Craig Renney: Budget office proposal could shine a light down fiscal holes

National leader Christopher Luxon has drawn the cost-of-living 'crisis' and reining in taxes and spending as his party's battle lines. But do his sums add up? Photo / Mark Mitchell

Opinion

OPINION

Government spending is a hot topic right now in New Zealand. National has put out a series of tax promises that it claims can be delivered without cuts to public services. This is hotly contested by Labour and, in response, National has promised to put out a fully-costed manifesto.

Yet these discussions often produce more heat than light - the past two elections were dominated by accusations of fiscal holes in accounts. Given the complexity involved in these issues and their calculation, shouldn't the public have some help?

The labyrinthian way in which the public finances are set out doesn't help to provide any clarity, and government departments rightly don't comment on this sort of thing. That would be delving firmly into the political realm.

This leaves the public relying on often-partisan commentators offering their view on the veracity of a claim.

But, unlike other areas of policy, finance is an area where everyone should be able to agree on whether a policy or a manifesto adds up. Fundamentally, it's just mathematics.

Help for long-suffering New Zealanders might now be on the horizon.

National Party Finance Spokesperson Nicola Willis said on Newshub Nation last weekend that she would be "writing to Grant Robertson to say to him, let's have another look at your Budget Responsibility Office".

This office was first proposed by Labour in 2017 as part of its Budget Responsibility Rules. That plan called for "a body independent of Ministers of the Crown who will be responsible for determining if these rules are being met".

The proposals at the time were blocked by then-leader Simon Bridges, but now appear to be back on the table.

These bodies are common overseas. The UK has an Office of Budget Responsibility. The US has the Congressional Budget Office. Australia has a Parliamentary Budget Office. Canada has a Parliamentary Budget Officer.

These bodies are responsible for looking at government spending and checking that the numbers add up in the way that they are claimed to. They also provide an independent assessment of government economic forecasts. These assessments are all public, meaning that everyone gets a better, non-partisan understanding of what really might be going on.

Crucially, many of these bodies provide advice to political parties about how to properly cost their policies. They can also provide an analysis of the total cost of a manifesto, and how it would work inside the government finances. They provide some security to voters that policy promises can be financially delivered in the real world, and in the current economic context.

Many people may baulk at the prospect of more bureaucrats doing work in Wellington, but these are often very small teams of experts who are seconded in from departments.

Such a body is a missing link in New Zealand.

If both Labour and National decide that they want to create such an office here, the essential element of its work is its political neutrality. That works two ways.

The first of these is that it must operate outside the existing government structures – it should be a creature of Parliament, like the Auditor-General or the Ombudsmen.

Any conversations that political parties have with it are outside of the OIA and are confidential. It's not a listening service for the government.

Secondly, it should be politically neutral in its view of the political economy. Whether certain forms of spending or taxation are right for New Zealand should be irrelevant to the body.

What matters is that the public can have some confidence that a policy will cost what is claimed or will generate what is claimed. Parties should also be able to show to the public that the costings in their manifesto have been scrutinised and endorsed by a truly independent organisation.

Craig Renney. Photo / Mark Mitchell, File

You might think that this just should be part of the normal business of a political party.

But I think that most New Zealanders would be astonished at the tiny amount of resources most political parties have to tackle these issues. Parties don't have access to public servants to do this work. They also don't have access to the economic models and data that the government does.

But the consequences of getting these things wrong can be enormous and are paid by everyone.

The creation of such an entity in New Zealand is long overdue.

The election in 2023 will see the economy and government spending under the microscope like never before.

Shining additional light on the costs of policies and the affordability of manifesto claims will benefit everyone.

This might also mean that we might be able to concentrate on what's important, which is the actual policy itself.

• Craig Renney is an economist and policy director with the New Zealand Council of Trade Unions.