Labour would spend $20 billion more than National over four years

Labour Party finance spokesman Grant Robertson, left, and leader Andrew Little after announcing their fiscal plan in Wellington. Photo/ Mark Mitchell

Labour is promising to spend $20 billion more than National over the next four years, mainly on health, education and its families package in a plan Labour hopes will offer voters a stark choice.

It has also set aside $10 billion in unallocated spending over that time from which it could fund some of the large spending promises of potential coalition partners New Zealand First and the Greens.

Outlining Labour's fiscal plan, Finance spokesman Grant Robertson said Labour would spend $8 billion more on health, $4 billion more on education, and $5 billion more on low-income families.

"We have different priorities than the National Party. They are prioritising tax cuts. We are saying no. The time is right to invest in those social services and to invest in the future.

"This is about very different priorities and I am proud to stand by ours."

Robertson has used Treasury's economic forecasts from the May Budget on which to base his own plans for income and expenditure.

Those forecasts will be revised in Treasury's Pre-election Fiscal Update on August 23.
"But we believe this is a plan that is progressive, that will build a fairer New Zealand and is properly and adequately costed."

Among the big-ticket spending capital items in the four-year plan is $2 billion on the Kiwibuild policy, aimed at building 10,000 new homes a year for 10 years, and $3.85 billion to the New Zealand Superannuation Fund.

Labour has set out several revenue earners for its four-year plan:
• $8 billion by cancelling the tax cuts in National's Budget.
• $300 million by extending the capital gains tax on investment houses to those sold within five years instead of the current two years, and banning the right to claim tax losses on investment properties.
• $800 million from pursuing multinationals to pay more tax;
• $105 million from as-yet-unannounced changes - likely to be a tourist levy floated previously by Labour leader Andrew Little.

The plan would see Labour posting surpluses every year from $4.3 billion in 2018-19 to $7.4 billion by 2021-22, a little less than National's forecast surpluses.

Labour has a slightly slower debt track than National. It would get net debt as a percentage of GDP to 20 per cent within five years, a little later than National's target of 2020.

Robertson said the spending were important investments and had been planned within a very responsible set of budget rules.

Labour leader Andrew Little said New Zealander were uncomfortable in a country where people could not afford to buy a home or rent, with the large number of young people not in education, employment or training.

"They want these things sorted out in a country they can be proud of and can say we are not a country that boasts growing inequality. They want that change. This fiscal plan is about backing ourselves to make that change and giving New Zealanders a choice."

Finance Minister Steven Joyce said it was "a classic Labour tax and spend approach".

Labour would borrow $7.2 billion more than the Government over the next four years and still cancel the tax threshold changes for low and middle-income earners.

"The most telling aspect of the whole document is they've managed to put out a 17-page document without referencing the importance of the economy once, yet no Government initiatives are possible without a strong economy."