Labour's fiscal plan hints at $10 billion for campaign surprise

Labour's new fiscal plan shows it will deliver surpluses into the future but they will be smaller than under National's current spending track and debt reduction will be slower - and it has left an envelope of $10 billion for policies yet to be announced.

Labour leader Andrew Little said in the four years to 2022, Labour would spend $8b more in health, $4b more in education and $5b more in its package for families than under National's current Budget plans. It would also restart contributions to the Super Fund immediately.

There is also a sign further big ticket policies are yet to come from Labour - its fiscal plan includes a spending allowance of $10b over the next four years to pay for policies that are yet to be announced on the campaign trail.

There is no separate budget set aside to pay for its support partners' policies in post-election negotiations, but in 2014 Labour included that in its own spending allowance for policies that were yet to be announced.

Little said it would pay for its plan by cancelling National's tax cuts, moving the "bright line" test for property speculators out to five years, and ensuring multinational companies paid taxes in New Zealand - measures it says will deliver an extra $2.4b dollars a year.

The plan shows Labour expected to be in surplus every year unless there was another major natural disaster or economic shock.

It shows surpluses rising from $4.3b in 2018/19 to $7.4b in 2012/22 - that is $1.2b less than the Budget forecast under National.

It has also pledged to reduce net core Crown debt to 20 per cent within five years - and its spending plan shows debt reduction from 23.1 per cent of GDP in 2018/19 to 20 per cent in 2021/22. That is a slower reduction than National which is on track to hit 20.6 per cent in 2019/20 and get down to 17.9 per cent in 2021/22.

Little said there was the fiscal headroom available to spend more on housing, health, education and infrastructure. National had allowed a social deficit to build up and created artificial surpluses by cutting public services.

Labour's big ticket items include:

• $1.3b a year on its families package, including major increases to Working for Families
• $8b more into health over four years
• $1b more in education, including $270 million a year for its policy of three-years free tertiary education or training.
• $10b over four years for unannounced policies (and those of its support partners).

Labour had its fiscal plan assessed by Berl to ensure it was consistent with the Fiscal Responsibility Rules it signed up to with the Green Party, which require it to deliver a sustainable surplus, to reduce net Crown debt to 20 per cent of GDP within five years of taking office, and prioritising investments that are important for the future of New Zealand - such as contributions to the Super Fund.