Thursday, May 18, 2006



Expectations and reaction

What was I expecting from the budget? Not much - this being a boring year where the money had already been spent - but perhaps a modest increase in official development assistance, and maybe some action on carbon payments to forest owners or tighter regulation of vehicle imports as part of the rework of climate change policy. What I got was no real increase in ODA (it will move from 0.27% of GDP to 0.28%. Big deal), and $100 million in contingency funding for biofuels and climate change policy. The latter sounds good (though I'm still scrabbling for details on how it is to be spent), but the former is very disappointing. The UN benchmark for foreign aid is 0.7% of GDP. Not only is the government not even coming close - its not even coming close to its own self-determined (and incredibly lax) benchmark of 0.35%. So much for keeping their promises.

I expected the government to spend on roads - but I didn't expect quite so much. The extra money can only be described as a major investment, though unfortunately its almost all going on roads rather than giving Auckland the rail network it deserves. There's an interesting graph in the Treasury documents which is quite revealing about the trends in spending in this area over the past decade:

So, National funded roads at about 0.8% of GDP during the 90's, whereas Labour has already seen it rise to 1.0% of GDP, and is planning to increase it to 1.3%. In nominal terms, the increase is even more impressive. And yet, National continues to bang the drum about roading and imply that Labour has not spent enough. I think their past performance in this area gives the lie to their argument and shows which party really invests in rather than running down our infrastructure.

For those still banging on about surpluses without tax cuts, Cullen had some interesting titbits in his preamble about where that money came from. $2.5 billion of it was due to windfall returns from Crown Financial Institutions - the Cullen Fund, EQC and the Government Superannuation Fund. They're part of the crown, and so their profits naturally go on the government books and improve its net financial position - but it can't (or rather, shouldn't) be spent on anything other than the purpose it was invested for. Once, the National Party understood this - but now they seem to be in the same camp as people who react to an unrealised increase in the value of their super scheme (and one which could disappear, to boot) by splurging on a sports car. There's only one word to describe such people: fools. And I'm very glad they're not running the country at the moment.

7 comments:

Is it all on roads though?

My understanding is that the funding is for the whole National Land Transport Programme - including public transport.

Posted by Jordan : 5/18/2006 05:48:00 PM

Either way, it shows that Labour has invested far more in this area than National ever did.

As for the increase, it seems to be pretty much all for roads. There's a transfer of money from transport to Treasury for upgrading the national rail network, but there doesn't seem to be anything extra allocated for improving public transport or helping Auckland get the infrastructure it needs for the Rugby World Cup.

Posted by Idiot/Savant : 5/18/2006 06:00:00 PM

A huge increase in spending on roads is incredibly shortsighted, when rising oil prices and climate change are considered. The construction of roads is incredibly carbon intensive and only encourages further unsustainable road transport use. However, when peak oil starts to push oil prices to a truly high level, we'll be left with large, expensive and useless white elephants like Transmission Gully.

I stand by my claim that no previous NZ Government has been worse for the environment in absolute terms.

(not to say that a National one wouldn't have been worse, but that's really the poorest of excuses - unfortunately it seems like the only one Labour Party members can give me)

Posted by George Darroch : 5/18/2006 09:39:00 PM

George: while not pleased with the exclusive focus on roads and ignoring of alternatives, I think you're being a little hyperbolic here. Worst for the environment ever? At least they haven't built a damn flooding a pristine valley (say)...

Posted by Idiot/Savant : 5/19/2006 08:44:00 AM

Worst for the environment? Dubious. Worst for the country? Quite possibly. Purely by virtue of happening to be in office at the wrong time, and National would have been even worse, but even so. The government's ostrich approach to climate change and peak oil are going to do far worse than leave us with some white elephant roads. The biofuels contingency funding, whatever that is, is a drop in the bucket.

Posted by Commie Mutant Traitor : 5/19/2006 11:24:00 AM

The biofuels contingency funding, whatever that is, is a drop in the bucket.

I think it will go more on climate change (Carbon payments? Buying credits internationally?) than biofuels. Introducing biofules won't be expensive for the government - the fuels are already competitive on the market, so there's no need to subsidise. Instead, the problems are around certainty and infrastructure, both of which can be solved by regulation and announcing policy well in advance so the market can adapt.

Posted by Idiot/Savant : 5/19/2006 11:43:00 AM

Certainty? No fear of that, the only thing one can rely on from Labour's enviroment policy is that they'll talk big only to end up pouring money at the status quo.

Want to build roads in Auckland, or Wellington? Put a big ass toll on them, they'll be nothing but another giant parking lot anyway. Anyone with a brain knows there's nowhere for the cars to go off the end of them.

Posted by tussock : 5/20/2006 03:02:00 AM