Labour and National’s finance spokespeople Grant Robertson and Nicola Willis clashed in what was one of the most bruising and fierce debates of the campaign so far, TVNZ’s Q+A finance debate.
During a chaotic, stereophonic, first segment, Robertson, Willis and moderator Q+A’s Jack Tame found themselves all speaking at once, with no one wanting to be the first to back down. Willis promised tax cuts and a surplus, Robertson alleged these would require heavy cuts to public spending.
Eventually Tame managed to extract policy details from both. Willis promised that she would get the books to surplus earlier than Labour - but there’s a catch.
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The most recent forecasts from Treasury, Prefu, forecast the Government will deliver a surplus in 2027. Willis said National would deliver a surplus that year - her promise to deliver a surplus earlier than Labour rests on her belief that Labour would spend more in a third term and push the surplus out again - it has already been pushed out twice, first to 2025, then to 2026.
“Labour are expecting you to believe that they will deliver a surplus in 2027,” Willis said.
“That’s based on Grant, for the first time in his entire time as a finance minister, sticking to his operating allowances.
“He’s not going to do that, he’s already delayed surplus three times,” she said.
Willis said she would get the books back into surplus earlier than Labour, but crucially, she did not say she would deliver a surplus earlier than 2027.
“Yes,” she said when asked whether she could deliver a surplus in 2027.
“But not earlier than that,” she said.
Willis’ argument rests on the fact that even prior to the Covid-19 pandemic, Labour spent more it had signalled in most of its budgets.
But the 2027 pledge means for the first time in a long time, National has been unable to promise a rosier fiscal trajectory than Labour. In 2017, the books were already in surplus, but National promised larger surpluses and faster debt repayment.
Robertson brought up the criticism of economists of the assumptions behind National’s tax plan. Those economists reckoned there could be a hole of over half a billion dollars a year in the costing of the plan.
Robertson said that Willis would have to cut spending more than promised to deliver the cuts because National’s revenue assumptions did not stack up.
“If Nicola is going to deliver on the commitments she has made there will be even deeper cuts,” Robertson said.
Willis promised she would deliver her tax plan if National wins the election, but backed off delivering the exact tax changes National had promised, noting this “depends on the economic conditions that we are in”.
Willis gave an assurance she would deliver her tax cuts even if some of the assumptions underpinning it did not work out. She said both National’s tax plan and the soon-to-be-released fiscal plan (effectively an alternative budget) had “buffers”, which meant she could deliver on its promises despite the conditions.
“I am confident that we have put this together in a way that means we will not need to borrow for tax cuts and we will not need to make reductions in any frontline services,” Willis said.
When asked by Tame whether she could give the same assurance to deliver her plan if National “did not get the revenue projected” in her plan, Willis said she could not.
“No... the revenue that we get depends on the economic growth conditions and therefore how much tax people are paying across a range of things and it depends on the economic conditions that we are in - but I will be delivering tax reduction,” Willis said.
Willis also said she would not sack Reserve Bank Governor Adrian Orr, with whom she has frequently clashed.
Instead, Willis reiterated a promise to review the Reserve Bank’s performance during Covid-19. She said the Governor was independent of the Government.
The debate played out against new polling from 1 News Verian that showed that 65 per cent of New Zealanders thought the country was on the wrong economic track, compared with 19 per cent who thought the country was on the right economic track.
But those voters are not necessarily wanting a change of government.
The same poll found 37 per cent of respondents thought a National-led Government would improve the country’s economic performance compared with 21 per cent who thought National would make things worse, and 32 per cent who thought a change of Government would make no change.
Robertson said now was not the time for tax cuts and that he could “grow the economy sustainably” on the current tax base.
Labour also promised to make more public homes accessible to people with disabilities.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
