Dawn Chorus: Rewriting Budget 2023 for the post-Gabrielle rebuild

Staring down the barrel at some difficult decisions: Hipkins and Robertson now have to lead the rewriting of Budget 2023. Photo: Photo: Lynn Grieveson / The Kākā

TLDR: Cabinet will meet this afternoon to rewrite Budget 2023 to deal with Cyclone Gabrielle, which PM Chris Hipkins and Finance Minister Grant Robertson have warned could be a multi-billion-dollar task that requires ‘reprioritisation’ and the use of the Crown’s balance sheet.

The big question will be how willing or able the Government feels about borrowing to fund the rebuild, as the National-led Government initially did in 2011 after the Christchurch earthquakes. Hipkins indicated on Sunday night Cabinet would have to make some “tough calls” about reprioritising. Robertson spoke less about reprioritising in comments on Friday and early on Sunday, but also said in answer to my questions that the Government had no plans to lift or change its self-imposed ‘30-30’ limits, which aim to keep the tax to GDP ratio below 30% and keep net debt to GDP below 30% of GDP, with a preference to always have it trending significantly lower over the long run.

I include more detail and analysis below the paywall fold and in the podcast above for paying subscribers, including my exchanges with Robertson from Friday.

Elsewhere in the news this morning:

• Andrea Vance reports for Stuff this morning on how the Government quietly decided late last year to water down protection for wetlands after lobbying from miners and developers;

• Jamie Morton reports for NZ Herald this morning that 60% of NZ’s freshwater are tainted with nitrate concentrations above levels seen as risky to human health;

• Grant Bradley reports for NZ Herald-$$$ this morning that Air NZ is set to report a half-yearly profit on Thursday running at $1.2 million a day.

• The United States warned China overnight against supplying lethal aid to Russia after seeing information suggesting big new arms shipments were imminent (Reuters); and

• The Reserve Bank’s (Te Pūtea Matua) Monetary Policy Committee will decide today and tomorrow whether to hike the Official Cash Rate by a further 50 basis points to 4.75%, as expected before Gabrielle, or whether to cut the economy some slack and postpone a move for six weeks until the economic impact is clear, as Kiwibank Economist Jarrod Kerr suggested on Friday in a note and in our weekly hoon on Friday night.

Cabinet to decide on cuts elsewhere and/or borrowing