In the lead-up to the election, the Herald is putting claims made by parties and politicians to the test. Today, Hamish Rutherford examines the Prime Minister's arguments about National's debt and spending plans
The claim: National is planning up to $80 billion worth of cuts to spending
Prime Minister Jacinda Ardern has tried to frame the election as a choice between "investing in our people" and "austerity measures and up to $80 billion worth of cuts".
National has suggested Labour's only plan to address Covid-19 is spending on an industrial scale which will leave New Zealand with a huge debt pile.
The difference in spending plans is a key point of difference between the two main parties.
The $80 billion figure Ardern is relying on was drawn from a speech National's finance spokesman Paul Goldsmith gave in early July.
Having criticised the Government's spending at length, for the first time he set out a fiscal target, albeit a vague one.
"Our sense is we need to demonstrate a path back below 30 per cent, in the first instance, within a decade, give or take a few years," Goldsmith said.
Labour leapt on the statement as a plan which would involve deep cuts to public services.
It pointed to Treasury's long-term projections contained in May's Budget, which forecast that by 2030/31, gross domestic product would have grown to around $506b while net debt would stand at $236b.
Based on those numbers - all else being equal - for debt to be at 30 per cent of GDP in a decade, it would be around $82b lower than the Treasury's projection.
Does this mean National is planning major cuts? Ultimately it depends on what you are comparing it to, and your assumptions about the next decade.
Goldsmith argues that outside of a few areas of difference its plan would simply mean "increasing Government spending slightly less quickly" with no cuts to core areas of health and education.
He also points to the fact that the statement is about a "direction of travel" and the fact that the timing to hit the debt target is loose ("give or take a few years").
National is yet to release an alternative Budget, but Goldsmith has outlined how the savings "could" be made.
He has already announced that if elected, National would suspend payments to the NZ Super Fund as well as axing KiwiBuild and pulling money from the existing Covid relief fund.
Although National has not committed to doing so, Goldsmith's example relies on axing the Government tertiary "fees free" policy, which the Opposition has attacked as poor quality spending.
National's plan would also pare back the operating allowance, money set aside for new initiatives as well as for day to day increases in costs and to counter inflation, from around $2.3b-$2.4b to $2b a year.
This would have a large impact on debt over a decade, with the saving in each year repeated in following years. Reducing it by $300m lowers debt by more than $15b.
But it is an easier promise to make than to execute. While Goldsmith claims National could get better value from $2b than the Government is getting from $2.4b, ultimately it means less money for pay increases, incremental improvements in existing services and money to cover unexpected needs.
To be fair to National, Labour played a similar trick - albeit more ambitious - in its alternative Budget in 2017.
To make its numbers work while also meeting its spending targets, then Opposition finance spokesman Grant Robertson left an operating allowance of only a few hundred million dollars a year.
In the end, the economy performed much better than the Treasury had forecast, allowing Robertson to run two large surpluses while also spending more than he signalled while in Opposition.
Goldsmith's plan - to the extent that we have seen it - also relies on his belief that National could get the economy growing faster than Treasury forecasts. Where Treasury's projections show growth at close to 2 per cent, Goldsmith hopes pro-growth policies would get the rate closer to 3 per cent.
A larger economy means whatever the debt level is, it would be smaller as a proportion of the economy.
Perhaps he will end up being right, but the Treasury is the one that does the projections. Should Goldsmith become Finance Minister in October it would be worrying if he could talk Treasury into raising its growth projections on his say-so.
A better assessment of National's plans will hopefully be available when it releases more detail, promised "soon after" Treasury releases its pre-Budget fiscal update later this month.
The claim is partly true. National will spend less in the long term, according to Goldmith's statement, but the cuts proposed are not as dramatic as Labour suggests. Labour's attack is based on a rigid interpretation of a vague statement. The more valid criticism is that National is unlikely to reach its target with the scenario it has proposed.