There are three political dimensions to the budget’s star “children in hardship” item.
One is John Key’s ownership. That fits his protestations of concern about disadvantaged children — though action has been slow coming. He made his pile in finance. This shows a human side.
The second is that hardship is socially divisive. It threatens social stability and broad prosperity. Moderate conservatives — Bill English is one — do not like social instability.
The third dimension is votes. Disquiet has grown about the large numbers of children in “persistent deprivation”, English’s phrase yesterday. That disquiet has spread beyond the do-good brigades.
If “they” in the cabinet seem to be doing something about that deficit, that disquiet might ease.
In other words, the government is spreading bitumen in a deepening political pothole. It might keep some voters from leaving National in 2017.
The rest of the budget is much in that vein. This is not a blockbuster third term kickstart. It is steady-as-you-go.
But it may not be quite as steady as it looks. The economic forecasts look optimistic, with the risks loaded on the downside. The forecast 2015-16 surplus is knife-edge. Resumption of contributions to the fiscally important Superannuation Fund is pushed out to 2020-21.
Also, embedded in the modest $1 billion new spending are fishhooks.
For example, $320 million additional health funding for 2015-16 will not ease the tightening pressure on hospitals. “Maintaining existing services and expected demand will be challenging,” said PwC yesterday. And it “misses the opportunity to invest in long-term conditions prevention which could reduce future demand”.
English is funding most of the hardship package by removing the kickstart subsidy on KiwiSaver and imposing a new airport tax.
His tight rein now is to fund an election tax cut pitch in 2017, which will probably only offset fiscal drag.
The budget also skirted round two political timebombs.
On what Winston Peters in yesterday’s debate called “the regional and provincial deficit” — now a big talking issue in local government circles and a quiet worry on government back benches — Steven Joyce offered $8 million a year for “new, privately-led regional research institutes to support increased innovation”.
Total research spending stays below the OECD government average. Investment for the future?
The other was housing: $52 million to convert government land for development in Auckland.
Housing may decide whether steady-as-you-go is steady enough for the 2017 election.