'Hangover after the party': Nicola Willis on beating inflation and whether she's 'liberal'

National Party deputy leader Nicola Willis. Photo / Dean Purcell

"There's no doubt we are paying, [it's] the hangover after the party," says National deputy leader and finance spokesperson Nicola Willis.

"We had huge amounts of cash coming into the economy through monetary and fiscal stimulus and now we are coming down from that high...and inflation is part of the consequence."

Just over two weeks into her new finance role, Willis seems keen on taking the inflation fight to Finance Minister Grant Robertson.

"Inflation is a thief in everyone's pocket," she says. "And it's important to remember that it came along well before the war in Ukraine. All the predictions are that it's set to rise."

Economists will all have views on whether too much stimulus was unleashed in our Covid response, she says.

But it is still very much the Government's problem to deal with.

So, how would National tackle inflation?

It starts first with monetary policy, Willis says.

National has been clear that it would turn the clock back on Reserve Bank policy settings.

"We think the RBNZ should have one target - that's price stability. We don't think the maximum sustainable employment goal has been helpful there."

The second issue is government spending, she says.

National isn't planning to spend less, but it plans to convince voters it can spend better.

"It's more important than ever that the Government is getting quality outcomes for its own spending," Willis says.

"It has to remember that every dollar it's taking is a dollar that could be in the wallets of New Zealanders."

Willis highlights National's plan to cut taxes by adjusting tax rate thresholds.

It's a modest proposal, she concedes.

Someone earning an average income of $72,000 would gain about $850 a year.

The tax threshold will move from $70,000 to $78,000.

"Tax payers above that will get $1045. If you think about a tax payer today on $78,800 can you really say that they feel rich. With the cost of living where it is, I don't think so."

The third thing is that Government has got to be careful not to add costs to doing business with unnecessary regulation, Willis says.

While clearly this isn't a return to the hard fiscal management that National used to beat inflation in the 1990s, is it is a traditional formula for fighting inflation.

Is it 'austerity light'?

Willis says no.

"My focus is on better government, not smaller government for its own purpose. I'm not proposing cuts of any sort." she says.

"Instead, I'm saying if the Finance Minister wants to go ahead with biggest increase to operating allowance in New Zealand history - he's planning to put an additional $6 billion in at this Budget - there is a very high bar for that extra spending.

Critics, including Grant Robertson, have accused National of trying to have its cake and eat it too, suggesting that tax cuts without spending cuts doesn't add up.

"I would put it straight back to him, Willis says. "Can you tell me that you have got value from every extra dollar of government spending since you came into office."

Willis argues that the answer is "clearly no."

She concedes however that there is still work to be done on National's fiscal plan to nail down the detail.

"The thinking that we're doing now is about: what is the economic growth plan? what are the policies we need to develop to ensure that New Zealand will have a more productive economy to ultimately make people wealthier?" she says.

"Yes the tax plan and yes fiscal plan is part of that, the exact number, the exact precision of the policy will be delivered before the election."

Willis with National leader Christopher Luxon. Photo / Alex Burton

National remains committed to big investments in areas like infrastructure which is needed to boost overall productivity, she says.

On productivity Willis also emphasises the need for investment in education and the importance of government making life easier for business.

"We do need to look at unleashing enterprise," she says. "That starts with getting rid of some of the costs that they are facing."

But ultimately it's a balanced approach on offer, which might put her as much at odds with some of the harder line policies of ACT as with the Government.

Willis is often described as being from the 'liberal wing' of the National Party.

What does that mean?

"There have been a lot of conscience issues since I came to parliament," she says.

"We've had end of life choice, we've had abortion and we've had conversion therapy. On those social conscience issues I have tended to have - what is sometimes described by others - as a liberal view."

"What that means is that I have a fundamental belief in the rights of individuals to make decisions about their own lives and you've seen that in my voting record."

"I would describe myself as fiscally orthodox, and conservative to the extent that you're not going to see me dreaming up a brand new economic theory for the way that New or the world should be run."