The finance minister says Labour has made five major mistakes in its fiscal plan, resulting in a big increase in net Crown debt but Labour has rejected the idea here are any holes in its figures.
Labour Party finance spokesman Grant Robertson has hit back at claims by National Party campaign chairman and Finance Minister Steven Joyce of an $11.7 billion fiscal hole in Labour's budget plans but has still been left exposed on Labour's ability to afford spending increases outside health and education.
Mr Joyce called a late-notice press conference late this morning, alerting media to what he called a number of inconsistencies in Labour’s plans. After spending a couple of days running the numbers, Mr Joyce and his team say Labour’s spending plans will result in net debt increasing by nearly $20 billion, from present levels of $60.6 billion to $79.3 billion over four years. However, Mr Robertson hit back, saying Mr Joyce has “embarrassed himself” and he accused the finance minister of attempting to “mislead the New Zealand public.”
Most significant in the alleged miscalculation is the contention that four years of new spending allowances worth $7.5 billion according to Labour's figures should, in fact, be recorded as $16.9 billion, a $9.4 billion blowout.
Mr Joyce claims Labour failed to include the cumulative impact of new spending in health and education in its recently published fiscal plan, but Mr Robertson rubbishes that claim, saying each year's new spending was included and just accounted for differently from the way the Treasury presents its regular fiscal updates.
National says it has an allowance for new spending in each of the next four years of up to $1.8 billion a year, based on the Treasury's pre-election economic and fiscal update. Labour agrees with that figure but has bundled some $8.5 billion of new health and education spending over that period into its "above the line" budget figures.
"This is the desperate act from a flailing finance minister," says Mr Robertson at a press conference called after Mr Joyce released analysis undertaken in his office without assistance from the Treasury or independent analysts. "What he's tried to do here is disingenuous in my view. He knows we have accounted for our expenditure in health and education going out into future years."
"That $6.7 billion for health and $1.8 billion for education, that's in there," says Mr Robertson. "Our fiscal plan adds up. We're absolutely clear we have the money to meet the commitments that we've made."
However, he appeared to concede that by committing so much expenditure in those two areas, Labour would struggle to fund what Joyce claims are routine claims from the rest of the public sector for extra funding of at least $1 billion extra every year.
Mr Joyce said at his press conference where the original claims were made: "There are generally about a billion dollars or so outside of education and health that just has to be done in the course of doing government. There's no way they have spare revenue hiding around to put against that stuff unless they're talking about doing those taxes that they don't want to talk about."
Mr Robertson says, in response to questions about such inflation and demographic costs in other areas: "There is still some money available within what we've called our operating allowance. We'll also be looking to government departments to reassess their spending. We will have some different priorities.
"Obviously, we do intend to build the economy as well to make sure that we have additional resources available. Like any government, we'll make those choices when we get into government," says Mr Robertson. Labour's fiscal plan expects to have some $7.5 billion in accumulated unspent funds available for other purposes over the four-year period, starting at $913 million in the current financial year.
Other issues Mr Joyce claimed had been missed include failing to allow for any increase in paid parental leave in its family income packages (an additional $567 million) and counting additional BEPs multinational tax revenue, which had already been counted by the Treasury in the Pre Election Fiscal Update ($902 million). But Mr Robertson claims that additional tax revenue is "completely wrong."
“What we have done is taken the IRD's advice, which is in the estimates, which is that for every additional dollar it is given to do work investigating tax avoidance, it will get $7 back.”
Mr Joyce says Labour also only included costs of its family package from July 1 next year, although it said it would begin on April 1 ($289 million) and did not factor in further finance costs associated with extra borrowing amounting to $580 million.
In terms of Mr Joyce’s comments on the paid parental leave figures, Mr Robertson says that came directly from MBIE’s advice.
“What Mr Joyce has failed to do is read all the way through that document and realise there are offsets from the non-payments of benefits and a range of other increased tax payments that will be coming into the government."
Mr Joyce's claims come ahead of tonight's second debate between the National and Labour leaders Bill English and Jacinda Ardern and the start of early voting next Monday.
National is pitching much of its attack on Labour in charges that it will be a 'tax and spend' administration, while Labour has invested heavily in preparing a fiscal plan overseen by economists at the independent consultancy BERL and in announcing a set of Budget Responsibility Rules the Green Party has also signed up to, stipulating spending and debt targets to shore up perceptions that Labour would be a less competent economic manager than a National-led government.
National's accusations come after a three-week surge in the polls, which has taken Labour to its highest levels of support in more than a decade and cut National's previously substantial lead over Labour. A OneNews Colmar-Brunton polls last week put National at 41%, two points behind Labour on 43%, while a Newshub Reid Research poll published last night had National still ahead, at 43.3% to Labour's 39.4% support. However, Labour was up six points while National was down one point.
"National has serious questions to answer about their own fiscals," says Mr Robertson. "They haven't allowed $8.5 billion for cost pressures in health and education. They haven't funded their GP (doctors' visits) policy properly. They haven't said where the money for their $11 billion of capital spending will come from."
In part, Labour was funding its plans by canning tax cuts worth $400 million for the top 10% of income earners.
