New Zealand: Labour government’s first budget starves essential services


New Zealand: Labour government’s first budget starves essential services

Tom Peters

22 May 2018

The Labour Party-led coalition government’s budget, announced last week, continues the severe underfunding of services, including health, housing and education, while providing more money for the military, police and prisons.

The government was stitched together last October following nine years of rule by the conservative National Party government. Prime Minister Jacinda Ardern declared that record levels of homelessness and inequality proved capitalism had “failed.” Media commentators, unions and pseudo-left groups promoted illusions that Labour and its partners, the Greens and NZ First, would carry out progressive reforms and reverse the austerity measures imposed since 2008.

Finance Minister Grant Robertson presented the budget as “transformational,” telling parliament on May 17: “We are determined to turn the page on the ideology of individualism and a hands-off approach to the economy that has left far too many people behind.”

In reality, Labour has adhered to strict “Budget Responsibility Rules,” keeping core spending at 28 percent of gross domestic product (GDP)—lower than the figure for most budgets delivered by the previous government. Robertson announced a surplus of $3 billion and promised to reduce net debt below 20 percent of GDP.

The budget forecast economic growth of just under 3 percent per annum for the next five years, a figure widely described as overly optimistic. The country’s economy, largely based on agricultural exports, is highly exposed to global volatility. In the event of a major downturn, Labour will inevitably impose deeper cuts to social spending, just as it supported National’s austerity measures following the…

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