National’s Finance Spokeswoman Amy Adams is gearing up for her first major test in the job – her criticism of the Budget.
Every year, the Opposition’s Finance Spokesperson takes the stage to explain why they think the Government’s Budget is no good for Kiwis.
They usually have a snappy one-liner to cap their criticism off – last year, then Opposition Finance Spokesman Grant Robertson called National’s Budget the “dollar Bill Budget.”
On Thursday it will be Adams’ turn to pick apart the numbers.
Although what’s in the Budget is a secret for most until 2 pm on Thursday afternoon, in the lead up to the big day Adams has been focusing her criticism in a few different areas.
On Tuesday, one of those areas was tax.
“Does he accept that increases to petrol tax, the new regional fuel tax, the five-year bright line test tax, and the new 'Amazon tax' adds up to Kiwis paying around $2.27 billion more tax over the next four years?” she asked Robertson in the House.
In a subsequent press release, Adams broke down the figure.
She says the combination of the fuel excise increase ($1.2 billion), the Auckland fuel tax ($600 million), the bright-line extension and scrapping of negative gearing ($300 million) and GST on online goods ($218 million) adds up to an extra $2.27 billion.
“This from a Government who said they would introduce no new taxes in their first term.”
In the House, Robertson was not able to confirm the $2.27 billion figure.
But a Spokesman for the Minister offered a rebuttal, saying the Government actually adopted Judith Collins’ work on the “Amazon Tax,” and Robertson thanks her for her work.
On fuel tax, he says the previous Government increased that by 40% and also introduced a two-year bright-line test.
He adds that the scrapping of negative gearing will “even up the tax playing field.”
Critical of Government debt
Adams has also put Government borrowing in her crosshairs, critical of the Government’s plan to borrow an extra $10 billion at a time when the economy is doing well.
“Can he confirm that the Government's plan to borrow around $10 billion more over the coming years will result in more than $1.1 billion in additional debt-servicing costs over the next four years, or $650 for every household?” Adams asked on Tuesday.
According to figures from the Half Year Economic and Fiscal Update (HYEFU) the Government is planning to increase debt by $10 billion to $69.40 billion by 2020. But that number drops to $66.76 billion by 2022, or 19.3% of GDP.
In the House, Robertson was prepared for Adams’ criticism on the debt servicing costs.
“I can confirm is that core Crown finance costs, according to the Half Year Economic and Fiscal Update will fall from 1.3% of GDP in 2017 to 0.96% of GDP in 2022,” he said.
“I can also confirm that in nominal terms core Crown finance costs are proposed to fall from $3.5 billion to $3.3 billion.”
In other words, he says it will cost less for the Labour-led Government to service its debt costs than it cost National when it was in power.
Speaking to Interest.co.nz after Question Time on Tuesday, Adams said National were borrowing at a much different time.
“When we were borrowing, we were coming through the GFC and the Canterbury Earthquakes – that is when you borrow, that’s why you have to have headroom to borrow.”
She said it was unfair to compare the Government’s borrowing situation now to the position National was in when it was borrowing more.
“When you get fiscal shocks, it’s important to have the space to borrow and we borrowed quite deliberately to protect the most vulnerable and get us through those tough times.”