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BUDGET 2013: Key can now return to his personal priority – helping the underclass

Matthew Hooton
Thu, 16 May 2013

John Key generally lacks any political beliefs at all.

In his previous career, it was buy the pound one day, sell the pound the next.

In the same way, as a politician, Working for Families can be “communism by stealth” one day and an essential part of the social-security system the next.

To advance his objectives, Mr Key will usually do what the polls tell him and, unlike some other politicians, he appears to feel few if any pangs of conscience moving one way or the other along the political spectrum in pursuit of the median voter.

But there is one exception. 

It has always been clear Mr Key has a deep personal commitment to addressing the needs and improving the life chances of what he terms the underclass. 

It was the subject of his first major speech as leader of the opposition in January 2007 at the Burnside Rugby Club where he played rugby as a boy, apparently badly.

His commitment to the issue can be traced back to his own working-class childhood in Burnside and the empathy it created in him for those without the familial support and encouragement that enabled him to move from state house to stately mansion.

In his 2007 Burnside speech, Mr Key said he believed in and cherished an egalitarian society where people’s life chances “will be determined by their abilities, their motivation and their hard work” and “not dictated by the size of their parent’s bank balance or the suburb they were born in”.

The state, he said, “ensured that I had a roof over my head and money for my mother to put food on the table” as well as “the opportunity to have a good education”.

 According to Mr Key, this was no longer the case for some.

He said there were streets in our country “where helplessness has become ingrained” where people “are locked out of everyday New Zealand the way most of us experience it” and locked into “a way of life for which the exit signs and the road maps have long since been discarded”.

Politics for him, he declared, was about changing this.

The speech was genuinely moving and it goes without saying it was a new way for a National leader to be talking about social issues and the welfare state, especially after the harder tone of his immediate predecessor.

As Prime Minister, Mr Key’s first move in 2009 was his Jobs Summit.

While it largely failed and was overwhelmed by his often-mocked cycleway, it demonstrated again the priority he placed on the protection of the vulnerable a year into Michael Cullen’s recession and months into the global financial crisis.

At the Jobs Summit and its follow up sessions, hardened unionists were impressed with his open-mindedness and genuine engagement on ways to slow the inevitable rise in unemployment.

Meanwhile, finance minister Bill English declared that the very first priority of his economic strategy would be to protect New Zealanders from the hard edges of the recession, including by not reducing their state entitlements.

The decade of forecast deficits left by Dr Cullen meant there was little more the government could do in pursuit of Mr Key’s agenda to help the underclass.

While welfare minister Paula Bennett has taken some initiatives to aid the move from welfare to work and early childhood education has been boosted to record levels, by and large Mr English has blocked all other new spending.

Mr English’s opposition to fiscal stimulus beyond the automatic stabilisers has been condemned by the left and his unwillingness to take bolder economic reform has been criticised by the right, including me, but the proof is in the pudding.  The economic data of recent months shows he was broadly right and his critics were broadly wrong.

New Zealand is now one of the fastest growing economies in the developed world, and conservatively forecast in the Budget to keep growing for the foreseeable future. 

Meanwhile, unemployment is low and falling and now expected, also conservatively, to drop below 6% this financial year, while wages are rising faster the inflation.  In fact, the Budget forecasts suggest they will grow by 2.8% in the year ahead compared with an inflation rate below 2%.

A year ago, Mr English’s critics, again including me, thought his forecast surplus of $197 million in 2014/15 was fanciful. 

Today, despite another $1.6 billion for health, $900 million for education and $189 million for welfare, he has been able to confirm the return to surplus.

Such a turnaround is what Mr English said would happen as a result of his moderate approach and it has. It has also occurred without a general global upturn suggesting it has been driven by domestic factors.

It also means a few political itches can be scratched including the extra social spending.

More importantly, it means the government can now return to Mr Key’s personal priority of helping the underclass.

Thus, $100 million has been provided for the Healthy Homes insulation programme targeting low-income households with children or high health needs.   More than $20 million has been set aside for rheumatic fever prevention.

Elsewhere, the Budget confirms an expansion of reviewable tenancies designed to ensure those with high needs can access social housing when they need it and for as long as they need it.  Spending on income-related rent subsidies will be increased by $27 million.

More broadly, the government has announced it will explore a warrant of fitness programme for social housing and a new low- or zero-interest loan scheme for low-income borrowers.

Perhaps of greatest importance, a food-in-schools package will be announced in a fortnight.  Kids can’t learn and escape their backgrounds if their parents are such losers that they won’t make them peanut butter or marmite sandwiches and buy them an apple.

It is initiatives like these that, for one of the first times, may give an answer to the sometimes-mysterious question of why Mr Key wants to be in politics anyway.

By providing such meaning for his prime ministership, it is to be hoped Mr Key can address the sense of drift that has afflicted his administration since his re-election in 2011 and get back on track to win a third term.

Matthew Hooton
Thu, 16 May 2013
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BUDGET 2013: Key can now return to his personal priority – helping the underclass