By Alex Tarrant
The exchange between John Key and Phil Goff this week on Labour's spending promises has set the ball rolling for what the election will be fought on - fiscal responsibility.
Does Labour have a NZ$17 billion hole over the next four years? Does it have a NZ$14 billion hole? Does it have a NZ$2.6 billion hole when you only look at the next Parliamentary term?
We do need to keep asking these questions. The public should know what the respective political parties are offering and how much it will cost in these tight times. It's called fiscal responsibility.
Labour is set to release costings of its election manifesto later this morning, and Goff pre-empted that on Thursday by saying if National were looking to borrow NZ$13 billion over the next three years, under Labour that was looking to be NZ$15.6 billion, "but we'll keep our assets".
So that's a NZ$2.6 billion hole, but we'll wait and see David Cunliffe's spreadsheet.
Don't just look at Labour
Now, seeing as we're in an MMP environment, we shouldn't just be talking about National vs Labour when it comes down to spending promises.
It should probably be National vs Labour, the Greens, probably the Maori Party, and for a bit of fun you could always throw New Zealand First in there as well.
You could add ACT to National, but they want to cut spending, don't they. Of course the other possible coalition partner for the Nats is the Maori Party, but they didn't kick up any fuss in the term just been, so we should expect them to quietly go about their coalition business behind the scenes.
The Greens are key
If Phil Goff is Prime Minister, then the Green Party will have to be part of the government. They're not just going to stand back like they did when Helen Clark offered them a Ministerial position. If, as the latest Herald-digipoll numbers show, they get 13 MPs into Parliament, then they're going to want some seats around that Cabinet table, and/or some pretty impressive 'associate' portfolios.
So when we're looking at Labour's spending promises, we need to take the Green Party's coalition priorities into account.
Worried? Perhaps there's no need to be so much. The Greens are certainly not going to behave like Winston Peters did when it comes to supporting the government.
The Greens say they are well aware of the fiscal straight-jacket New Zealand is in. Their co-leader Russel Norman, who handles the financial side of things for the party, could easily lay claim to Opposition Finance Spokesman given his displays in Parliament recently. Even Finance Minister Bill English, although in a prod at Labour, praised Norman in the House for his understanding of the fiscal side of things even if he didn't agree with him.
Now this of course doesn't mean the policies they want to get through Parliament next term won't cost anything...
The problem Labour found themselves in on Thursday was they were not able to provide any estimates of how much their election manifesto so far would hit the government's books. They told us before the election campaign that their manifesto would be fully costed. I naturally assumed that they would just update us every time they released a policy as to how this affected the fiscal side of things.
But it has turned out their strategy (?) was to do this for the tax package announced a couple of months ago (showing a NZ$1.9 billion hole in the government's revenue stream over the first five years), but then stop doing it with subsequent policy releases.
Instead, Labour have chosen to talk about the long-term situation - they say after the initial years, their tax switch will drag in more revenue than the track Treasury is forecasting under National.
National is making it look like they've forced Labour to put their heads down to provide a spreadsheet of how much their policies would cost versus their revenue stream over the next four years. Great politics from Joyce and Key, and terrible foresight from Labour.
But back to the Greens
When they released their economic plan back in September, the Greens provided a 'fiscal implications' page detailing what their highest priority policies would cost, and what they think can be done to bring in the revenue to cover that. See page 19 in their policy document here.
Not only that, they made provisions for policies they hadn't yet announced, like their conservation policy to be released today.
Co-leader Russel Norman is the first to accept that some of the numbers presented may not be bullet-proof. For example he says the NZ$519 million expected in extra tax revenues the government could receive from raising the minimum wage to NZ$15 could be out (he says by 10% possibly), because the government employs people on the minimum wage (and will therefore face higher costs), and that the corporate tax take could fall due to higher costs to business.
In the Greens' priorities - policies they would consider bringing to the table if they were in coalition talks - there are seven to raise revenue, and ten that will incur costs. However, they say this is just a list to choose from, and are not likely to demand them all be implemented within three years.
The problem is, some of the Greens' revenue streams are already included in Labour's tracks due to them having the same polices - raising the minimum wage to NZ$15 an hour, for example.
Another policy which is similar, but not exactly the same, is capital gains tax. The Green Party's revenue expectations from its capital gains tax policy would be higher than Labour's because they want to tax people at their marginal tax rates, whereas Labour's would be a flat rate of 15%.
The Green Party's call to reprioritise spending on motorways has also been partly taken into account by Labour - they want to use the money being spent on the Puhoi to Wellsford highway put toward an inner city rail link in Auckland. The Greens also want inner city rail in Auckland, but didn't include it on their priorities page (see it below).
One that Labour looks like it wouldn't agree to is the Green Party's earthquake levy on income tax - Labour has already released its earthquake policy.
So seeing as some of these revenue streams and spending cancelations are already incorporated into Labour's fiscal tracks, and others wouldn't be accepted, it would appear the Green Party has less room to move than if they were the only partly touting these policies.
They've tried to give themselves some room by saying their revenue policies would raise twice as much as their spending policies. At least they gave this a go before the election campaign began, unlike Labour.
By taking out those policies mentioned above, it looks like the Green Party would have to forego some of their policies which require spending, whilst getting Labour to also agree on additional revenue streams such as a levy on the commercial use on water and additional mining royalties.
Would Labour agree to those? They might have to - the Greens will say one or two out of seven ain't much to ask for.
What about NZ First?
Given their only hope of getting into Parliament is winning 5% of the general vote, it's less important we incorporate New Zealand First's spending priorities into Labour's tacks.
But, for fun's sake, let's say Winston Peters is in a position to form a government with Labour and the Greens (and actually let's face it, Labour might be toast if NZ First isn't there to help them in). Which policy of more subsidies for old people, or writing off half of student debt should we be taking into consideration?