Nicola Willis says Grant Robertson will lift spending even higher in 2023 Budget

National deputy leader Nicola Willis and leader Christopher Luxon. Photo / Mark Mitchel

National's finance spokeswoman Nicola Willis believes the Government will be forced to breach its self-imposed spending limits in the next Budget as it struggles to meet the increased cost of services.

Treasury's BEFU forecasts, released with the Budget last Thursday warned that the Government might need to find $3.5 billion in new money just to stand still. This would be more money than Labour's entire 2018 Budget, and would not fund any new services - it would only stretch to maintaining existing service levels.

In a post-Budget speech delivered to the Wellington Chamber of Commerce, Willis said Robertson would likely spend more than the $4.5 billion in new operating spending the Government has committed to in Budget 2023.

"It's actually predictable that he will have more than normal cost pressures. It will be challenging for him to stick to that spending allowance," Willis said.

"It's striking to me that this hasn't received more attention - Treasury says the only way that this can be met is either by reprioritising existing services, that is by stopping doing some things, or by increasing tax, or increasing spending and therefore debt," she said.

"I make a prediction today that we can expect another spending blowout next year and therefore bigger deficits for longer, and more pressure on New Zealand's debt," she said.

Willis said Robertson had consistently lifted operating allowances, spending more than he had pledged. The operating allowance is the amount of new day-to-day spending allocated each new Budget - it is not the total number of Government spending, which is forecast to decrease as emergency Covid spending winds down.

The Government lifted allowances from what was outlined in Labour's 2017 manifesto and lifted its allowances in its first term, particularly in 2019 (although it trimmed the 2020 operating allowance from what was promised in 2017). Budget allowances are set up to four years in advance and typically change as a Budget draws near.

This term, Labour promised new operating spending of $2.625 billion in each of its three Budgets. Instead, it lifted these allowances to $3.8b last Budget, $5.9b this Budget, and $4.5b next Budget.

"I've looked over the history of what has happened with the Finance Minister's spending allowances and whether he has met them - and I can tell you he has never set a future spending allowance for a future Budget that he has met," Willis said.

"There is a blowout in Government spending at the heart of this Budget that everybody should be conscious of," Willis said.

National has been critical of the level of spending in this Budget, but has not outlined what spending it would cut.

On Friday, Robertson challenged National to detail what spending it would cut.

"What would they not support that's in the Budget? Is it the winter energy payment - because Act want that gone, so does National want that gone as well," Robertson said.

"They do have to start fronting up to you about what will not be there if they are going to do those big untargeted tax cuts," Robertson said.

On Tuesday, Willis said National would not be putting $370m towards a new public media entity as an example of a saving National would make. National has consistently opposed the Government's public media policy, which is to merge TVNZ and RNZ into a single entity.