The Budget: a socialist response

“Budget 2018 sets out the first steps in a plan for transformation.” That’s how Grant Robertson introduced Labour’s first Budget. Hopes for transformation brought Labour, the Greens and NZ First into government last year. A glance around at the inequality, underfunding and social suffering that have become normalised after nine years of National shows how much needs to be transformed. There is a $2.7 billion gap in health funding between 2010 levels and now, according to Council of Trade Unions research. About one in eight children live in poverty. Workers have faced years of stagnant wages, and students have seen cuts to allowance eligibility and caps to the number of years they can receive a loan. The Salvation Army describes poverty levels as “critical”, with almost 40% of families facing food insecurity. Unemployed workers on benefits face the punitive and demeaning culture of WINZ, while families with at least one member in full-time employment make up about 40% of those in poverty. This is the background to Budget 2018, and to the kind of transformations needed by workers, students, and the poor.

Labour campaigned on a series of reforms that, since they won office, have seen their popularity increase: removing fees on the first year of tertiary study; an increase in the minimum wage; a healthy homes guarantee; a winter energy package for retired workers; extension to paid parental leave. These are all reforms socialists should support, but they are just a small fraction of the range of measures needed to address the scale of the problems working people face.

Budget 2018 shows Labour and the Greens in a position familiar to reformist parties historically and around the world. On the one hand they need to relate to the hopes that delivered them votes, and power. On the other hand Grant Robertson and Jacinda Ardern need to reassure big business, the capitalist class, that the Labour-led coalition will be responsible managers of capitalism and will rule in the interests of the bosses. So Robertson both raised expectations and tried to dampen them down, saying that: “Transformation takes time. It cannot happen all at once. One Budget cannot instantly fix nine years of complacency and neglect.  We have to balance our ambitious goals with our responsibility for fiscal sustainability.”

But how long will workers be made to wait. Even if Robertson had delivered a genuinely transformational budget, it would still take years to construct the thousands of houses needed and public transport infrastructure. And what counts as “fiscal responsibility”, and responsibility for whom? This Budget illustrates the limits of Labour’s and the Greens’ self-imposed Budget Responsibility Rules. Guyon Espiner goes so far as to call it a “triumph of neoliberalism”, a budget following the same logic of National (and the Clark-led 1999-2008 Labour government before that). Robertson has delivered a surplus of more than $3 billion, with plans to raise the surplus to more than $7 billion by 2021. Government spending, Espiner notes, “will be 28 percent of GDP. That is lower than the figure for almost all of National’s three terms in office.”

Borrowing is not the government’s only option for raising funds, though at current low interest rates borrowing makes sense. They have denied themselves the option of taxing wealth. If they only undid the National government’s corporation and high earner tax cuts they would raise billions of dollars. And there is money here for increases in reactionary areas anyway: more for the GCSB spies, more for defence.

“Budget responsibility” is not a neutral concept. The government is making a political decision to prioritise surpluses and caps on government spending over urgently funding services in crisis. This is a decision to reassure markets and the employer class rather than deliver for workers, students and the poor who brought them into office. If Labour and the Greens continue down this track they will eventually collide with the hopes and expectations of their own supporters. That collision may not happen soon, but it is the trajectory this Budget sets up.


There is little in this Budget to address the chronic underfunding of public education. NZEI President Lynda Stuart calls it a “major disappointment”: nothing concrete on addressing teacher recruitment; a decrease in real terms in school running cost funding; no restoration of 100% qualified staffing in early childhood education. The PPTA finds “no new funding for the critical issue facing secondary schools”, teacher recruitment and retention, and only minimal gestures in special education. In tertiary education, cumulative underfunding from 2009 levels has reached $3.7 billion, and yet there is nothing on offer to address the enormous difficulties staff and students in universities, polytechnics and wānanga face.

Is there more for teacher pay? The only way to test this is in negotation and campaigning backed by industrial action, something NZEI and PPTA members will be debating in coming months.


There is more money for health, $800 million; enough, the NZNO, the health workers’ union, put it, to “keep going and a little more.” But much more is needed. CTU research shows that $805 million is needed just for the system to “stand still”, and much more is required to really reaffirm public health: $14 billion over ten years to fix facilities left to decay “because of underinvestment and deferred maintenance”, and an extra $593 million for population and cost pressures.

What will this mean for the nurses’, health care assistants’ and midwives’ contract neogtiations? Robertson told Corin Dann on TVNZ’s Q+A that there was a “contingency” in the Budget for nurses’ and teachers’ pay claims. We should push hard in our unions for pay deals this year to make up for the lost opportunities of the Key-English years.

You cannot serve two masters

Budget responsibility, or transformation? That is the choice in front of the government.

Susan St John from the Child Poverty Action group outlined just some of the measures the government could take in order immediately to lift tens of thousands out of poverty:

  • Ensure all families get their full entitlements immediately
  • Stop all sanctions in the benefit system for families with children
  • Raise core benefits for all beneficiaries by 20%
  • Index benefits and tax breaks for families to average wages and prices
  • Allow beneficiaries to work at least 10 hours at the minimum wage before any abatement
  • Align single and married benefit rates
  • Remove penalties for receiving gifts and loans from family
  • Toughen policy on loan sharks
  • Reform the taxation of housing to reduce speculation in housing and rent and house prices

These steps would save lives. Pay equity in the public service still needs to be addressed. Teachers and nurses need to win, and win big, to address the issues of attrition and recruitment in core public sectors. And wins for these workers should – we hope – lead to wage pushes from other groups of workers who have been kept back.

The Budget Responsibility Rules and Labour’s commitment not to introduce new taxes are both political decisions. The Rules are a self-imposed restraint. As CTU President Richard Wagstaff points out, the state of the public health system is much worse than Labour had been led to believe. The response to this should not be to dampen workers expectations – we need our healthcare, after all – but to reassess the Rules. Helen Clark campaigned in 1999 on raising taxes on the rich.

Ardern and Robertson do not want to do this, however, because they are addressing the ruling class. They are establishing themselves as a safe, reliable government for capitalism, and that means putting business-as-usual and stability for business profits above the kinds of transformation needed to deliver for the great mass of us. That’s why pro-business and conservative commentators like Tracy Watkins have welcomed this budget as National-lite. For the ruling class and its commentators it’s fine for the two big parties to quarrel over details. What matters is to them is that both parties share the same common goals: workers kept in line and business interests coming first.

Despite the disappointments of the budget, we must keep a sense of proportion. There were still reforms: boosts to Working for Families, financial support for new babies, and cheaper doctors’ visits will all be welcome by hard-pressed families.

To win more, however, we need to organise to put pressure on this government. All the messages coming from Labour and the Greens will be to wait and not to rock the boat. National, after all, are ready and waiting to take up where they unwillingly left off. Change cannot come overnight, they say, and we need to be patient as the government, in Robertson’s words, “balances all the different priorities.”

But politics abhors a vacuum. Labour and the Greens have raised workers’ expectations. If they do not deliver there is every chance some of these expectations can turn to frustration channelled in rightwing directions. If we do not put pressure on the government to make real differences to people’s lives they will respond to pressure from the ruling class to undermine reform and be given pro-business concessions. Already, in the wobbling around the details of Labour’s investment in state housing and in Kiwibuild, we see this at work.

To break through the Budget Responsibility Rules and to keep the government to its election promises means going beyond the limits of Labour and the Greens. The nurses currently show us the way with their rallies across the country making health funding and pay national news. The teachers will have paid union meetings coming up from which they can launch their campaign for funding and pay too. The First Union, with canny reporting and old-fashioned hell-raising, have forced retail companies like Smith City to end the scandal of unpaid working time. There are signs – small signs, granted – of an upturn in workers’ confidence and combativity. We have had enough of the old ways and want some new ones. Budget 2018 does not deliver the transformation the government parties promise, but that means it is up to us as a class to make them. There are some reforms to welcome, but then there are more extensive reforms and a better world to win.