The 2013 Budget and Social Expenditure

Some Reflections by Fr Kevin J. Barr As usual there was a mixture of positives and negatives in the 2013 Budget. The business community, of course, were overjoyed with the continuation of incentives to investors and there was great hype in the media. The allocation being given to roads and infrastructure throughout the nation (though somewhat excessive) was welcomed by most. There were many good things in the Budget but also some serious disappointments. Provision for Basic Needs The increased budgets for Education and Health (especially directed to rural areas) was much appreciated as was the continuation of bus fares for students and the elderly and the provision of text books. However, one of the big disappointments was the failure to increase funding for the housing of low-income earners and the poor. Housing together with education, health care and food is one of the basic needs of the people. In total less than $4m was allocated: • $1m to Housing Authority to write off loans through its social housing policy; • $1m to Public Rental Board as rental subsidy for low-income tenants; • $1m to address the upgrading or relocation of squatter settlements; • $600,000 to HART for construction of new homes and the maintenance of existing ones. Mention was made of housing developments at Raiwai, Tacirua and Raiwaqa being undertaken by China Railways Group with loans from the EXIM Bank of China. However it was not mentioned that the cost of housing in these projects will be beyond the reach of most low-income earners needing housing. Continuing Confusions Confusion 1- Whenever the “poor” are mentioned by government in Budgets and elsewhere it is usually in terms of those covered by the Ministry of Social Welfare. However the Ministry (even with an extended clientele covering the pension scheme for those over 70) assists only a relatively small percentage of those living below the poverty line. The Ministry assists mostly the destitute poor and not all of those living in absolute poverty. Much is made of graduating welfare recipients “from welfare to workfare”. This is fine but many of those on welfare are not able to start small businesses and many who try ultimately fail. We need a more realistic approach. Confusion 2 - Another confusion being propagated is that the recent changes in the taxation system and the lifting of the tax threshold will mean that all workers will take home more pay in their pockets. Yet only a few may do so. Moreover the increase in the tax threshold over the years is welcome but, of course, this has been offset by the increase in VAT and increases in food and fuel prices. Incentives and Handouts We often hear of the need to provide “incentives” to the business community in terms of personal and corporate tax reductions, specific allocations (such as the $23.5 m to the tourism industry), tax exemptions for machinery or materials etc. The equivalent of millions of dollars is handed out to investors and businesses in the hope of increasing economic growth. On the other hand there is a great reluctance to provide assistance for the poorer people of our nation. They don’t deserve anything and we are told that providing “handouts” to them would only encourage laziness and a reliance on further undeserved assistance. This unbelievable anomaly is, of course, encouraged by our current  neo-liberal economic system and its proponents among the International Financial Institutions. Poverty is costly to a nation in terms of health care, absenteeism from work and school, and also (when poverty leads to crime) in terms of police, courts and prisons. Money provided in terms of subsidising housing for low income earners and the poor, removing VAT from most food, increasing health-care facilities will be extremely well spent. Moreover making sure that all workers are paid wages above the poverty line will go a long way to seeing greater self-sufficiency among the poor in meeting their own basic needs. --Republished from FLP website.