National attacks Grant Robertson over delayed surplus

National leader Christopher Luxon says Grant Robertson is "addicted to spending" following news the Government's books will return to surplus one year later than forecast.

Luxon repeatedly refused to say whether he would cut spending or increase taxes to return to surplus earlier, and clamp down on inflation by sucking money out of the economy.

"You need to control the thing you can control, which is spending," Luxon said.

Luxon did not offer an opinion on whether the Government should spend less to get to surplus earlier. Instead he said there was "lots of wasteful spending" and "you should be justifying hard any new spending".

Luxon and his finance spokeswoman Nicola Willis said the Government should "review" the size of the current Budget, which will add $6 billion of new operating spending.

"If you're going to have an inflation fighting plan, you'd be very fixated on removing costs from businesses which get passed on in higher costs, you'd be thinking about bottlenecks that are constraining growth, reviewing carefully any new and existing expenditure," Luxon said.

Willis said Robertson needed to "have a second thought" and "maybe now is not the time for the biggest spend up in New Zealand's history" because of the delayed surplus and threat of inflation.

In December, Robertson announced the size of this May's Budget, which would include $6b of new day-to-day spending. This is an historically large amount of new spending, which Robertson has said will be largely focused on health. National never delivered a Budget with more than $2b in new operating spending, and until this most recent Budget, Labour never cracked the $4b ceiling.

On Tuesday morning, Robertson told business leaders in a speech that Treasury's next set of economic forecasts would show a worsening in the Government's finances.

In Treasury's last set of forecasts, the HYEFU, published in December, the Government was meant to post a $2.4b surplus in 2024. Robertson said this had now been pushed out a year to 2025.

National deputy leader Nicola Willis and leader Christopher Luxon slammed the Government's spending. Photo / Mark Mitchel

Luxon slammed this but would not say whether National would cut spending or increase taxes to get to surplus early. He still would not explicitly oppose the Government's $6b operating allowance.

'What we're saying very clearly is we've got a Government that has increased spending by 68 per cent, we're sending $52b more this year than we did in 2017.

"We've got a huge amount of existing spending that we need to be going through line by line saying 'what's working, what's not working', and it's very hard to justify a $6b increase in new spending," Luxon said.

Robertson said on Tuesday the Government had been reviewing existing spending in "clusters" to see if money could be freed up, but he could not say how money had been freed up.

Robertson also announced Treasury would change the way it measures government debt to include a wider pool of assets and liabilities. This new metric was more internationally comparable than the current net core Crown debt, which is the most widely-reported debt metric in New Zealand.

It would have the effect of producing a lower net debt figure because the assets the new calculation included would lower the net liability.

Luxon supported this decision, saying it "seems sensible to adjust to a global norm".

Robertson announced the Government had set a new debt ceiling, saying it would now aim to keep net core Crown debt below 30 per cent of GDP. Under the new metric, net core Crown debt levels are about 20 per cent of GDP.

National does not itself have a debt target, and Willis said further announcements would be made on the party's fiscal strategy after the Government publishes its next set of forecasts on Budget day.

"We will be looking at the forecasts that [Robertson] has - he did not release his forecasts today with what growth forecasts are, what revenue forecasts are. We will be assessing those numbers as they come in."