LABOUR SEES RECOVERY PLAN AS A LIFEBOAT OVER FLOOD WATERS
Prime Minister Chris Hipkins, making his maiden statement in Parliament on February 21, fell back on the adverse weather events that have buffeted New Zealand in recent times to shore up his political capital, both within the House and without.
It’s a strategy that appeared to work for the new PM who has taken over the shaky mantle left behind by Jacinda Ardern with a general election looming on the horizon.
Hipkins showed political dexterity by linking the human cost exacted by Cyclone Gabrielle to the economic cost of reparation and rebuilding in its aftermath. In effect, the prime minister took the heat off the cost-of-living debate by making a case for increased spending to the tune of $ 50 million towards an interim recovery package.
But linking disaster management to managing the economy can only provide a breather for the short term. The relief is temporary. The prime minister will be under pressure in the months ahead to soothe the pain at the pump and the supermarket and harking on cyclones and floods will no longer grant him immunity from scrutiny.
Hipkins has announced an “initial support package to re-establish critical transport infrastructure and support businesses."
The “interim package” of $ 50 million for immediate support to “businesses, workers and the primary sector” is earmarked for flood recovery, business continuity support, resilience advice, and mental wellbeing support.
There are also tax relief measures to cyclone-affected regions, including interest write-offs and filing debt waivers.
Finance Minister Grant Robertson referenced the temporary exemption made to the Credit Contracts and Consumer Finance Act which has been extended to include Gisborne, Hawke’s Bay and Tararua. This will allow banks and other leaders to quickly lend money to affected customers.
Eligible borrowers can access temporary credit up to $ 10,000. In addition, home owners can expect to be supported with their insurance claims by the New Zealand Claims Resolution Service, which has opened its counters nationwide.
Immigration settings are to be readjusted to allow skilled workers to come in from overseas and work in the disaster-affected regions.
Cabinet has also cleared an initial amount of $ 250 million to top up the National Land Transport Fund’s emergency works budget to restore local roads and state highways damaged by the cyclone.
Hipkins went to great trouble to emphasise in his statement in Parliament that this funding was aimed at jumpstarting the remedial work and that the cyclone’s impact on agriculture, horticulture and food production was “currently incalculable.”
The ink had barely dried on those Cabinet decisions when the Reserve Bank increased the Official Cash Rate (OCR) from 4,25 per cent to 4.75 per cent “to return inflation to its target range over the medium term.”
Prices are expected to spike in coming months with export revenues dipping, the Reserve Bank forecasts, while hedging its assessment of the impact of the weather events on monetary policy.
But how this points change in the OCR will impact the victims of Cyclone Gabrielle as they pick their way through the devastation left behind by it is beyond ken. One thing is clear, though. The people who benefit from the Reserve Bank’s interest rate decision will likely not be among the cyclone victims.
While Hipkins surfed through the weather events during his speech in the House, Leader of the Opposition Christopher Luxon appeared to be looking for shelter from the storm.
Clearly, the opposition parties are forced to yield the advantage to Labour when it comes to extracting political capital out of natural calamities.
Instead, Luxon resorted to the cartoonist’s sharp lampoon when he told the House of the poor outcomes under Labour, saying: “The ministers who are responsible for those outcomes end up getting promoted. I mean, that’s the only organisation that you get to fail upwards in!”
But whether provoking a titter in the House is enough to stop Labour from wading successfully through flood waters on the back of a muti-billion recovery plan is a question National might want to ponder.