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National’s policies don’t add up

Written By: - Date published: 9:21 am, May 31st, 2022 - 48 comments
Categories: benefits, Christopher Luxon, Economy, education, health, national, nicola willis, same old national, tax, welfare - Tags:

This post is plagiarized unashamedly from a series of tweets by Clint Smith.

In very limited space he set out why National’s tax cut policies are absurd and how the media is doing us a disservice by not asking the hard questions like what will be cut and how the promised tax cuts will be paid for.  Following is an abridged and slightly tweaked version of Clint’s tweets.

Journos are getting fed up with National’s refusal to say what they would cut to both fund their tax package & suck demand out of the economy to dampen inflation.

Either National doesn’t know (a major credibility issue) or they’re refusing to say. Maybe we can answer for them.

I hope he is right about the media.  I have seen some evidence of this but I am surprised there has not been more push back by them.

When we did this in Labour in Opposition, we kept track of our spending and tax cut promises against the money available to spend in future Budgets.

Anything in excess of that available money would need more debt or more tax to balance the sums.

(and, yes, our promises were costed – the media would have eaten us alive if they weren’t – and that made us more disciplined because we couldn’t just promise all things to all people like we see National doing)

This is utter rational.  Labour’s policies have always been subject to the most intense scrutiny.  Believe me.  The example from 2014 of Labour’s Best Start policy still rankles.

The Media should be asking National how it is going to afford the cuts.

So – how much would National have to play with if it came to office in 2023? Budgets 2024 and onwards have $3b each of ‘new operating allowance’ (money in the Budget but not allocated to anything – the famous $6b in Budget 2022) that’s cumulative, so $12b in 27/28 year

That’s heaps, right? Well, not so fast. The first thing that needs to come out of that pool of money is funding increases to keep up with population, demographic & inflation cost pressures on health & education. Just to maintain service levels – they need $3b yr, cumulative.

The gradual run down of Health by National during Key’s reign is a classic example, as inflation and an increasing and ageing population increased demand that was not met.  By the end of its reign the signs of how badly the system was run down were evident.

In other words, National cannot fund any of its policies out of the new operating allowance, Health & education need it all. Unless they’re going to cut health and education services, they [will] have to cut things to balance the books against their tax cuts and spending promises.

How much would they need to cut? Incredibly, National hasn’t costed their tax package, haven’t said how much spending needs to come down on top of that, or specified their promised increases to defence & Pharmac funding … but we can estimate all that.

I guess recent events involving Steven Joyce’s and Paul Goldsmith’s inability to use a spreadsheet have rocked National’s desire to delve into the details.  But if ever there was a policy to cost it would be a tax cut.

National says indexation would cost $1.7b/yr. That increases with wages. By Budget 2024, the cost would be $2.2b & grow at 10% a year thereafter. Removing the top tax rate would cost $0.8b also rising at 10% a year. Restoring landlord tax cuts would cost $.85b a year

So, National’s tax package would start at $3.7b a year in their first year, 2024/25, rising to $5b/yr in 27/28

National has also said they want to gradually increase defence spending from its current 0.7% of GDP to 2% & boost Pharmac. That’s $1.7b in 24/25, $7.8b in 27/28

And they have dug themselves into a hole with their Government spending rhetoric.

… National says spending is too high & causing inflation. So, they need cuts over and above those needed to offset tax cuts and additional spending to suck demand out of the economy. How much do they need to cut to make a difference to inflation? There isn’t an answer.

The US Federal Reserve looked at the impact of govt spending on inflation & found “almost no effect of government spending on inflation”. Even rightwing darling Milton Friedman said there is no evidence. National would have to do some cuts though – let’s call it $1b cumulative.

All up, National’s commitments start at $10b yr in 2024/25 & rise to $28b in 2027/28 but new operating allowances are only $3byr in 2024/25, accumulating to $12b in 2027/28.

National’s fiscal hole is $7.5b in its 1st yr, rising to $16.6b after 4 yrs. Hmm. What could they cut?

The spending National has complained about gets us nowhere near. RNZ-TVNZ merger is a one-off that will already be spent. Same with the Te Huia capex. Fishing boat cameras are $15m a year.

The govt will spend $134b in 24/25. Off the bat – $100b is super, benefits, WFF, heath & education. Interest is $4.9b. Presumably, they wouldn’t cut the $5.9b for law & order, $1b for primary industry $4.2b for transport & or $3b for defence. That’s $119b already.

Housing is $2.6b. $1.5b is free ETS allocations. $1.1b is KiwiSaver, $1.9b Cullen Fund, $1b foreign aid, $1.3b sports, arts, culture; DoC etc $1.4b, $2b is support for businesses. Cut the bureaucrats? *already falling* post COVID & will be down 10% to $2.4b in 24/25

So. Luxon wants to cut decarbonization subsidies for families & businesses: $0.5b per yr. Cutting the Cullen Fund: $1.9b that first year, but only $1.5b in 27/28. Cancel fees free: $0.5b per yr

Drastic moves & Luxon still has a $4.5b hole in 24/25, ballooning to $14.1b in 27/28

Luxon’s not going to get those sums by cutting public service jobs – cutting public service by 20% gets only $500m. Cut Kiwisaver? $1.1b.

Still $3b to find just in the first Budget. You’re not going to get there nipping and tucking other small programmes.

Cutting climate policies, the Cullen Fund, KiwiSaver, Fees Free & 10K public servants isn’t enough. National would have to look to the big bucks – super, welfare, health & education.

What would it be? Means testing super? Benefit cuts? Health & education funding freeze?

A Budget is incredibly complex but the maths is simple – if National wants billions of tax cuts, billions on defence & billions less demand in the economy it needs to find billions in cuts to pay for all those things.

If National is serious about the policies they have outlined so far – and we should believe them when they say they want to cut spending – then those cuts are going to have to come from super, welfare, WFF, health & education.

No wonder they don’t want to talk about it.

Clint Smith has laid out how unrealistic National’s rhetoric is.  We cannot have a tax cut and maintain current service levels.

It is not surprising that National did not release an alternative budget, unlike their feeder party which laid out for all to see the carnage the right may cause if it is given the treasury benches.  But you get the feeling that they have pushed the rhetoric without having any idea of how to actually achieve what they are promising.

Hopefully the media will start asking Luxon and Willis the real questions.  What is National going to cut to deliver its right wing nirvana of tax cuts and smaller Government?

48 comments on “National’s policies don’t add up ”

  1. Ad 1

    Great post.

  2. Ad 2

    Just in Infrastrucure we have a $220b deficit and need to spend $31b per year to catch up.

    That's from the Infrastrucure Commission report.

    We are in massive built need deficit. We must cut nothing.

    Only under Labour are we even starting to address this seriously.

  3. Sacha 3

    you get the feeling that they have pushed the rhetoric without having any idea of how to actually achieve what they are promising

    They know exactly what they are planning, and staying quiet is a big part of getting it.

    • roblogic 3.1

      The quiet parts are probably

      • increase GST
      • sell assets
      • cut benefits
      • cut Kiwisaver
      • sell state houses
      • increase petrol taxes

      They will do stuff that hurts the working class and empowers greater corporate theft of the commons

      • Pataua4life 3.1.1

        Got another cut to add to your list.

        • Cut funding to Nanaia Mahuta family
        • Ad 3.1.1.1

          Conflicts register shows nothing inappropriate.

          Top work for a lazy slur though.

          • Pataua4life 3.1.1.1.1

            If it looks like a duck walks like a duck and quacks like a duck chances are it looks like corruption.

            • SPC 3.1.1.1.1.1

              “Fact free social media narrative – fast food mind feed”

              Q 4 8 16 32 64 infinite chin dribble b******* Rabbit.

            • Incognito 3.1.1.1.1.2

              Bold accusations require bold evidence, so put up or shut up.

              And FFS, use the correct term or the TS grammar police will put you on the naughty step.

            • gypsy 3.1.1.1.1.3

              if you're referring to the 'all in the family' material, I think the word you're looking for is nepotism (the practice among those with power or influence of favouring relatives or friends, especially by giving them jobs), not corruption (dishonest or fraudulent conduct by those in power, typically involving bribery).

              Mind you, Mahuta has other problems, including "volleys of criticism from New Zealand’s former foreign ministers and diplomats over her perceived inaction" in the Pacific.

              The PM has a problem with Mahuta. It will be interesting to see how she resolves it.

            • Peter 3.1.1.1.1.4

              If it looks like a duck, walks like a duck and quacks like a duck? Of course it could be a sign a trip to SpecSavers and some place to get a recalibraintion is called for.

      • AB 3.1.2

        Some of those certainly. The mistake is in thinking it is meant to add up. It's not. If it blows out the deficit, that's great, you can then point at the deficit in alarm and say "this can't go on, we'll have to sell assets etc." That's the standard right wing playbook, complain about deficits when in opposition, then in government increase them via tax cuts to the rich – and so justify asset sales and austerity for the lower orders.

      • Mike the Lefty 3.1.3

        Plus scrapping public transport subsidies, scrapping Auckland light rail and selling off KiwiRail (again).

  4. Bearded Git 4

    The Nats will sell off state houses while claiming to be building more-that is what Bill English did. They will also stop Labours plans to build more where that is possible.

    That will be a regressive couple of billion a year.

  5. Incognito 5

    Micky, I think Clint and you’re being a tad unfair to National. They’ve already signalled they would set up the Razor Squad headed by Bill English and Nicola Willis (in that order) and take Death's Scythe to spending in all government departments and throw all regulations on a huge bonfire – away with the red tape, viva the bluetag! What’s left over will be amalgamated in one giant Super-Ministry called Steve’s Spreadsheet, or SS for short, headed by The Hologram from Epsom.

    BTW, it is Luxon, not Luxton 😊

    • lprent 5.1

      🙂 corrected it for him.

    • SPC 5.2

      John has raptured, Christopher is Upper Room.

    • Craig H 5.3

      Nothing like a good razor gang to gut a department…

    • Chris 5.4

      luxton, keys and hoskings…none of them deserve to have their names spelled correctly.

      • Incognito 5.4.1

        It’s not a matter of deserving (and respect, I guess), it’s to avoid confusion with others with highly similar names and it’s an exercise in constructing rational arguments instead of relying on sneering nicknames by way of marginalising insults – this is DP stuff. I personally find it extremely tempting to go for the lowbrow language in my comments, especially after a few drinks, which is why I never drink & comment (let alone moderate) online – don’t use e-mail either.

    • SPC 6.1

      Former National leader Sir John Key told AM the attack ads show the Government is worried.

      "Chris is really right – the cost of living is the biggest issue that Kiwis face and the Government has completely failed on that front," he said.

      Both the current sound-bite, and the former leader John we should chaperone China into a partnership role in the Pacific Key, seem to have a fundamental misunderstanding of the global economic situation (and in Key's case the geo-political one as well) – the UN and World Bank have issued warnings.

      This is just lazy from both of them – presuming the average New Zealander is ignorant of the global inflation issue. It presumably is a manifestation of their obvious contempt for local media, or their trust in hit and run diversion units Herald/ Taxpayer Union/The Platform etc.

  6. MickeyBoyle 7

    Read the replies to Clints tweets. Many prove Clints figures wrong and show that projects like canning Lightrail gives National more than enough cash to pay for their current promises.

    If you want to win next year's election, don't be listening to Clint Smith. The guy is extremely toxic online and will be turning away many potential voters.

    • Incognito 7.1

      You’ve missed the point made by Clint and Micky by lightyears (a measure of distance, not of time).

      Let’s see if you can work it out by yourself without help of a teacher.

      • MickeyBoyle 7.1.1

        I haven't missed any point. I gave my views on why I don't believe Clint Smith should be listened to and noted that many of his assertions around Nationals figures are frankly bullshit when scrutinized.

        But in any case, I couldn't care less what a moronic twat like you thinks.

        So do one.

        • Incognito 7.1.1.1

          What I think of the price of fish is irrelevant.

          What you think is irrelevant – the premise is demonstrably weak, anyway.

          What you argue here matters, however.

          It is not Clint’s job to provide an alternative Budget that has been carefully costed & checked, preferably by an independent trustworthy third-party, so that it can be scrutinised by the public (voters), the media, and experts.

          Clint’s figures were guesstimates or hypotheticals to show the huge information vacuum created by National and National abstaining from its duty as major opposition party, which is just shambolic.

          National has form in showing enormous flaws in its budgets and financial calculations done in simple spreadsheets (or on napkins?). So, we all have a right to see the numbers before they put it to us in a vote in the General Election, not just vague promises and empty slogans.

          That was the point, which you kept missing and missing, over and over again.

          Feel free to link to National’s alternative Budget. I bet you cannot do so and that was the whole point cheeky

          • Ross 7.1.1.1.1

            There is fiscal headroom over the term of the coming Parliament, meaning that if elected, the National Party could accommodate additional spending of up to $10.189 billion over the five years to 2024/25 and still be within its overall spending envelope.

            What idiot said that? Judith Collins, perhaps? Maybe Simon Bridges? It must've been that economic clown, Paul Goldsmith? Blow me down with a feather but it was none other than the New Zealand Institute of Economic Research (prior to the 2020 General Election). I imagine the NZIER will be undertaking a similar assessment of National's fiscal policies next year. I’m predicting fully costed tax cuts. 🙂

            https://img.scoop.co.nz/media/pdfs/2009/National_Party_Policy_Costings.pdf

            • Incognito 7.1.1.1.1.1

              Your trust in National and its buddies at NZIER is endearing.

              In other words, you have nothing either other than a dated and obsolete report from 18 September 2020 based on even older and more outdated data. It may have passed you but things have happened in the world since then.

              … overall spending envelope.

              laugh That’s so funny!

              BTW, I’m not interested at all in National’s “fiscal policies”, which just goes to show that you have no idea what you’re talking about.

              Please stop insulting our intelligence with your unhelpful comments. The Opposition is supposed to offer an alternative, act like a Government-in-waiting. As it stands, they’re a bunch of hopeless hapless amateurs that cannot even cobble together a spreadsheet-based calculation that could even remotely pass as a ‘budget’ for the nation because they have no policy platform yet, i.e. they are trying to build the plane whilst trying to fly it and want you and us to buy it – a lead balloon stays in the air for longer. Even Clint on Twitter did a better job than those wannabee managers of the economy who have not one economically astute MP among them, least of all their figurehead who’s got his head still in the clouds and thinks he’s walking on air.

        • Kiwijoker 7.1.1.2

          Spoken like a true decaying boomer Mickey B.

  7. Chris 8

    "Hopefully the media will start asking Luxon and Willis the real questions. What is National going to cut to deliver its right wing nirvana of tax cuts and smaller Government?"

    Even if the media did start asking those questions the voting public will still put luxon and national in. All most people see these days is a female prime minister who saw us through Covid, but now we're back on track so it's time to get the real leaders onboard again who can sort the economy out and deal with the many "crises" we seem to be faced with right now. It doesn't matter how much shit comes out of luxon's mouth – people are too stupid to see what's really going on.

    It's a difficult situation to respond to, but what makes things really, really bad is that Labour and the current government have absolutely no clue at all what to do to stop it.

    • MickeyBoyle 8.1

      You are right, kiwis believe National are the party of economic management, no matter what history has shown.

      We shouldn't be relying on National to slip up or our "fair and impartial" media to scrutinize them in the hope of showing some flaws in their promises.

      We should be using the majority we have to implement truly transformative policies that benefit kiwis.

      Stop relying on catching National out or hoping for them to implode and start delivering for kiwis so that the only sensible choice they have when standing in that ballot box next year, is a choice of Labour or Greens.

      • Chris 8.1.1

        It doesn't help that national's MO is lie, lie, lie and hope some of it will stick. The problem the government has is that a lot of it sticks.

        Again, dealing with this is difficult, but Labour and the government can't be satisfied with its usual mild reply of "no, that's not right because…"

        The response luxon's empty lying rants demand is one that focuses on and exposes the deliberate tactic of not telling the truth. It's the "not telling the truth" that needs to be exposed, and then the truth.

  8. barry 9

    So why a series of tweets? Why not a press release saying "Robertson pokes holes in National’s finance policies"? Even the Herald might print it.

    Part of the reason why National is getting so much air time is because they issue about 6 million press releases a week. The media are super lazy and the press releases fill up the paper, and the headlines encourage clicks.

    I know National have time because they have nothing else to do, but it does stick. The content is almost irrelevant. Labour should make time.

  9. James Simpson 10

    Agreed 100% ,but I don't think National will be spooking the horses with details of their alternative budget this far out from the election. They will be trying to firm up some of that support.

    I think a lot of this will turn on where we are sitting in 12 months time. If inflation is still in the 5 -10% range their will be a narrative growing around having to all collectively go through some financial pain to get inflation under control. That pain will mean restraining and cutting both government and private expenditure. If National can present that as the only way to deal with inflation then they could present that alternative budget with massive cuts to welfare in particular.

    That type of cut is actually supported by your average Tory.

  10. Binders full of women 11

    I'd cut 300mil from Waka transit comms waffle around road to 0, infantile TV ads (as bad as 3 waters). I'd cut the 2bil 3 waters lolly-bribe. I wouldn't cut health.

  11. Patricia Bremner 12

    No Binders full of women, you "wouldn't cut health!!!"

    because those cuts would mean more would die and be injured on the roads. The actual "Road Toll"

    more will get ill or die from contaminated water,

    more will die of heart or stroke from worry about huge rate rises, and welfare cuts.

    Luxon has to explain Cause (Action) and Effect (Outcomes) and most of all Reasons

    This Government has based its Budgets on Wellness.

    What and who will gain from Nationals Budget.???? That is the question that is being avoided.

    So what have we got?

    A chorus of "Crime" and "I am scared" from Paula of Meth fame.

    Tax cuts ..again

    We will cut the spending and throw out all their legislation.

    That is not a plan.

  12. georgecom 13

    Maybe Luxon might want to get Goldsmith to have a look over the books, his fiscal hole was only $4 billion.

    You might expect National to look at raising GST.

    A sensible way for them to fill their fiscal hole will be a capital gains tax. Like that NZ Rocketeer bloke says, plug the 'rascist' policies which privileges some holders of capital assets and untaxed capital gain.

  13. " I hope he is right about the media. I have seen some evidence of this but I am surprised there has not been more push back by them. "

    " Hopefully the media will start asking Luxon and Willis the real questions "

    What planet are you on !

    The media is RIGHT WING in case you hadn't noticed and has no intention of asking the hard questions or anything else that might embarrass or put the National leadership under pressure or scrutinise the draconian alternative of Seymour's budget.

    That has been the narrative since Brash's leadership in 2003-05 then the shysters after that for nine years.

    Nothing has changed since their last time in office and their influence and favours in the corporate media remain unchallenged.

    The corporate media will wait patiently for LINO's demise while continuing to push negative headlines like water dripping on a stone.

    Of course National's policies don't add up they don't have to because they know they will never be scrutinised in the MSM.

    • tc 14.1

      +100 that's not changing so the likes of Davis, Mallard etc need to roll the sleeves up and counter the lies.

      Leaving the BS unchallenged till next year's a mistake IMO

  14. Chris T 15

    Have no idea who this Clint Smith dude is, but at some stage after 5 years in power Labour are going to need to realise you can't keep blaming the last lot, when they have had so long to fix their accusations.

    "The last govt did this" after 5 years is getting a bit tedious and looking like whataboutism and frankly just making excuses for a lack of just sorting it out.

    • Incognito 15.1

      I have no idea what Post you did read thus your comment here is unhinged and misplaced.

      BTW, has it already been 5 years? Crikey, I may have slept through the alarm …

  15. Peter 16

    I agree they should move off blaming the other lot and move to a different channel.

    Maybe they'll do that when the other lot and their brain dead supporters STFU about a housing crisis starting out of nowhere in October 2017 and in every utterence acting as that were the case.

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