By Katie Scotcher
New Zealand First leader Winston Peters has signalled he will not compromise on the roll-out of his election commitments, despite warning the government is short billions of dollars.
Already one coalition partner has had to agree to scale back the roll-out of one of their policies because it was too expensive, but Peters has suggested he will not be doing the same.
During his state of the nation speech in Palmerston North on Sunday, Peters confirmed reports the government is short $5.6 billion to pay for all of its campaign commitments.
"The growth rate is not what we thought it was. That's the real difference," Peters later told journalists.
The government has been managing expectations, flagging economic growth is expected to be significantly slower than expected over the next few years.
During his address, Peters described the economy as "broken".
Peters was asked if the coalition government could afford National's promised tax cuts, if it is short $5.6b.
He seemed to suggest the policy will be implemented - but exactly how is still to be decided.
"I admit that there is a construction of the economic plan going forward where all these things can be done, but not the plan I've heard just yet.
"However, we are in coalition talks all the time, to see what the construction pathway forward might be."
The suggestion of a $5.6b hole raises questions about how the government will fund its promises.
Already coalition partners have been forced to compromise on one policy because of cost.
Last week the government confirmed interest deductibility would be reinstated, but not backdated - as promised in National's coalition agreement with ACT.
When asked if the coalition can afford all of its commitments, Peters replied "our ones, yes."
Peters making it clear he will not compromise on the roll-out of his party's policies.
This will no doubt please his supporters, but will likely frustrate New Zealand First's coalition partners who may be forced to compromise on their own commitments instead.
Yes for tax cuts with 'right strategy'
Peters told Morning Report he had been pointing out for a year the country had a large fiscal hole so it was "no surprise" to him to have it confirmed.
"The economy was in far worse shape than people were prepared to concede. Sadly, that was the election outcome and our job is to turn it around and fix it up."
The country could still afford tax cuts, he said.
"As long as it sets out to realise what New Zealand's potential is we can do that, and do it rapidly. We can turn the whole result around and over the next 10 years make New Zealand a seriously successful country."
The country would need to increase the value of its exports and attract skilled labour and investment from overseas, Peters said.
