In this morning's email we discussed the unexpected items in the Budget area discovered by the incoming Government.
1. Unexpected Budget challenges
Officials have briefed new Finance Minister Grant Robertson about a number of unexpected "budget challenges" left over from the previous Government that could force Labour to rejig its plans longer term, or even change some policies.
Robertson told me in an interview that some of surprises revealed to the new Government were around big projects and big spending areas, including housing a fast-growing prison population and dealing with a creaking and leaky school property portfolio.
"In terms of what we are finding under the hood, we are inevitably finding challenges we weren't aware of. We'll have a bit more to say on that in the coming weeks," Robertson said.
"There are a number of areas where there are high level of expectations in the community about what should happen, and we want to meet those expectations, but we are certainly taking some time to get our heads around just what's been left for us," he said.
Asked about the areas or items of previous Government spending that had surprised him, Robertson was cautious, but said: "The Prime Minister mentioned in the house the other day the education capital side, and I'm looking at other areas where there is large expenditure expected of us. I won't say anything on that today."
Jacinda Ardern talked in her address-in-reply speech in Parliament last Wednesday about a potential blow-out in the likely cost of repairing and rebuilding New Zealand's stock of schools.
"If you want to talk about hiding data, then there will be a lot of time in this House to talk about what we've discovered in the school properties portfolio, but that time will come," she said then.
2. Watch Justice and big projects
Asked for more detail on the source and nature of the possible cost blowouts uncovered in early briefings to ministers, Robertson said: "The scale of it and perhaps the lack of progress in some areas."
Robertson did single out one area where forecast costs were higher than most expected -- prisons.
"Another one that has been mentioned publicly is the question of the prison muster and what that means for expenditure for Government," he said.
The new Government is looking for more advice on the multi-billion dollar prison building plan inherited from the National Government.
"The scale of the growth in our prison muster was one that I don't think everyone appreciated in New Zealand. Crime was increasing at a small rate and the size of the prison muster was increasing at an exceptionally large one. And the projections going forward are no better," Robertson said.
He indicated that any response was more likely to be a policy one rather than a spending one.
"It's not just a fiscal thing. It's a policy approach and we can make some changes to the policy."
Justice Minister Andrew Little has already cancelled the three strikes policy, although that is not expected to reduce the prison muster much. The biggest increase in recent years has come around tougher bail laws that have increased the number of prisoners on remand dramatically.
Robertson would not divulge more detail about unexpectedly higher costs, but suggested they could be around large infrastructure projects in their early stages of planning.
"There's just a one or two areas that we're digging in to, and we'll have more to say about that soon," he said.
"We're taking a lot of advice at the moment. It tends to focus around the some of the bigger scale projects that the Government has to undertake."
3. May require longer-term policy shift
Robertson said the unexpected Budget challenges would not change any of the items in Labour's 100 day plan, including the big-spending items around the families package and fees-free tertiary education.
Asked if policies beyond the 100 day plan would be affected, he said: "Not overall in terms of the budget responsibility rules. We're committed to meeting those. What they do, those unexpected surprises, is they mean we have to factor them in to the prioritisation, the phasing of what we do, or whether there are things we choose to carry on with."
Robertson said the fresh economic forecasts continued to show solid growth, albeit with headwinds from a slowing housing market. These forecasts had not changed the Government's spending plans for the year ahead.
"It appears to me it's completely possible to implement our plans within the forecasts we've been given," he said.
See more in the full interview published first on Newsroom Pro here.
4. NZ First may also oppose CPTPP
Newsroom's Sam Sachdeva reports from Manila that Prime Minister Jacinda Ardern has hinted that New Zealand First could also vote against the revised Comprehensive and Progressive Trans Pacific Partnership (CPTPP).
Yesterday the Green Party announced via its new Trade Spokeswoman Golriz Ghahraman that changes to the Investor State Dispute Settlement (ISDS) clauses were not enough to address the party's concerns and it would vote against the CPTPP in Parliament.
“We support fair trade that brings real benefit to all New Zealanders – not trade deals that put our rights and our Government’s ability to legislate to protect our people and our environment at risk," Ghahraman said.
Speaking to media in Manila, Ardern said she was “well aware” of the Greens’ position before she left New Zealand.
“I’ve had that conversation with James Shaw: before I left New Zealand I knew that would likely be their position, and as I say we discussed it, we were fully informed.
“This will from time to time be an outcome of a government that does bring together multiple parties - from time to time, we will take different positions.”
With National pledging to support the CPTPP from opposition, any new legislation has the numbers to pass, although Ardern said it was too early to talk about that aspect.
“Obviously we still have some issues to work through...once we have that final deal then we’ll be in a position to talk to other parties about their support.”
New Zealand First has been an outspoken critic of the deal in the past, with party leader and current Foreign Affairs Minister Winston Peters describing it “as an international corporate protection racket, covering a wide range of laws which challenged our national sovereignty, giving legal preference in a court not of New Zealand’s choosing”.
Ardern said she had been speaking to Peters about his party’s position, but a final decision would have to wait until the deal was signed.
While her Cabinet ministers were expected to follow collective responsibility for government decisions, that did not preclude an “agree to disagree” policy in specific areas of concern.
“We're not in the position yet to know whether or not that’s something that New Zealand First will want to do, because they haven’t got a final deal for them to consider.”
5. Ardern wants to put Trudeau on ice
Sam also reports from Manila that Ardern met for face-to-face talks with Canada's Prime Minister Justin Trudeau for the first time, during which she invited him to come to New Zealand and Antarctica.
“I’m going to put you in the awkward position of inviting you to New Zealand in front of the media so it’s on public record now, and yes you should feel bound by that," she said during the photo opportunity at the beginning of the talks.
Ardern later told media she had specifically invited Trudeau to visit Antarctica and see New Zealand’s work on climate change issues there.
“We have a shared interest in climate change issues, I think it would be a good opportunity for him to see the work that New Zealand is doing in Antarctica in the climate change space.”
See Sam's full report on the meeting here on Newsroom Pro, where it was published first last night.
6. Hoping for OIA reform
The Official Information Act was supposed to make Government more transparent. Instead, Governments from both sides have used and abused the Act to obstruct and deflect requests for public information.
Newsroom's National Affairs Editor Shane Cowlishaw has written an opinion piece for Newsroom on the need for reform. He doubts the new Labour Government will follow through on its pre-election rhetoric on the need for reform.
See his full comment piece here on Newsroom Pro, where it was first published yesterday.
7. 'China's coercive, covert, corrupting influence'
Canterbury University Academic Anne-Marie Brady has called for a series of investigations and new laws to protect New Zealand from “China’s covert, corrupting and coercive political influence."
David Williams reports for Newsroom that Brady published a policy briefing this morning arguing the People’s Republic of China’s political influence in New Zealand had reached a critical level.
“It is time to face up to some of the political differences and challenges in the New Zealand-China relationship, including the impact on our democracy of Chinese political interference, and make a re-adjustment in the relationship so that New Zealand’s interests come first.”