Chris Hipkins' first Budget as Prime Minister was deliberately unambitious compared to those under Jacinda Ardern – but by continuing his predecessor's advocacy for universal entitlements, Hipkins and Grant Robertson have left National in an awkward position, Sam Sachdeva writes
Nearly four months into the country’s top job, Prime Minister Chris Hipkins has developed an affinity for managing expectations.
After succeeding Jacinda Ardern this year, Hipkins made a virtue of what his Government wouldn’t do, rather than what it would – an approach he continued into Thursday’s Budget.
Repeated promises of a no-frills approach leading into the big day was followed up with talk of a “positive and pragmatic” plan, as the Prime Minister put it in his speech to Parliament.
Ardern herself wasn’t averse to making the case for pragmatic idealism, but Hipkins went a step further by largely eschewing any sense of idealism, emphasising the importance of the here and now rather than any grand vision for New Zealand’s future.
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Such a minimalist approach is hardly inspiring, but it is understandable given the grim economic conditions that have been dogging much of the world.
The Treasury may now be forecasting that the country will avoid a technical recession, but an overly expansive approach to spending would have run the risk of fanning sky-high inflation and going against the public mood.
Indeed, some economists have already warned that additional spending outlined by Hipkins and his finance minister Grant Robertson could lead to further interest rate hikes by the Reserve Bank.
Yet much of the public narrative has been around just how conservative this Budget apparently is, a victory (at least in the short term) for the Government.
The few cost-of-living measures that were included also seemed to have been carefully chosen, in terms of both policy and politics.
At first glance, extending free early childhood education to two-year-olds and scrapping $5 prescription copayments for all Kiwis hardly seem like game changers. But the former could make a significant difference to a number of families struggling with childcare costs, while the latter is of a piece with Labour’s inclination towards universalism in entitlements.
While the Government has been criticised on occasion for failing to take a more targeted approach to supporting the poorest New Zealanders, both Ardern and now Hipkins have been defenders of broad-based initiatives.
Greater efficiency in spending is sacrificed in the name of removing any barriers to access for those in need, even if they would be eligible for a targeted initiative.
While the National Party may have grounds for questioning whether the prescription policy is the best use of government revenue, headlines on Thursday night outlining the Opposition’s “vow to bring back $5 prescription fees if elected” are hardly going to do it any favours with the electorate.
Helpfully, universal benefits are also easier to sell to the wider population, and more difficult to scrap.
While the National Party may have grounds for questioning whether the prescription policy is the best use of government revenue, headlines on Thursday night outlining the Opposition’s “vow to bring back $5 prescription fees if elected” are hardly going to do it any favours with the electorate.
National’s tried and tested attack line – that Labour will implement new and damaging taxes – may also not be as effective as on previous occasions, at least going by this week’s Newshub-Reid Research poll, which showed 53 percent in favour of a wealth tax and just 35 percent opposed.
However, Labour’s problem has been turning that theoretical support into a practical policy that can win the backing of voters, and it is far from clear whether Hipkins will use any of his political capital in a way Ardern never truly managed.
But the Government arguably dipped its toe in the water with the announcement of an increased trustee tax rate in line with the top personal tax rate, a move backed by officials that also acts as a chance to test public sentiment further.
Newshub’s poll also gave further grounds for concern within National about whether Christopher Luxon is a drag rather than a boost to the party’s chances of winning power in October.
On that front, it was striking that the bevy of Beehive press releases about the Budget referred to the achievements of “the Chris Hipkins Government” – an honour Ardern never earned in budgets past, but which shows Labour is prepared to take a similarly leader-centric approach despite Hipkins’ lack of star power.
That advantage could mean little if the economy deteriorates further, however, and Hipkins will be hoping his Government’s deliberately downbeat approach is rewarded with improvement on the inflation front.
