Budget 2020: Big Numbers, But A Lack Of Detail

Sunday, 17 May 2020, 1:33 pm
Article: NZ Energy and Environment Business Week

First published in Energy and Environment on May 15, 2020.

Budget 20202 is full of big numbers to deal with a major health and economic crisis, however it is also lacking in detail.

In terms of energy and environment policy the centre piece is an announcement of $1.1b of environment and conservation projects which are intended to provide jobs and boost a range of initiatives to tackle pests, biodiversity and water quality.

These and other policies as announced by the Government are detailed elsewhere in this week’s edition of Energy and Environment.

Usually Budgets are put together over many months of work with new spending carefully assessed and detailed. It is a sign of how quickly Budget 2020 was thrown together that it is difficult to reconcile Treasury’s Estimates documentation with the announcements made by ministers.

An example is the Conservation Department’s new Jobs for Nature fund – it is not mentioned once by name in DoC’s estimates. This is not an accusation of deceit; it may well be the usual problem that ministerial announcements of projects bundle together spending spread around many pots of funding.

Because of this lack of detail many important factors are still unexplained such as how and when the money will be spent not only in the Jobs for Nature Fund, but many other ministerial announcements.

Usually such issues will be explained and tidied up during the Budget process, but this has not been a normal Budget process.

Another example is on the revenue side of the equation, for instance DoC’s budget still shows it receiving many millions of dollars from the international tourism levy – though Treasury says this is under review.

It may be Treasury believes its rather heroic assumption that international travel will return to something near normal in 2021. Sceptics might feel like some of other Treasury’s macro-economic assumptions that it has fallen into the old pattern of being pessimistic on the upturn and optimistic on the down.

A lack of time has also hit the Government’s plans to quickly progress infrastructure spending in the Budget. Instead this is some week’s away. There is also a large gap between the wish list of $136b put forward and the $3b allocated in this year’s Budget, though this may be addressed by the $20b still up Finance Minister Grant Robertson’s sleeve. Though reactions to Budget 2020 so far show the biggest spending Budget in history will still not go close to meeting every demand. The other constraint is that no matter how much money Robertson might be willing to throw at infrastructure, NZ’s already limited capacity to build has been reduced because it can no longer import the skilled workforce to do the work.

Another surprising omission from the Budget day legislation was the failure to introduce the resource consent fast track bill. Environment Minister David Parker had intended to introduce the Bill as part of the Budget Day Urgency motion and send it to select committee for passage in June.

On Tuesday, Parker said the Bill had still not been drafted leading to speculation he was still trying to lock in the support of the Greens, who had only indicated support to select committee. It is hard to imagine National blocking a Bill intended to stimulate the economy, but Parker may not want to deal with an Opposition seeking to extract a political price for support.

However, the Cabinet paper around the law change – known as the COVID-19 Recovery (Fast-track Consenting) Bill – has been released and it points to where some of the debate within ministerial circles is taking place.

The paper lays out the process for fast track consents with the protections outlined by Parker. However, it puts more emphasis on ministerial debate about giving automatic consents to some projects – in particular, NZ Transport Authority work, and self-consenting rights to some agencies – such as KiwiRail.

It is also notable Parker’s emphasis for the fast-track process is for Government agency led projects and not private sector work. This may all become clearer when the final Bill emerges. There is more detailed coverage of the Cabinet paper in this week’s edition.

First published in Energy and Environment on May 15, 2020.

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