The National Party has made confident statements about its spending plans and economic management. It should be honest about how it will all be paid for, writes the CTU's Craig Renney.
Opinion: Recent polls suggest National could occupy the Treasury benches after October 14.
We are just over two months to the election, and less than nine weeks away from early voting. A fully costed fiscal plan is central to the credibility of any potential government – especially an opposition. Despite repeated requests, National has yet to produce one or even the outline of one.
Labour released its fiscal plan in 2017 on July 19. John Key produced his in 2008 on August 4, well before elections those years. Yet little analysis has been made of National’s current spending programme, nor how their promises would be afforded. The only consistent message to come from leader Christopher Luxon and deputy Nicola Willis is that a plan is coming and that it adds up.
The Council of Trade Unions (CTU) has tried to fill that information gap for New Zealanders. This is by definition a partial analysis, but we have used information provided by both National and Treasury to draw up the basics of their plan. What this demonstrates should concern those who use public services, or whose families rely on them. There is a significant fiscal gap between their promises and their current ability to deliver.
Currently, there is $21 billion of new spending planned across the next Parliament. Of that, Treasury estimates around $16.8b will be needed just to keep the lights on – that is just paying to keep the current system running. That doesn’t account for population change, demographics, or new technologies like new medicines or any emergencies. That leaves $4.2b in money available for potential investment, which is very likely to be an overestimate of what is available.
The problem National has is that it is committing money faster than it could generate it, having currently costed $2 for every $1 available. Our analysis of National’s spending commitments has identified anywhere between $7.5b-$9.4b of promised new spending. The difference comes from changing the possible dates of the different tax changes National has promised to deliver. The earlier they come in, the more expensive they are.
The size of the gap between spending and revenue – between $3.3b and $5.2b – would mean cuts to public services year after year. This isn’t simply money that can be found from a few contractors or by letting go of a few comms staff. It means fewer staff, delivering fewer public goods. At a time when health, education, and policing are already stretched, and when we are recovering from Cyclone Gabrielle and an existing $210b public infrastructure gap, this can’t be achieved lightly.
To generate our figure, we have used the numbers provided by National in their costings. The problem is that many of their biggest policy announcements have no costings at all. So that means the true gap might be billions higher than this. This gap also assumes no new real investment in health or education, nor any new investment in the last two budgets of the next term. It assumes no more spending on the campaign trail this election, nor any spending for potential coalition partners.
In short, it’s not a credible fiscal plan. Their funding gap will likely grow and grow. This will necessitate bigger and bigger cuts. Cuts of that size get harder and harder to deliver. It’s an unpleasant circle of pain, with the main losers those who depend upon public services. Which is everyone.
Each day is adding to the uncertainty. The CTU’s analysis was completed before National’s recent announcement of its huge and potentially under-costed transport projects. And before their proposed use of overseas government money and its inevitable interest repayments. Given the confident statements National has made about its spending plans and economic management, it should be honest about how this will all be paid for.
National can end this uncertainty by doing what previous oppositions – and, to their credit, Act and the Greens – have already done this election. National should produce a fully costed and audited fiscal plan. That plan should show what will be cut from government spending, when, and how. New Zealanders deserve that clarity from the Leader of the Opposition.
The CTU has conducted this analysis because working people should know what kind of government National would lead, and the likely impact that cuts of this scale would have on essential public services, everything from care to public transport to state housing. Right now, National has a substantial fiscal gap that has to be overcome – one that is likely to get worse as the election season gets underway. Right now, it’s a fiscal challenge measured in the billions.
Post publication, National Party deputy leader Nicola Willis provided the following statement:
"National will release our fully-costed and fully-funded tax reduction plan well in advance of the election. Our plan will see workers, including members of the unions Renney represents, better off by hundreds of dollars a year.
"We reject the baseless conclusions Mr Renney has reached about our plan. They are nothing but politically-motivated and misleading speculation."
