Grant Robertson faces a unique challenge: cushioning the economy from the fallout from Covid-19 in an election year and keeping well-being a priority.
When Grant Robertson, New Zealand’s finance minister, unveiled his last annual budget he told the country that its success would no longer be measured by economic growth and productivity, but instead by the well-being of the nation’s population.
A year on and one day before he reveals his new spending plan, Robertson’s so-called well-being budget – a concept he intended would frame his fiscal policy for every future year of his term managing the country’s books – faces an extraordinary and unexpected test: a dire global economic outlook caused by the Covid-19 pandemic, with local jobless numbers already topping those seen during the 2008 global financial crisis.
It is a high-stakes document ahead of an election in September, which will function as a referendum on Robertson’s ability to cushion the economy from fallout from plummeting tourism and paralyzed industry.
But far from abandoning the well-being approach, Robertson told the Guardian that the “horrendous crisis that no one would have wanted to go through” presented an opportunity for change in a country that appears to have largely quashed the spread of Covid-19.
He cited child poverty, expensive housing, polluted waterways and rising emissions as matters to address in a pre-budget speech to a business audience early this month.
“In other words, we are not quite the nation we like to think we are,” he said.
But, speaking to the Guardian, Robertson cautioned that due to the pandemic some of his objectives – he would not specify which – would have to wait.
“It’s important that we don’t overestimate our ability to do it and do it quickly because we still have to recover,” he said. “But this is a chance to look at some of those long-run issues in our economy and our society like poor productivity, like inequality, and like our inability to reduce our emissions, and say what can we do in this moment to change that?”
While prime minister Jacinda Ardern has garnered global praise for her leadership amid the pandemic, she faces a tough task rebooting the $200bn economy, which is dependent on trade and tourism, with growth expected to slow significantly and hundreds of thousands of jobs to be lost.
Robertson said it was important to prove to voters that Labor has a plan for recovery. But his budget will look very different to those that came before, and last year’s carefully mapped well-being framework would not remain entirely intact, he said.
New spending to reduce child poverty, bolster mental health, and transition to a low-carbon economy will remain, but some initiatives had been “put on ice”.
Robertson, who was elected to parliament in 2008, is enthusiastic about discussing the finer points of policy. A former student politician, he worked for New Zealand’s foreign ministry and later represented the country at the United Nations. He is also minister for his beloved sports – he met his partner, Alf, at a rugby match.
Pre-budget announcements have been much more sparing than usual, but they have included a $4bn boost for the health system and $200m to combat family violence.
Robertson said the more than $20bn he has already committed since Covid-19 reached New Zealand – half of it on wage subsidies for struggling firms – was “far in excess” of what a government would normally spend on its entire budget. He would not “sugar coat” the resulting blowout in the national deficit, he said, and also cautioned that the treasury forecasts for the economy released on budget day would paint a “challenging” path to recovery.
Previous models by officials have predicted unemployment rates of between 8.5% and 26% following the pandemic and strict lock-down.
Analysts said the well-being approach would now come under pressure in an economy where more people were vulnerable due to the corona virus than a year ago.
“Lots of other countries were crying out for an economic approach that centrer on something more than growth,” said Max Harris, a New Zealand political commentator. “But understandably that focus meant there were expectations raised in New Zealand for an improvement in well-being across the board.”
The government must now deliver results for those who for years “have been left out by budgets of a more ordinary kind,” he said. “If their concerns were addressed, that would give people confidence that well-being is more than just a frame.”
But economists said Robertson could not afford to look too far into the distance, and the budget’s success in improving well-being would depend on his short-term spending.
“One of the greatest contributors to a lack of well-being is unemployment,” said Arthur Grimes, a professor at Victoria University, Wellington and a former chairman of the Reserve Bank of New Zealand. “It’s one of the few things that people don’t recover from.”
New Zealand’s strict lock-down has restricted deaths to only 20 but the government’s detractors say the strident measures have come at too high a cost to business.
“We may have flattened the curve as a nation but with 1,000 people a day joining the dole queue and employers deciding whether they battle on or give up, it is clear lock-down has gone on too long,” the opposition leader, Simon Bridges of the National party, said.
He has also warned of the effects of the lock-down on mental health and Max Harris said he hoped the budget would focus on more than creating work.
“This could be a generation-defining moment,” he said. “It was great that Grant was talking about dignity in work and a decent life for those in work, but I think the key to this budget will also be, will it provide dignity for those who are not in work, since we’re going to have an increase of people not in work.”
Robertson told the Guardian that while the political world he had to operate in had not changed – his party has two coalition partners to please when seeking approval for its measures – some things were different.
“I do take seriously the fact that that opportunity’s there,” he said. “Not every country has that privilege, because they’re still in a situation where they are getting on top of the virus. So we don’t want to squander that opportunity.”
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'a Generation-defining Moment': Delivering New Zealand's Pandemic Budget
Charlotte Graham-McLay - https://www.theguardian.com/world/2020/may/13/a-generation-defining-moment-delivering-new-zealands-pandemic-budget
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