Friday, March 29, 2024

ALTERNATIVE VIEW: A fairly balanced Budget

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I’ve been covering budgets for a while now and they are, in a word, predictable. Budget 2021 was no exception. For the record, I believe we have been well-served with our ministers of finance. I rated Sir Michael Cullen highly, Sir Bill English did a good job and Grant Robertson is continuing the momentum, albeit in the shadow of covid-19.
Dairy farm businesses remain resilient and have banked significant gains in the balance sheet since the last downturn.
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We are in a fortunate position. We’ve come through covid. Our unemployment rate is low at 4.7%. The rating agencies are positive. Standard and Poors gave New Zealand the first upgrade of any economy since covid began and Moody’s have maintained our AAA rating.

Pre-budget Robertson talked of two principles, the first being increased spending and I support that.

The second principle was that spending needed to be effective in both securing the economic recovery and in shaping the type of recovery that we as a country want. So far so good.

I thought the Budget was balanced. There were initiatives I agreed with and those I didn’t.

On the positive side it was good to see some solid money being allocated to the reform of the Resource Management Act (RMA). It is a dog that’s hampered progress for 30 years. It needs disembowelment – and now.

The recycling of revenue from the Emissions Trading Scheme (ETS) to Emissions Reduction is also positive.

NAIT receiving $22.5 million was good, as was the $8.9m for advanced screening technology. It will be a valuable biosecurity tool to locate threats in international mail.

On-farm emissions get a $62m boost, including $24m for greenhouse gas (GHG) mitigation research. That includes vaccine development, methane and nitrous oxide mitigation and the breeding of low-emission animals.

Almost $1m is to be spent collecting accurate information on agricultural GHG emissions, which is needed.

Farmers and growers will also receive $37m for the tools they need to meet freshwater and GHG requirements by 2025.

The considerable investment in training will be good for growth.

The training incentive allowance is boosted and the funding for apprenticeships is increased as is tertiary funding generally.

Education in the regions gets a $10m lift to “identify local solutions to the emerging needs of learners”. There’s also digital training available.

Tertiary education and health both get considerable funding boosts, as does Pharmac.

For the record, I didn’t have an issue with the increase in spending for welfare benefits.

As predicted there are boosts for Māori in housing, education, training and health. I didn’t have a problem with that. The spending was well targeted and you could never describe it as ‘separate development’.

I was disappointed in the infrastructure spend, which was an increase from $42.2 billion to $57.3 billion. I would have liked to have seen a far bigger amount. Interest rates are low and the Government’s books are solid.

People cry that our public debt is too high now being 31.7% of GDP. That figure is small compared with Australia’s public debt at 47.5% and miniscule compared with the UK and US being 85.4% and 104% respectively.

Our public debt is predicted to grow to 48% of GDP in 2023 before reducing to 43.6%. We can afford to borrow.

I remain unconvinced at the benefits of centralising education as outlined in the budget. Our local country school Whareama is incredibly well-run and successful. I’d hate to have Wellington bureaucrats interfering.

Every Budget, and it happens across the political spectrum, there is one minister who will grandstand. The 2021 Budget prize winner is Climate Change Minister James Shaw.

A media release from Shaw told us of “hundreds of new electric cars for the state sector”. That will reduce carbon emissions by 11,600 tonnes of carbon over 10 years. Another statement from Shaw had $67.4m to support a carbon neutral public sector by 2025. That took the total amount of carbon savings in the budget to 76,000t over 10 years.

According to Enerlytica analyst John Kidd, the Huntly coal-fired power station will currently go through the entire government savings in four days, 15 hours and two minutes.

Why? We don’t have enough water storage and was that featured in the budget? No. 

Ridiculously, we had the minister waxing lyrically about replacing boilers in schools and hospitals so they can use electricity. In dry years a lot of that electricity comes from burning coal.

Don’t play with the problem, Minister – fix it. And the only way you’ll do that is by nuclear power or water storage.

The last word on the Budget goes to Federated Farmers who told farmers to pat themselves on the back for making it possible for the country to afford the budget.

“And that’s because NZ’s internationally competitive, resilient and fleet-footed farmers and growers could roll with covid punches and keep this country financially afloat,” president Andrew Hoggard said.

Good on ya, mate.

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