Prime Minister Christopher Luxon. Photo: Samuel Rillstone / RNZ
Politicians have a reputation for stretching the truth. Sometimes they lie, but more often they just misinterpret data to suit.
The Budget Policy Statement is debated by Parliament this week - a harbinger of Budget Day. With budget season nearing, it is worth watching out for one data argument that has become common across parties. It involves using multi-year appropriations to fashion imaginary funding holes, described dramatically as fiscal cliffs.
Prime Minister Christopher Luxon is the most recent offender, repeating often that his government has "saved" the school lunch programme and that the previous government had "failed to fund it".
He returned to the line so often last week that, in apparent frustration, Te Pāti Māori co-leader Debbie Ngarewa-Packer resorted to responding "that's not true". Cue a mass choir of "oooOOOooo" from governing-party MPs - the primary school 'you're in trouble' noise. Yes, MPs can be surprisingly juvenile. Ngarewa-Packer was made to withdraw her claim and apologise.
MPs cannot claim in the House that another MP is lying - truth notwithstanding. It's a parliamentary nicety that presumes olde-world honour and decency. It makes stretching the truth a very useful debating tactic - because formal complaints about mistruths are slow and quiet, and have no discernible outcome.
So, what did the prime minister mean about school lunch funding, and was it true? And most importantly, what does it tell us about how government budgets actually work?
Budgets 101 and Multi-Year Appropriations
The budget is a government's annual estimate of intended spending. Governments have to outline these annual plans, because it is Parliament that approves each year's spending plan and later approves each year's actual costs. This is all done through 'appropriations' bills, (appropriation is a formal word for money obtained for a set purpose.)
The crucial words in the previous paragraph were "annual", and "year", because the appropriations are adjusted yearly and approved yearly. For that reason, they can only really be taken seriously yearly, despite the fact that recent budgets have increasingly made promises of spending over multiple years, called a multi-year appropriation (MYA).
MYAs are permitted to indicate forward-funding for up to five years. Their use has more than doubled in the last eight years. The Auditor General has been sternly critical of the use of MYAs, except for things that genuinely require them. Everything else should have a simple, annual appropriation.
The cover of a report from the Office of the Auditor General arguing that Multi-Year Appropriations are overused and increasing. Photo: OAG
The Politics of MYAs
MYAs are both politically and practically useful.
Politically, the combined multi-year spending figures sound larger and more generous. Promising to spend ten billion (across 5 years) sounds a lot more generous than two billion (this coming year).
MYAs can also help to spread the cost of big ticket items across longer periods, even if the actual spending might not be so evenly spread.
I suspect that MYAs of varying lengths could be used to soften a government's projected spending. If some MYAs are for fewer years than others, the overall projected spend appears to drop over time, even if the actual funding would need to continue (but in a later budget).
MYAs have practical uses as well. Uses the Auditor General would approve of. They are often used to project funding across multi-year projects where funding certainty is essential.
In reality though, MYAs give no certainty. Despite Parliament approving a multi-year spending plan, the funding might all change at the next budget - or even disappear entirely. At best MYAs provide an illusion of certainty.
The only year in any budget that really matters is the current one. Everything else is smoke. Things change. Government priorities, political necessities, economic circumstances, project realities - almost nothing is certain. A change of government can kill huge multi-year projects regardless of sunk cost. Consider Lake Onslow or iRex.
From Vote Education of the 2023-24 Budget, a section that includes the School Lunches Programme, Ka Ora, Ka Ako. This budget is the final one under the previous Labour-led government. The two years for which funding is noted are 2023-24 and 2024-25. Photo: NZ Government Budget Document
A fictional fiscal cliff
When Luxon claims that the previous Labour-led government failed to fund the school lunch programme, he is referring to Grant Robertson's final budget, for 2023-24. That budget used MYAs extensively. Funding was pencilled in for between three and five years for many budget areas. The school lunch funding was outlined for only two years - up until July 2025.
Luxon's argument is that since they were not funded beyond mid-2025, they were not funded. Yet the funding allocated in May 2023 has still not run out.
Between that allocation and the end of funding were two further budgets (one of which hasn't happened yet). Either or both of those budgets would be expected to change that end-date, and/or alter the budget amount, as indeed Nicola Willis' 2024-25 budget did.
Luxon's claim is a politically useful counter-attack to school lunch criticisms, but it is also nonsense.
In Parliament, reality often takes a backseat to politics. Luxon and National are by no means alone in this.
What would have actually happened to Labour's school lunch budget allocation beyond July 2025 is unknown; the funding might have increased, decreased, or disappeared entirely. We will never know.
Why was the 2023 allocation of school lunch funding uncertain beyond July 2025? It might have been politics, or accounting, or it might just be that the programme itself was new. New government programmes have uncertain costs and uncertain outcomes - just ask David Seymour.
From Vote Education of the 2024-25 Budget, a section that includes the School Lunches Programme, Ka Ora, Ka Ako. This budget is the first from the National-led government. The three years for which funding is included are 2024-25, 2025-26 and 2026-27. Photo: NZ Government Budget Document
Oh snap!
Ironically, Luxon's attack can cut both ways. The National-led government's 2024-25 budget also used an MYA for school lunches, that MYA doubles the funding in year two, halves it again for year three, and in the fourth year they left the box blank.
By the prime minister's own logic (that any MYA shorter than five years reveals an intention to defund), you have to assume that the current government has also "failed to fund school lunches". But that claim would also be nonsense.
Does the current government plan to halve school lunch funding, or cut the programme entirely, as their 2024-25 budget suggests? Who knows. The school lunch budget announced in May this year will likely be different from last year's. Next year's figures will be different again.
School lunches are not the kind of budget item where multi-year appropriations are useful or necessary - for anything other than politics.
The impact of MYA attacks
The Office of the Auditor General (OAG) has been arguing for fewer Multi-Year Appropriations. Budgets, they argue, should be year-by-year, except where necessary. They see the increasing use of MYAs as a reduction of the Parliament's proper authority and oversight over the Executive's expenditure.
The prime minister's current defunding attack must be depressing for the OAG. Luxon's tactic has opened the door for future attacks on budgets that vary funding periods as the OAG considers appropriate. Any funding projection shorter than five years could fuel a "the government has failed to fund…" attack. To protect against such attacks, finance ministers would need to ignore the OAG's advice and increase the use of MYAs even further.
Effective politics and effective governance are seldom good bedfellows.
RNZ's The House, with insights into Parliament, legislation and issues, is made with funding from Parliament's Office of the Clerk.
