A lonely figure stood at the side of the Beehive Banquet Hall yesterday during the Budget lock-up.

Treasury Secretary, Gabriel Makhlouf’s usual Budget seat next to the Finance Minister beside the front podium was empty.

His usual Budget economic briefing did not happen.

Instead, he was standing erect, head high, by himself, adjacent to the corridor leading to the bathrooms and quite obviously alone as the fallout from the National Party’s budget leak, and more particularly his response swirled around the Beehive.

A State Services Commission spokesperson told POLITIK               last night that now Commission Chair, Peter Hughes, is deciding whether to investigate Makhlouf’s actions.

The spokesperson stressed that no decision whether to proceed had yet been made.

Finance Minister Grant Robertson put the case against Makhlouf in a terse statement yesterday morning.

Robertson said he was very disappointed that confidential Budget information had been able to be accessed.

“I am also very disappointed that the Treasury did not seek to find more information as to how this happened before referring the matter to the Police,” he said.

“I now await the inquiry of the State Services Commissioner into this matter.”


But that inquiry, which was called for by Makhlouf, is to investigate the adequacy of Treasury policies, systems and processes for managing Budget security.

The Beehive would clearly like it to extend to Makhlouf’s actions and the question of whether he misled his Minister.

Makhlouf set off a widespread panic in Wellington when he issued a statement on Tuesday night saying there had been a systematic and deliberate hack of the Treasury’s IT system.

He did not link the hack to National’s production of secret Budget documents, but Robertson did in a statement issued  17 minutes after the Makhlouf statement. 

It is that statement by Robertson which would be at the centre of any allegation that Makhlouf misled him.

Gabriel Makhlouf's empty chair next to Health Ministerr David Clark with Winston Peters.

Yet though Makhlouf was on the sidelines during the Budget lock-up, his fingerprints were all over the first “Wellbeing” Budget produced by the Government.

Simply the Budget set out to explain over a new 144-page document how various Government initiatives aggregated together to form the Wellbeing initiatives.

There are two headliners; child poverty and mental health.

On Child Poverty, the budget items are:

  • $535 million to index benefits to wages; removing the penalty on solo mothers who won’t name fathers and increasing the amount beneficiaries can earn.
  • $266 million to replace parental donations in Decline 1 – 7 schools
  • $197 million for the Housing First programme to house homeless people
  • $273.4 million for capital and operating costs for transitional housing.

Then there are a host of smaller programmes which include funding for some NGOs which cover health, kids’ breakfasts, housing issues and money for care and support workers as well as $76.3 million for the Ministry of Social Development to increase case management on the frontline.

Departments making bids for this money have had to show how their programmes will help achieve the Government’s goal of reducing the number of children remaining in poverty after housing costs by 2020/21 by between 38 and 78,000.

Twenty-seven measures have been grouped together under the mental health package, but not all are new. (For example, $77.5 million already announced  funding for the Royal Commission into Historical Abuse in State Care and Faith-Based Institutions is included)

And here can be seen another aspect of the Wellbeing Budget; that money for a specific output may be spread across various Wellbeing outcomes. Thus the mental health outcome includes $197 million for Housing First and $149.2 million for transitional housing.

The big ticket item is $455.1 million for mental health workers to work with GPs and other health providers. This is to provide access to mental health services for 325,000 by 2023/24.

In Opposition, Labour’s Minister of Maori Development, Nanaia Mahuta, was critical of the way that the Whanau Ora programme was delivered.

The fact that it was the creation of Maori Party co-leader Dame Tariana Turia made it an easy target for Labour.

But yesterday there was $81 million for Whanau Ora programmes in the Maori and Pasifika section of the Wellbeing document.

It was received enthusiastically by Helen Leahy, who is Turia’s biographer and was her key aide when she was in Government.

“The Prime Minister declared from the onset that the wellbeing outlook has fundamentally changed the way they have made budget decisions”,  she said.

“We believe that wellbeing is Whānau Ora in action.”

Budgets are essentially about numbers, and Labour has got some to boast about.

The overall “medical” part of the Health budget; that part that covers DHBs and ancillary health services is up by 5.3 per cent to $17.9 billion. (More than our total exports to China).

And looking at Government spending overall; that is expected to rise by 31 per cent over the next five years while Crown revenue rises by almost the same amount.

Despite the warnings of National Leader, Simon Bridges, net Crown debt is set to fall below 20% by 2023 when Robertson has introduced a target range of 15 – 25% for debt.

Treasury is forecasting a slight increase in GDP from 2.4 per cent in the 2018/19 year to 3.0 per cent in 2019/20 falling back to 2.4 per cent by 2022/23. The forecasts are bouncing around a bit compared with last year; next year is down but the two out years beyond that are very slightly up.

In the hard end of the Budget, in those sections that directly impact on the economy, the politics of the coalition are clearly evident.

Top of the list was the decision to spend $1 billion on Kiwrail over the next two years.

The funding will range from replacing the Interislander’s ferries and South Island locomotives and rolling stock to $300 million for regional track developments. (NZ First have championed the building of a branch line from the main Northland rail line to Marden Point port.)

But NZ First Leader and rail nut, Winston Peters, possibly with a sense of gratitude and uncharacteristic generosity to the Greens extolled the environmental advantages of rail transport when he spoke to the Budget lock-up.

He said rail had 66 per cent fewer emissions than road haulage.

“It will support the Government’s commitment to the Paris accord and the drive to reach a carbon zero economy by 2050,” he said.

However, the drive to reach that target was not quite so evident in the Budget documents.

There was only $3.2 million for agricultural climate change research.

There is, of course, much more in the Budget.

But the big impact was the child poverty and mental health sections.

That is how the Government has asked to be judged.

And that will be Gabriel Makhlouf’s real legacy.