Govt firm on budget responsibility targets

Finance Minister Grant Robertson says the government can meet its fiscal responsibility targets, despite escalating demands on its finances from public sector salaries, and health and education infrastructure. The minister was responding to calls from the Council of Trade Unions today to scrap its pre-election commitment to Budget Responsibility Rules. 

CTU president Richard Wagstaff said the rules, which aim to reduce net Crown debt to 20 percent of gross domestic product by 2022, were too restrictive to allow necessary investment in public services and infrastructure.

"Our political leadership must now reconsider the restrictive Budget Responsibility Rules plan and whether their revenue is sufficient to gut and repair the rot that’s built up in public services."

Pressure is mounting on the government to find money for substantial public sector pay increases and to fix rundown public health and education facilities.

However, Robertson told BusinessDesk he was sticking with the plan. 

“The government is confident that it will meet the Budget Responsibility Rules while being able to begin the process of rebuilding our social and physical infrastructure.”

Robertson, who is putting final touches on his May 17 Budget, may end up raiding some of the $1 billion a year Provincial Growth Fund in order to fund urgent regional social service requirements. The government's target date of 2022 for reducing debt is already two years slower than the previous National Party-led government's forecast. 

Labour has also promised to continue running budget surpluses, albeit smaller than those projected under the previous government, and to keep government spending at around 30 percent of GDP, reversing the declining trend forecast under National.

The budget responsibility rules have sparked criticism from the left of the Labour Party and elements of its support partner, the Greens. They were adopted before the 2017 election as part of Labour's bid to establish credibility as a prudent economic manager, and featured in its coalition agreement with New Zealand First.

Wagstaff insists the minister needs to reconsider. "The responsible way to deal with any crisis is to reassess your game plan," Wagstaff said in a statement, leveraging Prime Minister Jacinda Ardern's comments this week that the capital needs in the public health sector were larger than the government had anticipated. This follows reports of previously undisclosed major maintenance needed on parts of Auckland's Middlemore Hospital.

At the same time, nurses, teachers and the police force are seeking catch-up pay claims under a new government that they expect will be more sympathetic to the argument that their wages were screwed down hard during nine years of the National-led administration.

The New Zealand Nurses Union this week rejected a 2 percent wage increase offered by their district health board employers, leading Ardern to suggest government involvement in a process of independent mediation to try and avoid industrial action.

Wagstaff used mould as a metaphor for deeper problems in the health sector. "The prime minister has realised that underfunding in health goes even deeper than she expected when taking office. Mould is a visible symptom in our buildings, but it’s also visible in the unmet need for care in our community and the stress and burnout visible in health staff.

"This Government has committed not to present rosy budget figures at the expense of our people and our public assets."


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