Labour’s reaction to the budget will tell us a good deal about the capability the party is assembling for its bid next year to regain the Treasury benches.

A consistent dose of negativity without clear lines of difference in approach to that of the Greens will leave it saddled with an uphill grind toward Election ’26.

Facing off over health funding – Dr Ayesha Verrall and Simeon Brown.

The Greens vision is virtually unequivocal:  In broad terms, if it moves, tax it. The money received will go to fund a range of free social services and education. The government would in effect assume full responsibility for the well-being of individual New Zealanders. The policy is full-strength socialism. It will have its adherents.

But for mainstream New Zealand, the reality is that the country has consistently rejected the proponents of such a widespread re-ordering of political priorities. The preferred option has been a pinkish tinged mix of free-market and socialist policies, the shade of pink veering to the left or right according to whether the dominant ruling party is of a blue or red hue.

The question with which Labour has to grapple at this stage of the electoral cycle is how it can lift the performance of state social services without promoting new tax policies likely to earn voter rejection. There’s a fine line in this area. A policy that overreaches could cause voters to question why they should fund certain services, while insufficient tax reform may draw criticism from supporters who believe the wealthy should contribute more.

Hovering also over this issue is the state of the economy and the spending options available without sparking an increase in the country’s interest bill on its $190 billion of debt. Labour has a political juggle on its hands.

It is one that can be glimpsed in the approach of health spokesperson Dr Ayesha Verrall to the announcement by Health Minister Simeon Brown that $164 million would be committed in the budget to provide new or enhanced urgent care services. These include five new 24-hour urgent care services in Palmerston North, Counties Manukau, Whangarei, Tauranga and Dunedin; new daytime services in places like Levin, Lower Hutt, Invercargill and Timaru; and extended after-hour services in places like Dargaville, Gisborne, Taupo, Masterton, Ashburton, and Oamaru. Rural New Zealand is to get 24 hour on-call support to deliver enhanced care.

Verrall said the funding boost would not make any fundamental difference Her statement drew a heading in Wellington’s daily newspaper: “$164m for urgent care ‘pocket change’, Labour.” The question taxpayers might well ask is that if $164 million can’t make a fundamental difference to the provision of such services in those towns and cities, what can?

As Verrall went on to say, the place with the greatest need is general practitioners and primary care. She might perhaps have better focused on that as a preferred spending target, rather than urgent care services. To do so, however, would have outlined a policy position on which the people in the affected areas, in particular, could make a judgement.

Such policy positioning will become essential for Labour as this parliamentary term proceeds. It may well, for example, have to soon consider whether it supports a change to law relating to the Accident Compensation Corporation (ACC) that will get it out of a potentially huge ongoing cost outlay.

The sticky political point is that the change would nullify a 2023 Court of Appeal ruling that victims of sexual abuse were entitled to compensation from ACC for loss of potential earnings from the time they were abused, not simply from the time they sought treatment as had been the case.

The ACC last year budgeted $3.6 billion to cover current and future cost of claims made possible because of the court’s ruling. A law change to restore the position as interpreted prior to the court’s ruling would stop an unexpected and uncontrollable explosion in ACC costs with ramifications for the scale of levies required to support the scheme.

The nub of the issue is that people who are the victims of sexual abuse can get compensation through the benefit system of the Ministry for Social Development. But there is a possibility that lawyers representing claimants could obtain higher payments by arguing a case to ACC and possibly the courts.

The Cabinet has yet to decide on this matter, according to Commerce Minister Scott Simpson. Should it go ahead with a change there is certain to be an outpouring of criticism that it is again, as claimed in the pay equity issue, discriminating against women who will probably make up a majority of claimants.

The coalition will argue for prudence in administering the public purse. Should Labour favour the position of the court, taxpayers might well ask where it expects the ACC to find the funds it needs for the extra outgoings.