Budget 2019 tells a story that’s skewed towards spending, materially downplaying the traditional financial context and its trajectory

Wellington, 30 May 2019 – “Despite the drama of the last few days, the much hyped ‘world-first’ Wellbeing Budget has largely delivered on its wellbeing promise, effectively spending everything and then some,” says Deloitte CEO Thomas Pippos.

“It was a midterm Budget by a centre left Government that felt more like an election year Budget. It was written in black ink, and was somewhat optimistic in economic tone, despite being written during an economic autumn.”

Budget 2019 overtly prioritised making good on infrastructure and social deficits. It assumed that the fiscal music will still be playing loud enough to stay in the black albeit that all indicators show that the volume is clearly decreasing. And there is effectively very little left in the tank in the near term, without going into the red, if the music stopped. So all good while the music is still playing. Not so good if it stops.

“Putting the wellbeing wrapping to the side then, what’s really different from previous Budgets other than a look and feel that showcases certain expenditure and outcomes in a modified way?” asks Mr Pippos.

Quite a lot it turns out. The Government’s risk appetite seems higher as the focus again has been on spending under a ‘wellbeing’ banner. And the detail outside of the spending is also quite muted.

Budgets are meant to be multidimensional, telling a balanced revenue and expenditure story. They are also meant to provide a narrative that looks to bring those numbers to life.

“The Budget was quite different on this front. It tells a story skewed towards spending, projected as being more palatable by being badged wellbeing. It’s very clever. The Government has sought to distance itself from traditional criticisms faced by centre left Governments while still doing what centre left Governments generally do,” says Mr Pippos.

It was deliberately focused on positively showcasing aspects of expenditure under a wellbeing banner and aligning the current Government with those programs. Materially muted was the traditional overall financial context and its trajectory, he adds.”

“As we saw in Australia, with global economic sentiment being cautious, will voters place the same weighting on wellbeing if economic fortunes start to turn? Time will tell as a lot can happen in a year; much of which is outside of New Zealand’s control,” concludes Mr Pippos.

ENDS

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