An early version of Labour’s GST policy document calculated the cost of the policy beginning in October 2024, instead of April 1 as announced by Chris Hipkins

Labour released a policy document which calculated the cost of its GST cut as if it began in October 2024, which would be six months after the proposed start date of April 1. 

An updated version of the document differs from an embargoed version which was sent to the media two hours before the announcement on Sunday. 

The version first released by the party only included the cost of removing GST from fresh and frozen fruit and vegetables between the 2024 and 2027 fiscal years. 

However, the party said it was aiming to implement the policy from April 2024. This means there would be an additional three-months of cost included in the 2023 fiscal year. 

The first version of the document also showed a lower cost in the 2024 fiscal year than in the following years, without explanation. The new version shows a higher cost. 

Nicola Willis, deputy leader of the National Party, pointed out the updated figures in a media release on Monday. 

In a subsequent press conference, she alleged the error could have occurred because the party didn’t expect the policy to actually be ready by April 2024. 

She pointed out the announcement said Labour would “aim” to have the policy ready, but didn’t fully commit to that date.

“When you talk to tax experts about this sort of policy they will point out that it would be pretty difficult to get up and running,” she said. 

The aspirational phrasing could have been chosen to give the party some space to delay the start date if it was not ready soon enough. 

“The costings seem to back that up, because they were based on the policy starting in October rather than April,” she said. 

The first versions of the policy document said zero-rating GST on fresh produce would cost $365 million in 2024, but the updated document says it would cost $485 million. 

The difference between those two figures is exactly equivalent to three months of the estimated cost, implying the first costing was based on an October 2024 start date.

Fiscal holes of dubious origin 

Although the $235 million error doesn’t significantly increase the long-term cost of the policy, it does cast doubt on whether Labour truly expects it to be in place by April 2024.

A spokesperson for Robertson's office said the costings were always based on an April start date and the errors were only a typo, not alternative calculations based on a different start date. 

Labour confirmed on Monday that the embargoed policy document included incorrect numbers but said the public materials released with the announcement were correct. 

“The correct cost of the GST policy has always been accounted for in our fiscals and was discussed at the media conference yesterday,” a spokesperson said.

This is true, Robertson did quote the updated numbers when he was asked about the cost on Sunday. 

“It's 2.2 billion over the forecast period … which ramps up overtime, but a little bit of it is in this financial year [2023],” he said.

Willis has a mixed record on fiscal holes and policy costs. Only two weeks ago she was pushing a speculative rumour that the Government was facing a $20 billion fiscal hole.

The theory had been floated by New Zealand First’s Winston Peters, but there wasn’t any evidence that any fiscal hole existed and none has been produced to date. 

This was followed by a report in Newsroom last week, which found the National Party had failed to factor inflation into its transport plan and was subsequently $2.5 billion short. 

However, Willis has twice been correct on Labour’s tax plans. She first found out they were considering a wealth tax in the run up to Budget 2023, and then leaked details of their GST policy before it was announced.