John Armstrong: Spend-big politicians play into National's hands

Winston Peters at the New Zealand First campaign in Kelston. Photo / Dean Purcell.

Next month's election is fast turning into the Spend, Spend, Spend election, with some parties making the proverbial drunken sailor look like the very model of abstemiousness in comparison.

The merest whiff of the first Budget surplus in six years - and a very tiny one at that - appears to have intoxicated some politicians and provided an excuse for a bidding war as other parties get more and more desperate in the face of National's seemingly unshakeable poll ratings.

In behaving in such fashion, however, they are playing right into National's hands.

The latest example of this virtual across-the-board spend-up came at New Zealand First's campaign launch yesterday with Winston Peters plucking $60 million out of thin air to fund a $1000 payment to all babies, with the money going into KiwiSaver accounts opened at birth. The policy has merit in encouraging children to develop a savings mentality.

Peters' justification of the cost was that it was about the same as that forked out by taxpayers over the Novopay debacle. Well, that's okay then.

The exception to this seeming profligacy is Labour. At its campaign launch yesterday, leader David Cunliffe unveiled the party's new health initiatives, which include free doctors' visits and prescriptions for people over 65. The $280 million package will be funded out of the $500 million the party has set aside for new spending.

Labour is being ultra-cautious, conscious it is subject to more intense scrutiny than other parties because it will hold the finance portfolio by virtue of being the dominant party in any centre-left government that emerges from the ballot.

The $500 million figure is derived from the $1.5 billion that National allocated for new spending in last May's Budget. Labour, however, intends devoting its remaining $1 billion from that $1.5 billion to shoring up existing health and education programmes, which it says have suffered real cuts in their spending capacity because National has not adequately compensated them for inflation.

Labour will also adjust its spending and revenue forecasts accordingly if there is bad news in next week's fiscal update, which the Treasury is obliged by law to produce pre-election to ensure fiscal transparency and that the incumbent governing party is not hiding some huge cost set to bite a new administration.

The Greens, who last week unveiled a $10 billion transport policy, are promising to come up with their own version of a fiscal plan once they have seen the Treasury's figures for such things as tax revenue forecasts.

It is incumbent on the likes of NZ First and Act to do likewise. To mangle Sir Robert Muldoon's famous maxim, voters these days are well able to spot a deficit without first having to be tripped over by it.

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