From 'Honour the Treaty' to 'Toitū Te Tiriti'
Budget 2024 all about the finances for today, but little about economics for the communities of tomorrow
As I was not eligible to attend the Budget 2024 lockup, I ended up attending an alternative gathering. Thoughts on both follow.
46 years earlier
It was 25 May 1978, in my first year at university, that I actively participated in my first political demonstration. I vividly remember a group of about 30ish people in Wellington marching with placards reading Honour the Treaty, in response to the evictions happening at what was then known as Bastion Point. It was clear we weren’t very welcome amongst the public, with much abuse and objects directed at the group as it made its way through the Wellington streets.
46 years later, almost to the day, on 30 May 2024 I gathered with many, many others in Pōneke with placards reading Toitū Te Tiriti and Tino Rangatira flags flying for as far as the eye could see. Little (if any) abuse was evident, and the mood was one of affirmation rather than one of defensiveness. The differences could not be starker.
“Māori are here to stay, we are not going anywhere”
I have been privileged to work with many Māori organisations over several years. I have learnt much during wide-ranging kōrero and many whakaaro. However, ringing in my ears throughout this time is a statement I heard on day one, “Māori are here to stay, we are not going anywhere”. I never really understood its true meaning. At times, it seemed a statement of the obvious with little resonance for me; while at other times it seemed pointless in the face of the power and control being exerted by others.
But on 30 May 2024 I witnessed both the figurative and literal expression of this statement where its true meaning was clear as the day itself. Despite years and years and, indeed, generations of suppression and subjugation, the resilience and strength of hapū, whānau, and iwi is now clear for all to see - despite some choosing not to see.
A revitalised confidence that sees Māori viewing themselves not only as part of Aotearoa, but as playing a proactive role in leading and shaping its future.
A young woman with a Tino Rangatiratanga flag in one hand, while holding the hand of one tamariki with the other. A self-painted ‘Toitu Te Tiriti’ cardboard sign proudly held aloft in the other hand of the tamariki. Each conversing with each other in fluent te reo Māori, with kuia chiding/chipping in along the way.
Resilience and strength transcending generations was the resonance that was previously lost on me. The inheritance-legacy-inheritance-legacy cycle of life is a wonder to witness and truly inspirational when right in front of ones (watery) eyes.
And, as for power and control, there is little that the current (or future) occupants of that building in front of us could do to halt the drive towards an Aotearoa, foreign to the New Zealand of 46 years earlier. Not only are Māori here to stay, tamariki and mātua and kuia will continue to kōrero te reo Māori as their first language. And Māori, without fear, will continue to affirm their presence, with all grace and richness and quirks and warts and beauty and all.
And in this developing world, more Tangata Whenua and Tangata Tiriti will join in what was evident on 30 May 2024; contrasting with the few that joined 46 years ago. The communities and people of Aotearoa will become more diverse, self-assured, confident, and connected to their future in a nation situated in the South Pacific.
The disconnect that was Budget 2024
And so to that other event of 30 May 2024. The contrasts could not be starker. Budget 2024 reflected just how disconnected the occupants of that building on the mound are from that future Aotearoa.
Indeed, Budget 2024 saw a similar prescription from 46 years ago being rolled out - even if the illness was somewhat different. The context for Budget 1978 saw the emphasis, rightly, on external debt rather than government debt (which fits with a fixed exchange rate world); and it was the last, rather than the first, year of the election cycle.
But, there was inflation that needed to be tamed and a cost of living crisis to be alleviated. And so, the prescription is repeated in Budget 2024 - further restraints on government spending and shifts to income thresholds for some to gain tax cut/relief. It was as if the last 46 years had not happened.
Now the rate of inflation … (has) been cut by about half. To this it has been necessary to put severe curbs on personal and Government expenditure. Government expenditure will continue to be closely scrutinised …. Through our tax measures we have shown wage and salary earners that increased efforts will bring increased rewards. … This is a generous Budget, but no more than economic realities require.
Budget Speech, 1978
The words would not have been out of place in any of the pages of Budget 2024. Budget 2024 (like many Budgets before it) was a rinse and repeat exercise - Back to the Future from those on the inside.
And for the Aotearoa for the coming generation and beyond? There was eerie silence.
The contrast to the gathering outside reflected a disconnect clear to all willing to see - there were two different worlds on show.
The inheritance-legacy-inheritance-legacy cycle reflected in Budget 2024 was not only devoid of inspiration, but also devoid of aspiration given the conspicuous absence of an objective.
The economics that remains MIA
As an economist, I (repeatedly) ask myself - to what end? What is the objective? Or, in other words, what is the legacy we are aiming to leave?
Budget 2024 leaves us with inflation back to within target range by mid-2025 and real government consumption spending1 pared back to close to a 40-year low of 18.5% of GDP by 2028.
This reallocation of resources is consistent with the desire to minimise the role of the government in economic activity. It, however, appears counter-intuitive in light of the increasing demands on government to address growing shortfalls in health and education (and other) outcomes, alongside the 300,000 people forecast to be added to the population over the coming four years.
Ominously, Treasury signal significant concern over the probability of success of this prescription.
This analysis does not take into consideration additional demand pressures on services (eg, demographic changes), spending on new policies, or the crystallisation of specific fiscal risks or contingent liabilities. …
The high-level analysis indicates that the future budget allowances are unlikely to be sufficient to cover future cost pressures on existing services. This means any shortfall and spending on new initiatives will need to be offset by expenditure savings, reprioritisation or revenue raising policy changes for each of the next three Budgets for the Government to manage within the signalled budget allowances. This will involve difficult choices and trade-offs for the Government which are likely to become harder over time.
Budget Economic and Fiscal Update (BEFU), 2024
This is thinly-veiled code: expect more doses of austerity (aka expenditure savings and reprioritisation), as the numbers presented in Budget 2024 for the next three Budgets are difficult to believe.
The economics that is missing in action is an exposition of the changes in the structure and composition of economic activity required to address the challenges facing the nation. And, importantly, what is the transmission mechanism between lower government spending and tax relief/cuts, to these desired/required resource shifts?
Budget 2024 provided an annual financial plan. Missing in action was any consistency or connection with
a 20-year (at least) LTP (Long-term Plan)
a population strategy, alongside workforce development plans
a 50-year (at least) infrastructure plan
climate adaptation and mitigation activities to be pursued
an assessment of strategic risks and opportunities ahead
the inheritance-legacy aspirations of the communities and people of Aotearoa, as a diverse, confident, and resilient nation situated in the South Pacific.
Together, such a connected constellation on the horizon2 would display the direction towards which the nation was navigating; and would signal the shifts in real resources (technologies, knowledge, land use, transport and communications networks, people, workforce, and their communities) required to deliver the productivity to address the climate, equity, geopolitical, and technological challenges that must be our legacy for future generations.
That legacy needs to establish, enable, encourage, and ensure shifts away from a short-term output GDP focussed, low-wage, labour-intensive economy based on producing commodities, and extracting and exploiting resources for today.
A shift towards an economy that embraces a nurturing, maintaining, improving, and, critically, a guardianship attitude to the resources under its watch.
Rather than a plan that continuously insists on replaying Back to the Future, such a legacy would embrace the new future - embedding the inheritance-legacy-inheritance-legacy cycle of life reflected by those outside on 30 May 2024.
In other words, doing our utmost to be a good ancestor - and that’s the economics that continues to go MIA in annual Budget announcements.
That is, the proportion of the nation’s resources directed to meeting the demand for goods and services that are delivered by government.
Or, North Star, if you like.