With its popularity trailing National for the first time in years, Labour will be hoping its May 19 Budget improves its short-term prospects and lays the groundwork for next year's re-election campaign.
Budget 2022 will serve two important purposes.
First, to help the Government re-gain control of the political narrative and halt its decline in the polls. Second, to fund and deliver on its key priorities before it heads into election year in 2023.
With COVID-19 moving into the rear-view mirror, Government attention will refocus on its traditional priority areas, and Finance Minister Grant Robertson has already made it clear health and climate change will be front and centre.
While Budget 2023 will form the basis of a forward-looking election policy, there likely won’t be enough time for its impacts to be felt by the public in a meaningful way. The outcomes from this year’s Budget will be critical to bolster the Government’s record ahead of the election.
Pre-budget announcements have focused on areas National has identified as vulnerabilities, such as school truancy and crime. Mr Robertson has also outlined new Budget debt and deficit rules to reassure voters of his fiscal responsibility after an expensive COVID-19 response.
Press releases and funding allocations may help Labour rebut political attacks in the coming weeks and months, but whether these programmes deliver improved public outcomes will be the real test, particularly amid accusations of undisciplined spending and delays in delivery.
Mr Robertson will also need to address the cost of living crisis with 77% of people thinking the Government hasn’t done enough to fix the problem. Voters shouldn’t expect anything radical given the Budget will have been locked down several months ago with most of the $6 billion additional spending earmarked for health and climate priorities.
One solution is “dual-purpose” spending that lets the Government tick climate and affordability boxes at the same time. That could include decisions on initiatives such as the 50% cut in public transport fees or reducing the cost of electric vehicles. There may also be instances where the Government has to navigate conflicts between climate change and cost of living objectives.
There might be enough left over for minor tax reductions or benefit increases, though this could be deferred until the election year Budget.
With all indicators pointing towards an extremely close race in 2023, the Government will be conscious of the political impact of every dollar it decides to spend.