War of words needs the numbers

Steven Joyce: big fundraising boost.
Steven Joyce
Finance Minister Steven Joyce and Labour finance spokesman Grant Robertson continued their verbal exchange yesterday about Labour's fiscal plan.

Mr Joyce alleged on Monday there was an $11.7 billion hole in Labour's financial plan, something Mr Robertson and Business and Economic Research Ltd (Berl) chief economist Ganesh Nana denied.

Labour had used Dr Nana and Berl to check its costings.

Mr Robertson yesterday called on Mr Joyce to front up to New Zealanders and apologise for his ''patently false and cynical'' attack on Labour's plan.

Mr Robertson overstretched slightly when he said every respected economic commentator had come out and said Labour's plan added up.

Less than 30 minutes later, Mr Joyce responded in kind, accusing Mr Robertson of ''maintaining the fiction'' of Monday.

Labour would be left with no allocation for increased spending in any area of government outside of health and education for two budgets.

''That's literally a two-year Budget freeze for most of the Government.''

There was no new money for wage increases for police, social workers, Department of Conservation rangers, for pay equity settlements, for the Ministry of Vulnerable Children, and no money for science and innovation, defence or law and order, he said.

Mr Joyce claimed Labour's plan was not credible. Anyone with any experience knew there were myriad investments governments had to make every year to provide public services for New Zealanders to keep the country running.

Mr Robertson, in turn, called for Mr Joyce to be open with New Zealanders about his plans. National was now saying there definitely would be a second families package, just two weeks after saying it would only happen if fiscal conditions allowed.

''There are no details about this package and no money to pay for it. Labour has been clear, open and transparent.''

Labour's plan showed how much it would invest in health, housing and education in coming years. It would restart contributions to the New Zealand Superannuation Fund and would run operating surpluses.

''Mr Joyce needs to ditch the dirty politics, stop the stunts and debate the issues fairly and squarely.''

On August 31, Mr Joyce released a summary of its 2017 election campaign announcements to date and their effect on future budgeted expenditure.

At that stage, the announcements made since August 12 had a total effect on the Government's operating budget of $264millon in 2018-19, rising to $299million in out years.

That compared with an annual operating allowance of $1.7billion available in Budget 2018, he said.

National had allocated $412million for capital projects during the election campaign to date, compared with $4billion of reserved capital funding which was unallocated in the Budget 2017 documents.

On August 31, Mr Joyce said National would continue to update the summary through the remainder of the election campaign.

It is the right time for Mr Joyce to now provide that update.

In return, Mr Robertson needs to start being more open about Labour's tax plan.

Mr Robertson has an optimistic view of New Zealand's economic growth in the forecast period to 2021, including the tax take rising by 6% or 5% in each year in the same period.

The saving grace for Mr Robertson was forecasts for economic growth to continue strongly. No allowance was made for any events, such as a global financial crisis, or a downturn in investor activity.

Leader Jacinda Ardern said in Monday's leader's debate there would be no increase in tax rates when she was prime minister. She also said she would resign rather than change the retirement age from 65, a line former prime minister Sir John Key said.

Prime Minister Bill English planned to raise the age from 65 to 67 starting in 20 years' time.

Under National, the age of entitlement for NZ Super increased by six months each year from July 2037 until it reached 67 in July 2040.

Everyone born on or after January 1, 1974 would be eligible for NZ Super from age 67.

Most working groups have said superannuation is unaffordable in its current form.

If Labour is committed to keep superannuation at 65, taxes will have to rise to pay for it, given the demographic change of New Zealand.

Ms Ardern yesterday refused to rule out a land tax when interviewed on RNZ's Morning Report.

While continuing to rule out the family home as being subject to capital gains tax, she said land tax applied to land, not homes.

''Nothing we're looking at will affect a family home. I've been really clear on that.''

What Ms Ardern was less clear about was whether a land tax could be part of the brief for Labour's tax working group, if Labour wins the next election.

Voters can get turned off by figures, and turn to personalities. But voters deserve to know if their taxes are going to be affected ahead of time, rather than after the event.

Labour has said it would cancel National's $486million tax cuts. It needs to be clear on what else is coming.

dene.mackenzie@odt.co.nz

 

Comments

Given Steven Joyce's academic record, I would not put him in charge of an out-house let alone any nation's finances.