A budget for benefits not jobs

The centrepiece of last week’s budget was a massive $3.3 billion boost to welfare benefits.

In line with the Welfare Expert Advisory Group recommendations, main benefit rates will be lifted by between $32 and $55 per adult.

Families with children will receive an additional $15 per adult per week. However, the Welfare Expert Advisory Group also called for a big investment in making sure that those currently on welfare were made ready for work and there was nothing in this budget for that.

It’s essential we support our most vulnerable, but welfare will never be a pathway out of poverty. Having a job is the best route out of hardship and will provide the greatest lift to household income. Yet, one in every nine people are now on a main benefit under Labour.

Without initiatives to provide new job opportunities or dedicated support for people to move off the benefit, we risk creating inter-generational welfare dependence and too many people stuck in a cycle of hardship, reliant only on State assistance and a belief they will be there for decades. Helping people into work is the kind and compassionate action to take.

The real disappointment is that there was nothing in this budget for middle New Zealand. These are the people who get up early to go to work every day, work multiple jobs and long hours, support themselves and look after their family, and pay their taxes on their low and middle incomes.

These New Zealanders need assistance because of the economic conditions made worse by this Labour Government. Increasing the cost of living by adding more costs onto small businesses was always going to make life harder for our most vulnerable. Piling more costs onto residential landlords was always going to make life harder for renters by decreasing supply and forcing a spike in rents. Sadly, hard-working middle New Zealanders and small business owners are not this government’s tribe and so this budget provides very little for them.

Another big theme is that this is not a budget about growth or private sector led prosperity. This government doesn’t understand that it is actually private enterprise that creates jobs and growth. New Zealand’s ability to become more prosperous and to enjoy a higher quality of life as a nation depends on the size and output of our economic engine. I believe that it’s growing New Zealand’s economy that will provide the opportunity for all New Zealanders to benefit.

New Zealand economic growth is expected to grow modestly relative to other countries until 2025.

With the right pro-growth and pro-trade settings New Zealand could have been set to gain more from the massive global growth curve that will occur over the next two or three years. This adds to the narrative I’ve spoken of in earlier columns of us winning the Covid battle but losing out in the economic upturn because of our economic and vaccination settings.

I will leave you with two final concerns. The first is inflation which is on the rise around the world due to all the stimulus spending of governments. If we do see inflation start to get away in the New Zealand economy, then the Reserve Bank may be forced to increase interest rates resulting in reducing mortgage affordability and business and consumer confidence.

The second concerns paying back our debt. We have been borrowing $110 million per day and our net core Crown debt is forecast to peak at 48 per cent of GDP compared to 19 per cent of GDP early last year. Without a more aggressive paying down of our debt, there is a risk for us if we face further Covid-related shocks or natural disasters in New Zealand.

Borrowing money is fine if it is spent on inter-generational productivity enhancing infrastructure. Yet, unlike the Australians, there are no big nation-building infrastructure projects here. The government wasted an opportunity to come up with some really big calls about renewing, replacing and greening infrastructure.

  • Christopher Luxon, MP for Botany