As I said earlier the right has this belief that they are economic geniuses. Their reason for being is that they will make the economy better. The eternal question is who for, the answer tends to be for the rich and the rest of us can get stuffed, but their world view is of extreme importance to them.
Not all of them are rich. But they all want to be rich.
Occasionally this belief is shown to be faulty.
The latest example casting major doubt on National’s fiscal skills comes from news that the cost of giving landlords tax cuts in the hope that some of this money will somehow trickle down to tenants is $800 million more expensive than previously thought.
I always thought National’s figures were really rubbery.
After all during the campaign it emerged there was a $110 million a year hole in its figures because National had used old data to calculate the cost of restoring interest deductibility for landlords. It used the original estimates, formulated when interest rates were low, rather than up to date figures which it could have used the OIA to obtain.
Of course Christopher Luxon claimed with uber confidence during the election campaign that National’s figures were rock solid. From Stewart Sowman-Lund at the Spinoff:
Reporter: Are you still rock solid on your tax plan?
Luxon: Absolutely we are, we’ve looked at the numbers very closely, we’ve had them independently reviewed, and I’m very excited by the fact we’re going to raise foreign buyer tax… and most importantly we’re going to give it to hard working Kiwis.
Reporter: Economists say you’re about half a billion dollars short every year…
Luxon: I disagree… There’s a different set of assumptions, economists will have different disagreements about it but from our point of view it’s been very conservatively put together.
Reporter: You had economists on the left and on the right saying you guys have got a fiscal hole here…
Luxon: I disagree completely. We are
Reporter: Are you still rock solid on your tax plan?
Luxon: Absolutely we are, we’ve looked at the numbers very closely, we’ve had them independently reviewed, and I’m very excited by the fact we’re going to raise foreign buyer tax… and most importantly we’re going to give it to hard working Kiwis.
Reporter: Economists say you’re about half a billion dollars short every year…
Luxon: I disagree… There’s a different set of assumptions, economists will have different disagreements about it but from our point of view it’s been very conservatively put together.
Reporter: You had economists on the left and on the right saying you guys have got a fiscal hole here…
Luxon: I disagree completely. We are rock solid on our numbers.
To be fair the change is in part because Act has managed to get National to accelerate the roll out of the policy. Only some of the increase is due to National’s miscalculation.
But here is the thing. Of National’s big tax earning policies, the ones needed to pay for tax cuts have major problems. The the foreign buyer tax is no more. This was worth, according to National, nearly $3 billion over four years. The offshore gambling tax, estimated to be worth about $700 million over four years, is looking decidedly unlikely. Labour thought National would be lucky to raise a quarter of that amount. And raiding the Climate Dividend pool may not work. If the recent advice given by the Climate Commission to the Government is followed the result according to Bernard Hickey would be a further loss of $1.4 billion.
The total of these areas (including the extra for the landlord tax cut) is nearly $5.5 billion. That is a lot of back office jobs. And it makes it very unlikely that National will be able to deliver $14.8 billion dollars in promised tax cuts.
And the media get this. Jaws dropped on Monday when Luxon claimed that he could not give a cost of the policy during his post-Cabinet press conference and when he said he had not seen an updated cost for it. I mean an $800 million problem and the Prime Minister did not know about it?
If you want to see the level of incredulity shown by media this TVNZ Breakfast clip shows it in spades.
Luxon parroting his talking points and refusing to answer legitimate questions is obviously causing media to wonder what is going on. And to question his ability to do the job.
Rock solid? Only if the rock is talcum powder.
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