The Verge of Greatness

I tried to give this government the benefit of the doubt. I really did. I believe campaigning doesn’t always reflect governing, and that any good, democratic citizen should give parties a chance. I played devil’s advocate, aand gave them their flowers when they earned it.

That hasn't happened too often.

I don't need to list every grievance. I'm reorienting to focus on nonpartisan explaining over at Why We Vote. Venting incandescence here hardly helps with that. What pushed me over the edge was ACT and National’s sudden turn against immigrants - cutting against the core of what their parties exist to achieve: help the hard workers and help the businesses. Not only were there big policy issues on this front - there isn’t even a big constituency for this!! It started to feel like being governed by social media brainrot.

So I didn’t come to this budget with an open mind. And yet, to my surprise, I find it’s…about as good as you could hope for from this government? If we accept that National and co. are going to have certain goals and priorities that don’t align with what we might prefer to see invested in - that they’ll let climate change and poverty keep rolling on while they try to balance the books - then by what we can realistically expect of them, rather than simply failing them for not passing a socialist manifesto, they almost pass.

This is all the more striking coming from a government that really branded itself in the worst ways with its past two budgets. In 2024, the $14.6 billion tax cut for landlords was never adequately defended and became an absolute millstone. How can this government ever credibly defend any little cut when the entire deficit could have been resolved simply by avoiding that handout to the already-sorted? What a no-brainer to stay clear of - but then, those politicians in Wellington wouldn’t have received the backing they needed to wind up in power. Bribery.

And in 2025, the Budget was memorably “saved” in a mishmash of mixed messaging between National and ACT by nixing pay equity agreements. What a gut punch to tens of thousands of working women. What a godsend to the Labour Party, who have addressed none of their issues around being an out-of-touch, ineffectual managerial class. Now they can point to a process they started and contrast it clear as can be with the Coalition. One side looks after working-class women who actually do the hard yakka. The other side looks after landlords. What a dismal contrast. These sorts of own goals make the election this year look closer than it ever “should” be, considering the polling strength of NZFirst compared to the institutional weakness of both Labour and Te Pāti Māori.

This budget has avoided all such landmines. In fact, it’s a remarkable exception to the trend of election year budgets, which are typically particularly keen on handing out some bribes to voters. The right’s preference is for tax cuts, the left’s, welfare raises. No matter how otherwise prudent Michael Cullen or Bill English or Grant Robertson were, all succumbed to this self-serving urge. This is the rare case of a Finance Minister putting her foot down and saying that fiscal responsibility actually should come ahead of buying your way back into power. And, god forbid, that the voters are actually smart enough to appreciate that.

Three things hold me back from a full endorsement.

Number one: an eye watering $2.3 billion commitment to defense. If I were a conservative lobbyist or think tanker, I would be circulating a poll right now asking Coalition voters the following:

The 2026 budget dedicated $2.3 billion to defense, $450 million to police, and $400 to prisons. Do you prefer this allocation of spending, or $450 million to defense, $1.35 billion to police, and $1.35 billion to prisons?

It’s a staggering waste of money on glorified LARPing. No doubt the intelligence services had some very severe tuttering to offer behind closed doors, just as our leaders and intellectuals warn of an increasingly dangerous world out there and admire leaps and bounds ahead in drones aboard. Some rise to prep for natural disaster relief across the Pacific and to prevent another HMS Manawanui mess? Sure. 

But the moment you cross the tracks from “doing right by our Pacific neighbours (and earthquake struck Cantabrians) who can’t afford to look after themselves” to “military capabilities”, you are importing foreign arguments that make no sense in a New Zealand context. It is an increasingly dangerous and uncertain world, as the rules-based international order collapses. We should not dogmatically trust in the USA, China, or any other power. If you are the UK or France or Germany, there is a legitimate argument to invest in guns over kids and schools because you want to deter Russia, uphold your NATO obligations, and appease Trump.

We are New Zealand. We very famously bombed out of our one defensive alliance decades ago, with no plans to rejoin, and are an infamously useless partner to Five Eyes. The Western powers don’t trust us with critical intelligence and cannot exercise any obligations over us. Trump doesn’t give a hoot about us compared to hectoring Spain over its NATO spend.

What is our lethal capability meant to accomplish? Let’s say by some freakish chain of events we get dragged into an eminently justified big war, like joining a coalition to defend Taiwan against Chinese aggression. It does not matter if we literally triple the size of our military. We cannot possibly alter the outcome of any such conflict. And doubling our military spend won’t even double our military in practice. 

This is a huge waste that we simply cannot afford right now. It’s a bizarre break from the ranks that throws a huge cloud over Judith Collins’ legacy - and leaves questions about whether this was more of a parting gift to her than a decision for the benefit of Kiwis, or the Pacific. (And don’t even try the “catching cocaine-chocka cartel boats” argument. The harder you fight the War on Drugs, the more you incentivise the winners in the narcotics marketplace. Imagine what a billion dollars could do for, dare I say it, wraparound rehabilitative services! You wouldn’t eliminate our drug problem, but you’d be a good sight closer to it.)

The next issue is a cut that should never have been made: going after social housing. As ever, right-wing welfare crackdowns rest on two faulty premises. One: somebody will always bludge and exploit an opportunity for free stuff. Boo hoo. You’ll never get anything done for people who do need it if you’re constantly busy weighing souls for moral purity. You’d get far more out of means testing super. Two: a cut in one place eliminates the cost. More people out on the streets, unable to raise their kids in a stable housing environment, turning to the bottle or the pipe, simply transfers and enhances costs across other services, in places where they’re far harder to deal with. This is one “bribe” well worth paying. 

Past the very real havoc that this will wreak in human lives, it’s an obvious political embarrassment because we’re still somehow doing this thing where wealthy government ministers insist they need taxpayer handouts while they take away handouts from poor people. There’s just no getting around how out of touch it makes them look, and it’s pathetic that any government minister who insists that they are doing what’s best for New Zealand and that the Opposition will bankrupt and ruin the country would be willing to in any way slightly damage their electoral chances just to afford a new iPhone for the grandchild at Christmas.

The third  wasn’t a matter of depending at all but a relatively rare change in recent years: to revenue. Unusually for a National Finance Minister, Nicola Willis seems very keen on exploring a range of new taxes. (Bill English only wanted one: a rise on GST that broke an election promise and which we are forced to pay to this day. Cheap shot!) Time and again, she’s been barred by her coalition partners, and now the latest pitiful levy on banks for just $50 million a year - which will be eaten up by their own regulation costs - has been stalled from going any further by ACT.

My disagreement is easy to explain here: New Zealand needs to balance its budget sheet. Any way you can raise taxes on great mountains of wealth, that won’t have knockon effects on poor people, is a win. The thing about enormous wealth is you can take some of it away and the rest will still be sitting there, earning more wealth. To raise money by going after our social housing provision instead is clearly worse for society.

Yet it also concludes this article on a concerning note for the government. Three years ago, it was hard to see the coalition working well together, but they’ve been able to cooperate and can for the next term. Yet as a band of economic reformers, they haven’t really worked out. Between the three parties, there are enough different interest groups covered and ideological preferences insisted upon that they’re just pretty bad at mounting any sweeping program to balance the books. Hell, I’ve made it this far without even mentioning the billion dollars for rail, and while I’m not cold on rail - anything that gets freight out of long truck trips that damage highways is a good thing - we all know that that wouldn’t be happening if an eighty year old populist wasn’t around to play with his choo-choo engines.

Treasury’s one unexpected bit of “sugar” was a promise of a return to surplus by 2029, a year sooner than expected. Sounds good. Yet that relies on the idea that we’re gonna leap from our current, sub 1% economic growth to reach 2.7% per year, every year. Given the darker and more dangerous world we now live in, that just seems delusional. So when the government is stuck as it is…if the next term is supposed to take even more power out of Nicola Willis’s hands and give it to Winston Peters, a man who lives and breathes for handouts and bribes, who has never made balancing the books a priority of his, who will never in a million years allow a single scratch on the single biggest cost of government, superannuation…how is the most right-wing coalition since the 90s actually supposed to deliver a return to the holy grail finances of the 00s and 10s?

This was their last chance before the election to convince us they could. Willis and her team have made a valiant effort. They just can’t overcome the circumstances they are working within. This election offers no solutions on this front either way. All we can do is pray that events won’t rear their ugly head again, and take us from bad to worse.