Labour to announce high-level spending projections Wednesday with focus on health; Work done on how to deflect 'tax and spend' and 'dodgy accounting' criticisms of previous years

Labour to announce high-level spending projections Wednesday with focus on health; Work done on how to deflect 'tax and spend' and 'dodgy accounting' criticisms of previous years

By Alex Tarrant

Further evidence of how Labour is looking to portray a different ‘centrist’ stance from National will be on display later Wednesday as Andrew Little and Grant Robertson release a set of fiscal projections for the next four years.

These will be high-level numbers detailing how much certain Crown expenses will be over National’s Budget 2017 projections, with a key focus on Vote Health. While we’ll be given headline figures for projected spending, these won’t be whittled down to individual policies – there will be large ‘other’ sections for policies set to be announced during the election campaign.

Separately, Labour says one of the first things a Labour-led Government would do is resume payments to the New Zealand Superannuation Fund.

Meanwhile, Labour will seek to limit any ‘dodgy numbers’ accusations by basing their projections on top of those in Steven Joyce’s May Budget out to 2021 (see page 94 in the BEFU). We’ll be told how much extra Labour will spend on the various Crown expenses classifications.

For anyone wanting to turn to the ‘tax and spend’ criticisms of previous years, Labour thinks it has an answer for that too. The numbers are set to sit within its five ‘Budget Responsibility Rules’ (BRRs) released earlier in the year. Number four is that Labour will maintain core government spending at about 30% of GDP (the promise was designed to show it won’t increase proportional spending by too much).

That rule gives Labour a little more room over the 2017 Budget projections, where core expenses are forecast between 27% and 29% of GDP over the next four years. Labour also has a slower debt reduction track than National. Rule two of the BRRs is to reduce net debt to GDP to 20% within five years of forming a government (ie 2022/23). National is targeting that mark at the start of 2021.

Nominally, a back of the envelope calculation indicates this will give Labour between at least $3bn and $8bn a year extra. There will also be talk Wednesday about accounting for inflation and population growth, so maybe shave a billion dollars off those annual extras.

Andrew Little’s stance of not heading into the 23 September election with any proposals for new or raised taxes will also be used to deflect the tax and spend criticism. The party’s tax policy at the moment involves the removal of negative gearing allowances and getting rid of secondary tax. Gone is the capital gains tax used to fund various spending promises previously, or talk of higher income tax brackets like the Greens.

Saying that, one of the first questions set to be asked of Little and Robertson will certainly be, ‘what about the Greens’ spending and tax promises due to the likelihood of needing them to form a government’? Well, there might be a bit of provision for the spending side of things. But Labour will argue that as it is asking for a mandate to lead a government, it should be allowed to portray its own “vision”.

Health will be the primary focus of that vision Wednesday, with a ‘big number’ set to be revealed. Labour has been arguing that National has underfunded the health system by $2.3bn since coming to office, relying on this Infometrics report.

An NZIER/Vic Uni analysis incorporating inflation and population growth suggests health spending under the fifth National government has risen 0.5% versus 2.7% under the previous fifth Labour government. But with demand for certain healthcare services rising more than that, like mental health, Labour argues an effective funding cut.

The move to release spending projections is another attempt by Labour to show how it will differ from National on the fiscal front. Last week, the party announced its alternative families package, which will see a number of new tax credits targeted at lower-income families in place of National’s tax threshold, Accommodation Supplement and Working for Families tweaks of the May Budget.

A decision was made during the last month or so to announce the alternative families package separately from the fiscal projections, allowing Labour to talk up its family and health lines on separate occasions, in different cities. It also gives deputy leader Jacinda Ardern and finance spokesman Grant Robertson their own space in the spotlight with leader Andrew Little.

National’s response to Labour’s accusations on spending deficits has been that it is focussed not on how much one is spending, but on how targeted that spending is. This is how it argues it is doing enough to tackle rising social problems while cutting or keeping stable various budgets. Labour will say this hasn’t worked. Rising demand, particularly for health services, shows more funds are needed up front.

All eyes now on the pre-election Treasury fiscal projections, set to be released a month out from election day.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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16 Comments

Still reckon Singapore spending 10.6 billion to provide world leading healthcare to 5.5 million people implies that the 17 billion we spend to provide mediocre healthcare for 4.5 million people is far too much!

That's a pretty dumb comparison, if I ever heard one.

maybe this is why they spend less, its called user pays

A key principle of Singapore's national health scheme is that no medical service is provided free of charge, regardless of the level of subsidy, even within the public healthcare system

We cant compare ourselves to Singapore , you have to pay for State health services and where for example a hospital cleaner crosses over the causeway from Malaysia each day to work for one tenth of our wage rate

I would imagine even such a simple thing as it's small geographic coverage makes the most massive difference. It's going to cost less to provide care through 5 hospitals than 10, at the most basic level.

All good, The burning question is can we trust them? what will they do if their other immigration, minimum wage and superfund contribution ... etc etc depressed the economy ?? .... what guarantee could they provide that they won't tax the hell of property and higher income - the Greens and WP will not settle only for the charms of Mr. Little and his team and allow him to "lead" free handed .... WP alone has tons of charm of his own ...!! and a much tougher negotiator than Mr. Little realises...

What will happen when that extra $3-$8B would not eventuate or evaporated next year simply because of their assumption of power which could be a major cause of depression itself ? ...what will happen if there was another "minor" earthquake somewhere? .... By pushing debt repayments means they will borrow more to save face and satisfy the Co partners ...with all their own conflicting policies - a very dangerous mix indeed ...
The whole thing doesn't add up !! -- too many conflicts and premature policies which can be negated anytime .... not sure at all if they can be collectively trusted ... even if they promise Jupiter !!

Precisely, Eco bird, even if we could trust Labour not Tax and Spend , its doubtful if their coalition partners would ever entertain this .

Also note the wording , they have NOT specifically committed to NOT increasing taxes .

Right now the economy is flying on all cylinders so the GST and overall Tax take is really good , but this could change if there is a drop in immigration leading to the construction sector slowing

The Labour idea of building a home for everyone and selling it to us at under cost is a noble idea , but it will bankrupt us without tax increases or debt to fund this idea

Some of the GREEN ideas are so expensive that its doubtful a Government would afford it without tax increases

They have NOT specifically committed to NOT increasing taxes. This statement in itself means yes they will increase income tax if they become government.

Perhaps they'll use Greens proposed income tax increase as the vehicle to increase income tax by saying it was a concession for Greens becoming a coalition partner.

If the tax take disappears then the spending would disappear or turn into debt. You can trust Labour as much as you can trust National. The only time any party gets a performance review is when people look at the broken promises every election.

What do you mean by trust? Shall I list all the times I can think of where various members of this government lied, covered up, restricted information release, or acted against the populations best interests for private gains? Not since Rogernomics have we seen a government who could be trusted less than this one.

If the economy did get a bit depressed (as a result of too much debt built up under the current regime) I would expect those with more income or asses to be taxed higher to help get us through. Would you rather they taxed the poor more in recessions?

I know I'm not addressing your key point (no pun intended) but yes, I would be very keen on avoid list of politicians' lies. I see it's gotten a little harder to research these now the Herald has removed their historical articles from online and made their site harder on the whole to use.

You know Labour is on a hiding to nothing this election , they are appealing to their hardcore old base , and not the centre .

This building houses -for -all- and- sundry will bankrupt us

Their offer to take hard-earned money from low income earners and generously give their own money back to them by way of a complex costly and cumbersome round tripping of funds is ludicrous

Their partner - in crime the Greens have scored a massive own goal

Ms Turei, it turns out is a benefit fraudster , and this is very very serious having a criminal in Parliament , she should step down .

As previously advised, overseas visitors are costing the public health sector 200m annually, the size of the current health funding gap estimated by Infometrics. This cost will grow to 300m annually within 5 years based on tourism projections. There has been a trade off between tourism and health over the last 5 years which is unsustainable. Travel insurance details need to be taken at the border and matched with the cost of publicly funded health care received. This can then be returned to providers to eliminate their funding gap.

That's too easy - can you come up with a proposal that's more complex so the government can say - wow, that is complicated, we will look into it, then we will invite submissions, then we will look at it again - then we can do nothing - meanwhile locals miss out

'Andrew Little’s stance of not heading into the 23 September election with any proposals for new or raised taxes'

Not correct. In a 30 May NZ Herald interview with Claire Trevett he made it very clear that tax increases were back on the table - 'Labour cannot rule out increasing taxes'

Labour has already decided to scuttle Nationals partial roll back of the tax bracket creep that has so unfairly increased the taxes of much of middle NZ and is now contemplating further tax rate increases. In addition their coalition Green partner wants to increase taxes even more savagely to fund their income redistribution policies. It is clear that a change of government will result in a significant increase in the burden already being shouldered by taxpayers.

Isn't our net debt already very low? Doesn't National plan to pay it down faster than Labour?