Bryce Edwards
Victoria University of Wellington – Te Herenga Waka
democracyproject.nz
Dr Bryce Edwards is Political Analyst in Residence at Victoria University of Wellington. He is the director of the Democracy Project.
Warning
Long read. 1827 words.
Grant Robertson is a big fan of British socialist folk-punk singer Billy Bragg. The finance minister even wrote an opinion column last year that started and ended with lyrics from Bragg’s iconic song “Between the Wars”, with its key line “Sweet moderation; Heart of this nation”. Robertson titled his column, “We can be a nation of sweet moderation – but only if we keep working at it”.
The Finance Minister and Deputy Prime Minister appropriated Bragg’s “sweet moderation” line as a justification in the face of criticisms that his government had become moderate rather than “transformational”. In fact, his column sought to paint rising political discontent and anger as being dangerous and something for all to condemn. In contrast to radicalism, he claimed that his type of “sweet moderation” was all about “giving everyone a fair suck of the sav” – i.e. a very down-to-earth way of signalling a vague sense of egalitarianism.
What Robertson misses about Bragg’s song is that it’s actually a critique of politicians like Robertson, who fail to side with the poor. Bragg’s song calls for a proper welfare state “from the cradle to the grave”, and it criticises governments who deny workers “a living wage”. The character in the song recalls: “As times got harder; I looked to the government to help the working man”, but the Government failed to help the poor and instead helped the wealthy.
This is, of course, what Labour has generally done since 2017. And yet again, it’s what Robertson did last week with his Budget that did very little for the poor and working-class, but which was well received by business.
Its key initiative was a $350 payment to those in the so-called “squeezed middle”. This was the boldest element of a very pedestrian budget. Most controversially, the $350 Cost of Living Payment (COLP) was deliberately designed so that the poorest New Zealanders wouldn’t be eligible.
Treasury’s progressive criticism of Labour’s Cost of Living Payment
Many Labour supporters, especially amongst political commentators, were full of praise for the COLP, seeing it as proof the Government is still progressive, or alternatively can masterfully fend off National’s attempts to win over middle New Zealand.
Remarkably, the strongest criticism of the policy has come from Treasury, which worried Labour was missing the opportunity to help poorer members of society. Treasury officials argued that much of the COLP would go to high-income households. According to Thomas Coughlan’s report on this: “Treasury reckoned about 55 per cent of total payments would go to the middle 40 per cent of households, but 25 per cent of payments would go to the top 40 per cent of households.”
Treasury recommended that the billion-dollar package would be much better spent on those on low incomes and that this could have a positive impact on the Government’s stated goals around reducing child poverty.
Treasury pointed out that it was low-income families who were much more significantly impacted by the cost of living crisis.
For Treasury to be to the left of Robertson says something about his “sweet moderation”. As Herald political editor Claire Trevett pointed out, “It is not often that Treasury is one that preaches the Labour gospel as the preferred option and it falls on deaf ears in Labour.” She pointed out that the COLP was therefore more about Labour looking like it was dealing with the cost of living crisis than actually doing anything meaningful.
In reply to criticism that he disregarded such strong advice from Treasury, Robertson stated his desire to have payments going to a “wider group”, although he probably really meant a “richer group”. And he tried to make a virtue of the fact that he often disagreed with Treasury.
Time for a campaign to extend the Cost of Living Payment
For those who really care about inequality and the need to protect workers and the poor from the cost of living crisis, it’s time to demand that the COLP be extended. Such extensions are entirely obtainable, if the Government is put under pressure – Robertson has already admitted that COLP extensions are possible if deemed necessary.
First, the whole “cost of living package” could be extended beyond three months, and perhaps should continue for as long as inflation is high. Duncan Garner argued for this on Monday in the NBR:
“For it to be meaningful and make a genuine difference, surely it had to last as long as high inflation itself. But, when this comes off, arguably inflation will be higher than it has ever been and it is expected to rise again before it comes back and eases. Yet, at the very point it comes off, the petrol tax goes back on and the half-priced public transport ends. How hard would it have been for Labour to extend all this to Christmas? Easy, really; it’s all a matter of priorities”.
Second, the COLP needs to be higher. At the moment, the payment is fairly miserly. As many have pointed out, the $27/week is barely meaningful – in the metrics that Robertson preferred for his Budget launch, the payment will only allow recipients to make 18 cheese rolls each week. And economist Brad Olsen has calculated that the average household is soon to be paying $89/week extra due to inflation – about three times as much as the weekly payment.
Put another way, financial journalist Brian Fallow says the payments will “represent little more than half of 1 per cent of the household consumption, the cost of which is rising at nearly 7 per cent a year.” And economist Stephen Hickson of the University of Canterbury says, “At the median wage of about $57,000 a year, an extra $350 is equivalent to a 0.6% pay increase. Inflation in the first quarter of 2022 alone was 1.7% and 6.9% for the year, and this is a one-off payment – you don’t get that money on an ongoing basis.”
Third, the payment needs to be extended to the poor. As Stuff’s Henry Cooke points out, the payment is designed so that even Cabinet minister’s partners will be eligible if they’re in average-earning jobs. How about the payment is extended to beneficiaries and pensioners? At the moment, these people are facing quickly rising food prices, and the Government says they can use their Winter Energy Payments for these costs – effectively choosing to turn their heaters off in order to be able eat.
The Government really needs to listen to Treasury about looking after the poor.
The Budget exemplifies the 2017-2023 Labour Government
The 2022 Budget has come to epitomise the moderation of Jacinda Ardern’s whole time in government since 2017 – timid and conservative, and certainly not very transformative. While many were calling for public transport to be made free in the Budget, or at least the half-price initiative made permanent, instead a watered-down version was announced for Community Cardholders, and it was announced cheap fares would end following the two-month extension. In all, Robertson allocated a bare $132m for this public transport initiative.
For this reason, writing for the Spinoff Danyl Mclauchlan commented on the Budget saying it’s hard to see what Labour are actually “doing with the most powerful electoral majority in our modern political history”.
Other progressive commentators have also been aghast at the emptiness of Labour. Josie Pagani suggested it was typically bland and lacking courage:
“Voters won’t reward the party for this Budget. Trying to be all things to everyone looks like avoiding hard decisions. Was this a climate change Budget, a health Budget or a cost-of-living Budget? A little of all of the above sounds incoherent.”
Pagani says it was a “treading water” budget which takes the country neither forward nor backwards, and does nothing for dealing with child poverty or “intergenerational hardship”, which is pushed out as something to deal with in the future.
Similarly, social policy researcher Kate Prickett of Victoria University of Wellington says that, once again, the most vulnerable families have been forgotten by Labour, and Ardern will now fall well short of her child poverty targets. Prickett says:
“This budget will be remembered as the first to demonstrably leave poor children behind.”
Likewise, inequality researcher Max Rashbrooke says that in targeting income relief at middle New Zealand, the Government is heading for disaster:
“Labour has three main child-poverty targets for 2024; as things stand, it will miss at least two, and perhaps all, of those targets. This is potentially disastrous for a prime minister who has put such store by this issue, and for whom kindness is supposedly paramount.”
Rashbrooke laments that the myth of Labour’s so-called “radical incrementalism”, in which the Government was said to be “trying to achieve its grandest goals step by step”, is now exposed as a failed strategy.
The Government’s strategy, according to former Green MP Gareth Hughes, is one of “failure demand”, which he defines as avoiding addressing the root causes of crises and instead spending to fix the symptoms. Budgets like last week are remedial band-aids, and the outcome is that the crises continue:
“A rental crisis, a housing crisis, an inequality crisis, a poverty crisis, a biodiversity crisis, and a climate crisis still stalk Aotearoa.”
Of course, some defenders of Labour and Robertson argue that they are still radical, pointing to the large sums being spent in the Budget. But this is somewhat illusionary. Even Robertson emphasises that his own spending track forecast will get government expenditure below 30 per cent of GDP, and therefore National government. He says that his latest Budget represents a fiscal tightening.
Hence, although much is promised in terms of health, housing, and education, as broadcaster Rachel Smalley points out, “by 2026 annual operating spending is forecast to be lower in health, education and housing than it was in 2022.”
Robertson therefore continues to be something of a moderate, and perhaps could even sell his approach, and that of the Government’s as “sweet conservatism” rather than Billy Bragg’s “sweet moderation”.
In fact, on Budget day, Bragg announced he would be coming to New Zealand to play an exclusive three-night set in the capital, at Victoria University of Wellington, in February. Will Robertson show up to sing “Sweet moderation; Heart of this nation”? Probably. But the Finance Minister will need to be ready to receive a lecture from the stage about Labour politicians who betray the poor.
This article can be republished under a Creative Commons CC BY-ND 4.0 license. Attributions should include a link to the Democracy Project.
