Budget Alternatives and Alternative Budgets.



IT WAS ONE OF THE THINGS I admired most about the NewLabour Party (and later the Alliance) – it’s Alternative Budget. From its inception, in 1989, until its absorption into the Alliance, the NLP Leader, Jim Anderton, made a point of pre-empting the Government’s official Budget Statement with one of his own.

Along with Anderton, himself, the alternative document was put together by the NLP’s economic consultants, John Lepper and Petrus Simons, with invaluable input from the University of Otago’s Professor James R. Flynn. The irrepressible Flynn was the party’s unofficial conscience when it came to fiscal policy, insisting that it was politically unethical and tactically foolish to offer voters all manner of benefits without, at the same time, demonstrating how the party intended to pay for them.

It was Flynn’s stated intention to make not only his party comrades, but also the wider electorate, understand that democratic socialist outcomes could not be guaranteed in the absence of democratic socialist taxes. He knew that the fastest and most effective way of turning a party of idealists into a party of realists and pragmatists was by showing them how high income taxes would have to rise in order for them to cover the costs of what Bill English describes sneeringly as “nice to haves”.

It was very instructive to observe how the policy maximalists would wince when they saw how high the income taxes of not just the obscenely wealthy but ordinary middle-class professionals and skilled wage workers would have to rise if the Party’s pet projects were to go ahead. The wily old Flynn knew that the prospect of having to levy politically suicidal income tax rates would spur the membership into moderating their demands and searching for alternative methods of revenue-gathering. The result was the NLP/Alliance’s adoption of the Financial Transactions Tax – a measure which, very neatly, solved the problem of how to pay for paradise.

The preparation of an alternative budget is a highly educational (not to say therapeutic) exercise for any political party, but it is especially useful for radical parties like the NLP/Alliance and ACT.

That the ACT Party’s new leader, Jamie Whyte, not only recognises this but has actually gone ahead and released an alternative budget bodes very well for the party’s electoral future. At the very least it has forced ACT’s members into thinking seriously about where they want the country to go and how they propose to take it there.

As neoliberals, not democratic socialists, the task confronting ACT’s members would have been pretty much the opposite of the one facing the NLP/Alliance. Rather than starting with all the things they’d like to have and then calculating how much tax would be needed to pay for them, ACT’s members began by asking themselves how far taxes should be lowered and then worked out how many government services and transfer payments would have to be eliminated to make that figure possible.

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The answer, of course, turned out to be: “A helluva lot!”

Whether the scale of expenditure cuts required to produce a top income tax rate of 17 percent made ACT’s members wince I do not know, but, after reading their alternative budget, I’d wager that very few of them were in any doubt about the radicalism of their party.

Why 17 percent?

Well, I have a theory about this seemingly random number. Originally, I suspect, the desired top tax rate was deemed to be 10 percent. But, when ACT’s economic advisors told them that to bring the top rate down to that level would require them taking a very large and a very blunt axe to health, education and welfare spending, they reluctantly decided that, 10 percent being electorally suicidal, a higher figure was required. Hence 17 percent.

Set at this level, Whyte is able to reassure (the Epsom?) voters that taxes can be lowered dramatically without slaughtering the New Zealand electorate’s sacred cows.

It is interesting to note that immediately following the release of its alternative budget the value of ACT’s “stocks” on iPredict rose to 3.8 cents. In other words the political speculators now expect ACT to win nearly 4 percent of the Party Vote.

Why, then, does Labour not produce an Alternative Budget? Wouldn’t such an exercise be of enormous assistance in putting some credible flesh on the bones of Opposition policy? Would it not ensure that when John Key, channelling Tom Cruise, began shouting: “Show me the money!” the Leader of the Opposition was well equipped to do exactly that?

Because, when you think about it, there’s really no excuse for an opposition party not being able to cover its policy bones with detailed flesh of. Opposition politicians would, after all, like us to believe that they have what it takes to form an alternative government. So, surely, within its ranks there ought to be sufficient wit and experience to pull together an alternative budget?

Oh yes, I know, the political “strategists” will have none of it. “Why show the Government your hand?” They will ask. “Why risk Treasury ripping all your numbers to shreds? The resources just aren’t there for the Opposition to even contemplate producing a document to challenge the government’s budget statement.”

But no one’s asking for that sort of detail. All Labour’s supporters want to hear is the two Davids – Cunliffe and Parker – making confident replies to Government and news media questions about numbers. The policies of the alternative government have got to add up. If working people are going to be better-off – or worse-off – as a result of Labour’s policies, then surely they have a right to know by how much? If Phil Twyford wants to be believed when he says the next Labour Government will build 10,000 affordable homes every year, then he must be able to quantify “affordable” in a way that makes sense to a young couple bringing in $70,000 per year.

The so-called “cheese-on-toast” budget that National will deliver on 15 May is unlikely to be spectacular – but it doesn’t have to be. The Government will simply point to their handling of the Global Financial Crisis; to steadily expanding economic activity; to rising business confidence and falling unemployment and say: “See? It’s steady as she goes. The economy’s in safe hands.” The advantages of incumbency are numerous and usually decisive.

Unless. Unless they are systematically undermined by an Opposition with a clear and compelling story to tell. Using broad brush strokes to outline their alternative narrative, but also supplying sufficient detail for ordinary people to be able to imagine themselves into the story.

If there really is an alternative – for God’s sake, let’s hear it!


  1. Yes lets hear it, and lets include taking care of the 285,000 children living in poverty, and the low income working families too.

    Lets put our children (our future) in the center of the numbers.

  2. Interesting insight Chris. I always enjoy a story that includes that delightful character Jim Flynn, a lecturer of mine not too long ago.

    I suspect the reasons for the lack of a genuine alternative from Labour is for the reasons you note above, as well as the simple, cynical reason that detailed, complex policy doesn’t win many votes. While we all complain about the dumbing down of political discourse, it also reflects a demand from the national electorate for snappy sound bites and emotive policy-making i.e. ‘string the bastards up’. A likeable personality and a good quip win at least as much support as an actual plan.

    All that said, I think some of the smaller parties would do very well to take a lesson from the old Alliance/New Labour crew. A professional, well-researched and thoughtful alternative budget from, lets say, MANA, would go a long way to convincing at least some of those beltway hacks (Patrick Gower I’m looking at you) that MANA is actually the real deal, rather than a bunch of activists with a utopian wishlist that has no chance of implementation. Change the perception of your party with these folk and you might change the wider narrative that is currently dedicated to marginalising you.

    I personally would love to be involved in such a project. [sigh], if only they knew. Keep them coming Chris.

  3. Hi Chris. Budget time, time to hand out the lollies, or throw them up in the air and watch the punters come running. My head starts to ache after the first couple of percentages and I’m sure I’m not the only one. I do have to comment though, for what it’s worth, on the price of food staples which hikes at odd intervals throughout the year, usually at the end of a festive season. Flour, over $1/kilo… sugar, $1.60/kg… butter, $8/kg…
    I’d like to see a budget one day which is delivered by someone who actually has to live with these kind of maths, as opposed to the number of trillion dollars a superior bandwidth can deliver on the high frequency trading buzz. And not one of those faux housewife Thatcher/Richardson type polies who lecture on about living within one’s means.

  4. “Chris writes: “Because, when you think about it, there’s really no excuse for an opposition party not being able to cover its policy bones with detailed flesh of. Opposition politicians would, after all, like us to believe that they have what it takes to form an alternative government. So, surely, within its ranks there ought to be sufficient wit and experience to pull together an alternative budget?”

    Oh, come on Chris, you are a bit naive here, or misguided by wrong advice.

    It is so easy for a smallish party to present an “alternative budget”, or to make great promises for whatever policies they will bring in, “when”, or rather “IF” they will be in government. That is why ACT had nothing to lose doing just that. They have been below the 1 per cent polling margin for ages, so it is all about getting media attention, to make people listen up, nothing else. They will NEVER have to deliver on their claims and promises.

    Also did the ALLIANCE not have a chance to become the leading party and ultimately dominate a government party in their days, despite of their early results in some areas. They were dependent on going it with Labour, in some form or another.

    Hence we have small parties come up with sometimes a bit over ambitious if not loony policy proposals, as they know, it will appeal to some of their loyal supporters, perhaps get a few more votes, but will never have to be put into practice, as they will always have the guaranteed chance to explain it away, why they did not have to deliver (coalition or support agreement).

    Only the Greens now have to be more careful with this, given their polling above 10 or even close to 15 percent. They have a good chance to be in government, in large enough numbers, holding ministerial roles and responsibilities.

    As for Labour, I agree that they should deliver more in clear policy and figures. But it would be idiotic to expose themselves to criticism and figures being picked apart, while the present National Party led government has delivered very little new policy so far, is only going to present real figures to day, and still leaves their option open, to deliver (in words) more promises, of perhaps tax cuts, before the election, that being for “the future”, all going well.

    So Labour is wise to wait until the last 8 weeks before the election, to then bring out important policy announcements with more detail bit by bit, after this budget.

    I am disappointed though about Labour not having presented any real policy on welfare, apart from the “Best Start” policy, still somewhat unclear housing and economic policies, which will definitely primarily be benefiting the much cherished MIDDLE CLASS.

    They have been totally silent on the welfare reforms since they were passed and then implemented last year. It is like they are now largely in silence in agreement with these rather radical reforms, that are not just about “social obligations”, drug testing and stopping benefits for those facing warrants for arrest.

    The talk about “helping” people “locked in welfare”, “removing barriers” for disabled and so is much window dressing, and what it is really about, is to implement a slightly more moderate reform as has been followed in the UK for years, pushing many sick, injured and disabled to the limits, even in some cases to suicide. We hear no criticism from Labour, so as if they seem to accept the bizarre “science” of one Professor Aylward who advised Bennett and the government, and who influenced the mad MSD Principal Health Advisor Dr Bratt, likening benefit dependence to “drug dependence”.

    This is a real worry and in my eyes a betrayal to many on benefits:



    Maybe Labour want to hide that they were already preparing the same approach? It gives me and many on benefits enough reason, to not vote them, and to give at least my party vote to another party!

  5. Having hounded out the last of the moderates Labour is likely now incapable of putting together a viable budget.

    Parker on his own probably could but he’s surrounded by so many loonies, he would find himself ‘herding cats’.

    Every second day they issue brain-fart policy statements, like trucks in fast lane, cutting migration numbers and madatory kiwisaver….only to renege on them the very next day.

    None of these brain farts were even superficially thought through so what chance is there of a viable budget?

    Forget New Labour! Can someone please phone Mike Moore and Prebble so we can have some Old Labour?

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