Budget takes National to another wave of popularity

Venkat Raman – 


Budget takes National-John Key WebThe Eighth Budget of the National government, delivered to Parliament on May 26 by Finance Minister Bill English has received widespread acceptance, although a few, including United Future Party Leader and Internal Affairs Minister Peter Dunne, have dubbed it ‘boring.’

Budgets are those sorts of activities that evoke a variety of reactions, ranging from utter disappointment to utmost criticism. But National’s Budget 2016 has struck of popularity and if elections were held on May 26, the Party could have obtained a comfortable majority. It is rare in the political history of New Zealand that a Party continues to ride on the preference of people.

That is not to say that Election 2017 is a foregone conclusion. With at least 15 months away, the next poll would be hard to predict.

Points to Ponder

But there are a number of reasons for National to feel confident.

Firstly, the economy is performing well, with growth figures expected to be about 3% over the next three years or more. Treasury predictions indicate a return to Budget surplus in the next financial year. Creation of jobs would help further growth.

Secondly, investments in a number of areas are likely to improve and increase economic activities. Infrastructure development and investment incentives are expected to increase domestic and foreign investments.

Thirdly, the stoppage of brain drain and the reversal of immigration is seen as a credit to the performance of the national economy. There are more people returning to New Zealand than those leaving; with more people being accorded permanent resident status, the immigration balance sheet is robust.

Fourthly, the export sector is firming up and the country recorded an increase of about $2 billion last year.

Budget takes National-Budget at a Glance by PwC Web

Positive indicators

Fifthly, as the ultimate economic indicator, the nominal Gross Domestic Product (GDP) is forecast to $17 billion higher over the five years to June 2020, compared to the Half-year update. This would flow into higher-than-expected tax revenue.

Sixthly, the brightening economic prospects may encourage National to consider tax incentives for companies and individuals. This would prove to be an election boom.

John Key has proved to be a strong leader and as he completes ten years as the Leader of National in November 2016, his popularity is higher than any of his rivals within his Party and in Opposition.

Labour’s woes

In contrast, Labour has experienced four leadership changes since the 2008 general election. Andrew Little, the Leader, has had more success than his recent predecessors in reducing internal bickering between the party’s factions. However, fresh divisions emerged within the party earlier this year over ratification of the Trans-Pacific Partnership (TPP) agreement. Two former Labour leaders and sitting members of Parliament (MPs), Phil Goff and David Shearer, have voiced their opposition to the party’s anti-TPP position.

Mr Little took the unusual step of allowing Mr Goff to vote with the government on enabling legislation, in recognition of the fact that the latter was Trade Minister when TPP negotiations began under the leadership of Helen Clark.

Mr Goff is one of two senior Labour MPs to have announced that he will not contest the next general election in 2017. He is running for Auckland Mayor and chances are that he will get it.

The party’s decision not to support the TPP also rankled with Clayton Cosgrove, a former Cabinet Minister and Shadow Spokesman for Tourism and Commerce under Mr Little, who announced on April 11 that he too would not seek re-election.

The departure of two of Labour’s more business-focused MPs leaves the right of the party weakened and could lead Labour to shift further left as it reviews existing policies and contemplates new ones.

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