire term in office, Key has been positioning National to deliver this message of success via alleged moderation' - see: On this week's Budget rhetoric. See also Chris Trotter's blog post, The Cruellest Cuts: Why Joe Hockey's Budget Will Almost Certainly Fare Worse Than Bill English's.

Welfare changes

Paid parental leave is now a popular and embedded part of New Zealand's welfare state. According to the Dominion Post, the Labour Party can take the credit for making it so, and for creating a demand for the extension of the scheme - see: Big political push set to benefit parents.

There is a strong expectation that National will announce some sort of extension to the scheme tomorrow. Claire Trevett also sees National's shift on this as designed 'to avoid being outflanked by Labour in fertile vote-hunting turf' - see: Battle for family vote on paid parental leave. But is the extension to paid parental leave the best way of achieving National and Labour's goals of ameliorating child poverty? Many think not, and in Trevett's article, Victoria University's Jonathan Boston is cited as saying that 'if the aim was to help parents of babies and infants then extending paid parental leave was not the best approach'.

There are some signs that the Government might introduce a greater degree of targeting in welfare. According to Trevett, 'English has also hinted at some more targeted support for low-income parents is on the cards'.

Housing battles

An inoculation for housing is a certainty for tomorrow, but it's far from clear what form this might take. So far, National has concentrated on solving the 'supply side' of housing rather than the pressures of 'demand' - see John Armstrong's Battle lines over affordable homes. He points out that 'Labour is offering more populist policies on the demand side, such as blocking foreigners from purchasing existing homes, though not new ones that they build and thus add to the housing stock'.

There continues to be uncertainty about the extent to which foreign-based house buyers are affecting the prices - see Brook Sabin's Govt: Foreign buyers not part of housing problem.

No significant tax changes likely

There are unlikely to be any radical reforms in the tax system tomorrow. If anything, there might be something related to targeting social assistance, but no big changes in the area of savings - see Tamsyn Parker's Don't expect any KiwiSaver.

We can rule out Bill English introducing a capital gains tax according to tax specialist Greg Thompson - see: Why a capital gains tax will be off the agenda. He says that 'Capital gains tax (CGT) has become a major policy difference between the two main political parties in the lead up to this year's election but it's unlikely to get any air time in the budget'. He explains this via the possible impacts of such a tax - especially the unintended consequences - and concludes: 'the negative impact on markets, business and a fragile economy means now is not the time'.

Labour Party's economic alternatives

Labour announced its version of the Budget earlier this week - see Michael Fox'sLabour targets unemployment rate. This had support in the blogosphere from No Right Turn - see: "A wish, a target, and a dream", and opposition from David Farrar - see: Labour's 4% unemployment target.

The most interesting response was from economist Matt Nolan, who was especially critical of Labour's idea that it could 'set' the unemployment rate - see: Labour's alternative budget. Nolan was also surprised that Labour had so little in terms of leftwing policy: 'And here is what surprises me. Our main left party has nothing to say about social policy and poverty, but plenty to say about subsidising exporters and other industrial subsides ... very interesting'.

According to Tracy Watkins, 'Labour's biggest enemy may be the improving economy', and she cites the latest Fairfax/Ipsos opinion poll 'showing 63.6 per cent of voters believe the country is on the right track' - see: National has no need to pull rabbits out of hat. Labour is also down in this poll 'to 29.50 per cent, taking it below the morale-busting 30 per cent threshold for the first time'. National is also down to 47.6 per cent, but still 'still enough to govern alone'.

Green eco-economics

The Green Party is pushing its more eco-capitalist brand at the moment, and this week's Budget announcement was a bold proposal for a private-public partnership bank - see Adam Bennett's $120m 'Green Investment Bank' plan for clean tech projects. In the blogosphere, No Right Turn thought it a A good idea, David Farrar suggested Greens do want taxpayers to lose 96% of their funds also!, and Rob Salmond had some reservations - see: The Green Investment Bank.

Act Party alternatives

In a time of bland budgets, the Act Party can also be relied upon to provide something more interesting - see Audrey Young's Act leader produces alternative budget.

However, economist Matt Nolan was even more scathing about Act's alternative budget than he was about Labour's: 'I would like to take all parties seriously, but this is a frankly ridiculous budget that makes claims that are totally unsubstantiated - anyone with any experience in looking at the data, and the impact of policy, may say that lower tax rates will increase the level of economic activity - but the magnitude implied here indicates that the ACT party has no idea about real economics and is leaning solely on ideology (hence why most of the document is arbitrary catch phrases). To be blunt, this document might use economics terms but parts of it are frankly economically illiterate' - see: ACT's alternative budget.

Nonetheless, Act could be an influential part of the next National-led government and economic direction - see Fran O'Sullivan's Act ups the ante on era of entitlement

Finally, for a parody of what the Minister of Finance might have been going through in producing the latest Budget, see Scott Yorke's Bill English meets the media.

Today’s content

Judith Collins

Barry Soper (Newstalk ZB): Backslapping and backhanders

Peter Wilson and Sarah Robson (Newswire): Key scoffs at Peters 'pop gun'

Adam Bennett (Herald): Peters' knockout blow on Collins dimissed as 'pop gun'

Adam Bennett (Herald): Jury out on whether declaration needed

Radio NZ: Peters accuses Nats of costs cover-up

Felix Marwick (Newstalk ZB): Peters alleges Collins has broken more rules

Patrick Gower (TV3): Winston Peters' 'smoking gun' on Collins backfires

TVNZ: Winston Peters makes 'cover up' claim over Collins' China trip

Adam Bennett (Herald): Collins didn't declare Chinese govt support – Peters

Simon Wong (TV3): Winston Peters' attack on Judith Collins fizzles

Barry Soper (Newstalk ZB): Key issues Peters challenge

Winston Peters (RadioLVIE): Dancing the Rich Man’s Tune

Matthew Beveridge: Two points about Trevor Mallard’s tweet



Tracy Watkins (Stuff): National has no need to pull rabbits out of hat

NBR: Nats strong ahead of Budget — poll

Rob Salmond (Polity): Fairfax poll

Pete Geroge (Your NZ): Is Peters up to holding the balance of power?

David Farrar (Kiwiblog): Labour hits the 20s during “National’s worst week”

Liam Hehir (Firing Line): Fairfax Ipsos poll - National unaffected by "Scandalgate"


Party fundraising

Laura McQuillan (Newstalk ZB): Key accuses Labour of hypocrisy over unions

Tova O’Brien (TV3): National under fire for foundation

David Farrar (Kiwiblog): Will this appear on TV3?


Budget 2014

Vernon Small (Stuff): Steady as she goes with 6th Budget Education, health, housing boost likely

RadioLIVE: Budget expected to focus on health and education

Claire Trevett (Herald): Battle for family vote on paid parental leave


National Party

Janine Rankin (Stuff): Mayor Jono Naylor to stand for National

David Farrar (Kiwiblog): Mayor Naylor for Palmerston North

The Standard: John Key challenged!


Labour Party

David Farrar (Kiwiblog): Labour’s 4% unemployment target

Grant Duncan (Policy Matters): Karen Price for PM!

Pete George (Your NZ): Cunliffe genuine at home, disappointing in Q & A

Herald: Editorial: Credibility before politics for journalists

Radio NZ: Flavell unfazed by competition

Isaac Davison (Herald): Clark backed in row over political bias

Radio NZ: Taurima decision may be reviewed by Labour

Tim Watkin (Pundit): The Taurima affair: when good reports go bad

Tim Selwyn (Tumeke): Taurima excuse for TVNZ purge

Newstalk ZB Staff (TV3): TV3 confident in Linda Clark

Peter Cresswell (Not PC): Cunliffe: A Future Reality-Show PM?

Stacey Kirk (Stuff): Key questions broadcaster's Labour link

Isaac Davison (Herald): John Key questions broadcaster Linda Clark's work to Labour

Bruce Wills (Herald): Labour's farm policy dog whistle politics

Lesley Deverall (Newstalk ZB): Taurima given a raw deal - Maori Party

Martyn Bradbury (Daily Blog): That’s the David Cunliffe I see



TV3: Russel Norman explains the Green Investment Bank

Laura McQuillan (Newstalk ZB): Govt rubbishes Greens' investment bank plan

Simon Wong (TV3): Green Party looks to open own bank

Hamish Rutherford (Stuff): 'Green Investment Bank' plan

Rob Salmond (Polity): The Green Investment Bank

Matthew Beveridge: The Greens and live streaming



Patrice Dougan and Rebecca Quilliam (Herald): Cook Strait ferry skippers stood down

Radio NZ: Minister has no concerns over ferries

Newswire: Brownlee: Ferry investigation appropriate


Auckland liquor laws

Rachel Smalley (Newstalk ZB): Law changes won't quench thirst for escapism

Mike Hosking (Newstalk ZB): A few rule changes won't fix alcohol issues


Kim Dotcom and Internet Party

Newswire: Kim Dotcom 's party has been registered

Adam Bennett (Herald): Internet Party formally registered

Martyn Bradbury (Daily Blog): Latest attack on Kim Dotcom

Dylan Moran (TV3): 'Racist day' inappropriate - Human Rights Commission

Edward Gay (Radio NZ): Dotcom asks court to step in



Radio NZ: Govt downplays foreign impact on prices

Christine Rose (Daily Blog): Free Market No Solution to Auckland’s Housing Costs

David Kennedy (Local Bodies): Government Shifts Social Housing to Private Sector

Brook Sabin (TV3): Govt: Foreign buyers not part of housing problem



Stuff: One in the eye for dairying's critics

Tim Hunter (Stuff):Laissez-faire leaves bad taste

Hamish Rutherford (Stuff): Kiwis choosing NZ as Aus economy slows

Chris Trotter (Bowalley Road): New Zealand's Progressive Nationalism

Matthew Beveridge: Pixies……pixies…..oh god pixies…..

Peter Cresswell (Not PC): Money, Money, Money

Radio NZ: Auckland's income a tale of two cities

Jane Kelsey (Daily Blog): Mainstream media silence on investor-state dispute settlements in the TPPA

Richard Meadows (Stuff): The ABC of credit ratings


Maori politics

Gareth Thomas (Radio NZ): Correspondent

Mike McVicar (NZCPR): Race Based Electoral Privilege



Stuff: Today in politics: Wednesday, May 14

Tony Milne (Daily Blog): Labour’s Christchurch flooding proposal

Olivier Jutel (SA): "hey Chong just cool it"- Prohibition, Mana and the Left.

Sam Judd (Herald): Rahui for our reserves

Fundamentally Useless: 5 Reasons why writing a political blog is a bad idea

Newswire: McKinnon named next ambassador to China

Radio NZ: Otago takes ethical stance on climate

No Right Turn: Environmental Reporting Bill submissions

Stephen Franks: Deceit (of Hawkes Bay Public) No 2 Bill

David Farrar (Kiwiblog): Unusual maternal numbers

Matthew Dallas (Manawatu Standard): A thorn among the feathers

Comments and questions

It is interesting this notion of "Labour-lite" and equally this notion of Left Vs Right. That Labour represents the working class and National represents business.

To me this is old thinking. I work in a world were we segment customers into many different groups - each customer appearing in more than one segmentation. The modern world with its high speed communication, access to real time information whether that be by internet, books, newspapers TV, advertising has made us all much more sophisticated and complex.

The reason political parties have moved to the centre is simply that when considering all the things that people care about any given society has a set of things that they collectively agree on and a number of small areas that they hold to our own and these can be in any direction.

Housing is perhaps an issue for the low income people and or low wealth, but not all low income people can be qualified into a single group. There are people who are on low incomes but have the aspiration and capability to earn more, there are people on low incomes who choose that life style but could do many things if the wanted to, there are of course low income people who will always be low income people, there are higher income people who have larger debts and are also caught up with this housing problem. So trying to say that Labour is the typical party to support more housing is nonsense.

The UK did a study released last year which re-analysed the so called classes and grouping of people and found they broadly could group people into 7 groups not two as many people still try to do from a historical point of view.

Funnily enough I see the Greens as both a left wing party and a right wing party as I see "Green" issues as right wing - i.e. most of the people openly concerned with the "Environment" are highly educated and quite well off. The left traditionally being associated with less educated people who are struggling financially.

This whole notion of equality needs a lot more work in terms of presentation of fact. It is usually reported in simple terms of people have in a lot and others having a little in absolute terms. It is not reported against a a set of qualifiers in terms of cultural diversity, choice, age, education etc. all things that effect where people may be on the equality register for any give part of the lives - something that does change on an individual basis.

I think we all suffer from a dumbing down of reporting to the simple terms that everyone can understand. These simple terms filter out the nuance that brings understanding.