Labour, Greens pledge fiscal responsibility if elected

The Labour and Green parties are promising to be fiscally responsible if they win the Treasury benches at the September general election and will set up a body independent of government to make sure they stick to their rules.

The opposition bloc have a memorandum of understanding to try to topple the National-led government, which has been in power since late 2008, and today released a set of budget responsibility rules to shore up their fiscal and economic credentials. At the top of the list is maintaining operating surpluses, which they anticipate being able to deliver "every year unless there is a significant natural event or a major economic shock or crisis". Those surpluses will be in place once the parties' policy objectives are met and won't be delivered by underfunding public services.

The rules also target reducing net debt to 20 percent of gross domestic product, something the existing administration is trying to achieve, and will prioritise long-term investments including restarting contributions to the New Zealand Superannuation Fund, building infrastructure to cater to the expanding population, and mitigating the impact of climate change. They also plan to keep government spending at about 30 percent of GDP, and will set up a working group of independent experts to advise on how to establish a progressive tax system to rebalance the economy and put it on an environmentally and economically sustainable footing.

"These rules demonstrate how Labour and the Greens in government will manage the economy prudently, effectively and sustainably," Labour finance spokesman Grant Robertson said in a statement. "These rules are a clear and direct statement to New Zealanders that we will manage the economy carefully and be held to account."

As part of the budget rules, the parties would set up a group independent of the executive to make sure they are being met.

"The body will also have oversight of government economic and fiscal forecasts, shall provide an independent assessment of government forecasts to the public, and will cost policies of opposition parties," they said.

(BusinessDesk)