Budget

Winston’s post-Budget magical mystery tour

The Deputy Prime Minister makes many claims, some true, and compares himself with Warren Buffett and Mahathir Mohamad, while out selling the Budget.

The Christchurch crowd can be forgiven for looking at each other in bewilderment and asking what just happened.

Winston Peters, the Deputy Prime Minister, apologises for his lateness by having a crack at Air New Zealand, gives a history lesson about rail stretching back to the 1870s, demands thanks for killing the capital gains tax, takes credit for predicting the recent Australian election result, and assaults “neoliberal economic nonsense”.

It’s a rambunctious rollercoaster ride. Peters spends as much time riffing off-the-cuff as reading from his notes. Much of it is factual but some doesn’t stand up to scrutiny. Time will tell if his most personally important prediction – for the next New Zealand general election: “We’re going to be back!” – comes true.

It’s a day after the Budget, at a lunch arranged by a large accounting and consulting firm. The kind of lunch where the tie is off for the day and wine flows freely. After a Budget that was big on righting social ills and relatively light on what commentators like Matthew Hooton call corporate welfare, the venue for the talk should have been a lion’s den.

Peters doesn’t hold back.

The combative New Zealand First leader proves he’s the same cantankerous character no matter who he’s addressing. His icebreaker line is that he’s aware of the audience’s political penchant and doesn’t expect a “heavy outbreak of affection”. “But that’s not the point,” he barks. “We’re here to give you a few hard facts.”

Those facts include: The Government will ensure multinational companies pay their fair share of tax (Newsroom doesn’t hear any tax accountants choke, mid-sip), and it was “your friends in the National Party” who signed New Zealand to its climate change obligations.

He also takes time to bag talkback radio king Mike Hosking and, more locally, former National Party Finance Minister Ruth Richardson, who held the Selwyn seat, just outside Christchurch, from 1981 till 1994. He’s not trying to make friends, instead opting for hard-edged influence.

Give me a (tax) break

The economic centrepiece of the Budget was the Government’s $1 billion earmarked for rail. The Budget also contained $300 million for medium-sized start-ups and close to $250 million for skills training and apprenticeships.

But Peters doesn’t mention that after his speech. Newsroom points him to the NZ First-Labour coalition agreement, which said the Government was committed to resolving the greatest long-term challenges for the country. The first three challenges mentioned are: sustainable economic development, increased exports, and decent jobs paying higher wages.

What announcements in the Budget relate to those things?

Peters refers to the lower currency, $1 billion for research and development, and then grumps about three billion logs being exported, without value being added, from Gisborne’s port, which is “not sound for the economy”.

Asked again what was in the Budget for the business audience he’s just addressed, Peters says: “Well, as I said, $1 billion for research and development. Ahhh. An economy with more money than there’s ever been in our economy at any time in its history. If you’re any good at making money, you should be able to make some.”

Except the $1 billion for research and development – which is a tax break, including for some state-owned enterprises – wasn’t in the Budget. It was a policy announced last October by Ministers Megan Woods and Stuart Nash. That whittles down Peters’ message to businesses, effectively, to: The economy’s awash with money, go and make some.

(Accused of the Provincial Growth Fund missing the upper South Island, Canterbury and Otago, Peters says many projects in the provinces weren’t ready. “We’re seriously looking at a project in Dunedin now, it’s 18 months on [from the election] we’re just getting the information now,” he says. The Government’s only halfway through the fund’s expenditure, he says. “If there are meritorious projects we’ll back them.”)

Fact or fiction?

Peters flagging that the lower currency is critical for exporters is a good chance to fact-check some of his claims.

Claim: Since the coalition came to power in October 2017 the New Zealand dollar had dropped to US65-66 cents. “And it’s going to stay around there.”

Verdict: False. According to Xe.com, the day New Zealand First chose Labour (and the Green Party), the kiwi was US71.5c and dropped below US69c by early December. But it ended the year over US70c and stubbornly stayed there until about a year ago. Yes, on Budget day, it was a touch over US65c, but as recently as March it was over US69c.

Claim: Peters said Premier Sir Julius Vogel built more rail lines in a decade, between 1870 to 1880, than New Zealand did over the next 139 years.

Verdict: False. Vogel’s Government took New Zealand’s rail lines from 74km from 1870 to 2000km in 1880. Yes, KiwiRail’s website says it now operates and maintains 3500km of track – so less than double the 1880 figure. But KiwiRail also says the country’s rail network peaked at 5689km in 1953.

Claim: The IMF is predicting New Zealand’s economic growth will grow faster than that of the United Kingdom, Japan, Canada, the whole of euro zone, and Australia.

Verdict: True. You might as well chuck in the United States, too.

Claim: Exports as a percentage of GDP fell under National.

Verdict: Correct. World Bank data show that in 2008, New Zealand’s exports of goods and services as a percentage of GDP was 32 percent and dropped to 25.8 percent in 2016, rising to 26.9 percent in 2017.

“Why people believe [polls] I don’t know.” – Winston Peters

It’s also worth exploring Peters’ contradictions.

In his post-Budget speech he trawls out Treasury’s estimates of GDP growth of 2.4 percent this year and 3 percent in 2020. But he’s quick to point out the “gathering storm clouds in the global economy”, exemplified by the tariff war between the US and China, endemic political uncertainty in Europe, which have created a “global slowdown”. Surely, in that context Treasury’s prediction must be seen as rosy, as he says our exports aren’t immune to global economic forces.

Peters points to polls which he says push the coalition past 60 percent support. Yet, in almost the next breath, he says the surprise Australian election could be predicted because “the polls are nonsense in Australasia at the moment”. That includes New Zealand, where polls are “misleading New Zealanders”. “Why people believe them I don’t know.”

For all his post-Budget bluster, Peters shows heart in his speech.

Of the Wellbeing Budget, he says: “We say that unless we all share in the land of plenty then it’s not change worth having.”

And of the Government’s $1.4 billion boost to mental health services, he says there wouldn’t be one person in the room who wasn’t touched in some way by mental health problems. “It confronts all families and we just can’t ignore it.”

The question and answer session is always a good yardstick of a speaker’s ability to think on their feet and turn a question into a political hit.

Peters is asked which of the Budget policies will have an immediate effect and which might take longer. The rail money – “jobs, new rail lines opening, new equipment building ourselves where we can” – will have an immediate impact, he says, while mental health spending will take a long time to show a turnaround.

A lawyer in the audience declares he has a friend who votes for New Zealand First – “He’s a lawyer. It’s not me.” His friend’s biggest question is about succession. “What are your plans, Winston?”

Peters retorts that nobody asks about Warren Buffett’s succession plans, and he’s 88. And “a friend of mine”, Mahathir Mohamad, is the prime minister of Malaysia at “94 years of age”. (Multiple sources say he’s 93.)

Peters: “You only have a conversation about a succession plan if you’ve got no leader in the first place. And that’s why they’re constantly talking about the National Party.”