National’s current policy proposals would exceed operating allowances by between $3 billion and $5 billion, according to a Labour-aligned group of trade unions.
A document put together by the Council of Trade Unions attempts to calculate the fiscal impact of various National Party policies, in an effort to demonstrate how much cost cutting would be required to balance the books.
National’s finance spokesperson Nicola Willis said it was little more than a media release from Labour’s Grant Robertson dressed up as something else.
The CTU’s chief economist, Craig Renney, was a former advisor to Robertson.
Willis said the document was “ludicrous and hypothetical” and wasn’t worth a response.
“National will release a fully costed tax and fiscal plan in due course. It will represent a new way forward for NZ: lower income taxes, more disciplined Government spending, better public service delivery and a path out of the cost of living crisis”.
The CTU has claimed that the fiscal plan will require cuts to public services to balance out the impact of its promised tax cuts.
“When asked how it will pay for those tax cuts, National has claimed it would ‘cut wasteful spending’ without stating what that spending is, or what impact it will have on future Budgets,” it said.
“The public has no clear understanding of what the National Party would really change in terms of spending, nor how its plans would add up”.
The 2017 Labour opposition and the 2008 National opposition had both released fiscal plans by the start of August in previous election cycles.
However, neither party has released their tax policies or fiscal plans for the 2023 election. Recent polls have shown the National Party in a position to form a government with Act.
Plenty of policies
National has committed to adjusting tax brackets to account for the inflation that occurred between 2017 and 2021, but has been coy about whether it would go further.
Its bracket indexation policy, as it stands, would be an 11.5% increase to income tax brackets. The CTU claims this would cost about $2b in each of the years in the next Parliamentary term.
Returning interest deductibility to rental properties would cost another $650m per year, once fully implemented, while scrapping the Auckland fuel tax would cost another $150m.
The net effect of all policies means there would be somewhere between $2b and $3.2b less revenue in each fiscal year of a National Government.
This could be a problem, considering Crown tax revenue was already $2.2b below forecast in the 11 months ended May. The Treasury expects the shortfall to persist throughout the year.
National has also announced a slate of new spending promises, some of which were paired with cuts to help fund them.
For example, the Build for Growth payments would cost $378m but that could be offset by cancelling Labour’s free early childhood education for two-year-olds.
National would also free up money by cutting spending on contractors by $400 million and cancelling the GIDI fund which has been used to help decarbonise NZ industry.
But details on how the multi-billion dollar tax cut would be funded have not yet been specified. The CTU claims the party will need to find between $3.2b and $5.2b in savings.
The operating allowance across the three year term would be $21b, with the CTU claiming $16.8b would be required to maintain current service levels.
That leaves $4.2b for new policies which would be more than absorbed by National’s revenue policy, with only $15m of net spending cuts announced so far.
National disputed the document in general, but was unable to offer a full rebuttal until it revealed its fiscal plan. That is expected to occur in the next few weeks.
Costing unit
Willis said this debate wouldn’t be happening if Labour’s Grant Roberston had set up an independent policy costing unit.
This was proposed in the Labour and Green Party’s confidence and supply agreement in 2020 but was ultimately shot down by the then-National Party leader Simon Bridges.
Without cross-party support for an independent costing unit, Labour abandoned the idea.
However, Willis attempted to revive the policy when she became National’s finance spokesperson and deputy leader.
“I wrote in good faith to Finance Minister Grant Robertson and said I would like to take you up on your offer of an independent fiscal and costings unit,” she said.
“I think it is very telling that he has chosen to make no progress whatsoever on that”.
Robertson said it was “just a little bit late for that” and the Government wasn’t sitting on standby waiting for National to change its position.
“They turned us down and the money ended up being spent on other things, and everyone can agree that money is very, very tight.”
Willis said she would implement the costing unit if she were to become finance minister and Robertson said he still supported the idea “in theory”.
44 Comments
i think you will be very disappointed in a few years time when you realise the mob thats come in is as bad as the last mob.
we have a very very poor choice this election and i can see air new Zealand putting on even more planes to aussie and lots of planes from places to replace those with cheaper workers
We have a very good choice. TOP.
Nat and Lab got us into this housing mess. Why any one would think either of them will change the system sufficiently to sort it is beyond me. They have had their turn and and continued the same nonsense policies every time (Labs interest tax the exception).
But hey…let’s try Nat again…rinse repeat disappoint
Genuine question, what mess? I'm not a big Labour fan, but the economy's chugging along pretty well, employment's high, wages are rising, rent's pretty flat (a good thing in my opinion), house prices are crashing (a great thing in my opinion), inflation's just under the OECD average. Public transport could be better but I don't see any other parties doing a better job at it, traffic's terrible but National's "just one more lane bro just one more lane" isn't going to solve it (see: induced demand).
I don't think Labour's particularly inspirational, but I'm not seeing a big mess; maybe it's different for you?
Matt09 - that rules out any who are idiot enough to believe you can have exponential growth on a finite planet.
Oh. hang on, that's pretty much all of them - but particularly National at the moment. The reason they get away with it, is that we get reporting but not jourrnalism - really, this article should have been appraising which Party is best in light of what if breaking over us right now. Butt we won't see much of that from NZ media - if any. Thus we get comments made in some state other than 'informed', and voters ditto.
What they are polling, then, is ignorance; one wonders why they bother.
Well they would say that wouldn’t they. Can we cancel September so we can bring forward 14/10 and shorten up on all the hyperbole and huff, bluff and stuff that soon becomes totally banal and increasingly irrelevant, and which our politicians seem to revel in like pigs wrestling in mud. Suppose you might call it electioneering?
They will probably pay for the few promises that they keep by selling the few remaining public assets and monetizeable public services to their wealthy mates. Anything else that that they can scrape outt of the economy will be channeled into tax cuts and tax deductible wangles for the wealthy.
The Wellington swamp needs to be drained big time, too many people are not productive, those salaries would pay for a lot of nurses, doctors and teachers, starting with 3/10 waters, and many other new entities.
Remember there has been a 34% increase in middle management in all government departments, according to Tax payers Union. Has anyone seen an improvement in education, health, crime, stats in the past 6 years or longer. Some form of productivity analysis that we can all understand needs to be conceived.
If a government department actually achieves some measurable goals we can all start to celebrate, but nothing has happened for so long they all just seem to exist to waste our taxes.
Nobody has ever shown the 34% figure to be wrong. Nobody has ever shown the lack of associated government department productivity improvement claim to be wrong either. Don't just throw out personal abuse. Show us something that shows their claims to be wrong, please.
The unions and Labour have been a political pair since day one, so that's not surprising. They do have a lot of sway on Labour as a bloc within the party, so we do see policies passed that are pro-union whenever Labour's in. I guess it's arguable whether or not they help the actual workers.
".......Labour-aligned Council of Trade Unions claims National policy proposals would require cuts to public services to balance out the impact of its promised tax. ...."
Well they would say that. The union for people on the public purse.
They have a cunning plan. 100% of the people on public provided incomes. Who are then all needing government favour, and will vote for them.
What could go wrong?
of course they are way short of money to cover their promises, they will follow their normal pattern, once in power defer promises further down the track, sell off some stuff,( i will be lining up again to buy) some cuts to parts of the community that dont vote for them, telling all government departments to find 5 10% savings
and hopefully not the great tax shift GST increase for a small tax refund
Fenton St Rotorua still rented to the homeless for $200 per night per room per motel and MSD extending contracts forwards for more years.
Hundreds of millions going to consulting firms and only God knows how many working groups, virtually for nothing.
The size of the public sector at an all time high.
So there's room for savings. Labour assumes that all of their nonsense will be maintained and can't possibly be optimized.
I agree with this. The biggest fools right now are those suckers lapping up National & Labours PR thinking they will actually do what they say - they have a terrible track record. My guess is we will be lucky to get 10% of their promises actually delivered in their next term.
Take National's inflationary massive spending announcement. If they get in fast forward, cost blowouts and scope reductions all over the show. They will also likely run down other services to divert funding into the roads. How many much needed hospitals could be built for the $24bn price to give more money to Auckand and Wellington to build roads of questionable economic return? We would fix our entire health system, instead they want to spend it things thay will only ultimately add pressure to the health system.
Its telling how their are no timeframes on their promises - they are basically already admitting they know they wont happen.
Labour are the same, promise big, deliver little. But unlike the last National govt they can least partly fairly blame that they had the interruption of a global pandemic to somewhat argue this was unforseen in 2017 and required significant diversion of resourses and global shutdowns of supply chains. For the National fanboys to pretend like it didnt happen is a significant re-telling of history. In saying that Labour use COVID as a convenient excuse today for all sorts of things that only their management are to blame for.
To be honest to the Labour and National fanboys and girls. Wake up and realise that pretty much the only thing modern large political parties actually can deliver is PR. They are all style and no substance. Be prepared to be disappointed. All they are here for is to maintain things as they are, tinker around the edges and keep house prices high. Also to those fanboys and girls out there - our political parties have enough of their own spin doctors, they dont need you parroting their PR for free. Take a break from it all the PR spin and then for the election, truely vote for the party that best represents you.
A large part of the problem is voter expectations. Hence the need for promises that can't be kept,or we would need to borrow to keep.
No party wants to say , hey, we've had the covid shutdowns, we had weather events , we really just need to knuckle down , build resilience , pay our bills , and do something about climate change. sorry no tax cuts or other presents , unless you want to pay with it through some kind of capital tax.
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