Where are National’s costings?

mickysavage
8 months ago
Categories: Christopher Luxon, david seymour, election 2023, national, paul goldsmith, same old national, tax, treasury

Three years ago I took great delight in writing a number of posts about National’s shambles of an alternative budget. At one stage I said this:

It has been a complete and utter shambles. A clusterf&*k of epic proportions. A week in and they are still being hammered about it. Because if there is one part of National’s reputation that needs to be defended at all costs it is the perception that they are competent financial managers and making multiple billion dollar mistakes in your alternative budget at election time is the one thing over all else that will hurt that part of your reputation.

The problems were numerous but included these:

There was a $4 billion dollar hole because Goldsmith had used the incorrect figure for “savings” to be made by stopping contributions to the Cullen fund.
There was a more modest $88 million hole because National used the wrong figure for the capital allowance. It used the budget figure and not the PREFU figure which was smaller. It should have checked.
National double counted a $3.9 billion contribution from the National Land Transport Fund. Its solution was to just say that the NLTF would have to pay this sum twice. What fiscal geniuses National has. Imagine being able to get funding this way by drawing twice on a fund in the future even though you have no idea if it will be able to afford this.
And another $2 billion hole appeared because National, fiscal geniuses that they are, thought they could cut contributions from the Cullen Fund but still collect the tax earned by these further investments that were not made. Wow. Tax income out of nothing. And they talk to the left about magical money trees.

So I thought that this time National would interrogate its figures mercilessly and repeatedly to make sure there were no problems. How wrong I was. National’s tax cut plan has as many holes as a large piece of swiss cheese.

Like the half billion overestimate of tax from the Foreign Exchange Buyer’s levy in the first year and by the looks of it every year after. Independent economists including former Treasury Economist Michael Reddell have rubbished National’s figures.

Or National repeating Goldsmith’s mistake and not checking on the latest status of the various funds it wants to raid. This time costing it a cool half a billion dollars after it reprioritised money in the Climate Emergency Response Fund that is no longer there.

Or the heroic assumptions about how much money can be raised by taxing internet gambling. The best estimates available suggest that the amount of gambling that could be taxed is a quarter of the amount required to meet the target.

From Radio New Zealand:

[Labour Minister Barbara] Edmonds on Thursday told reporters at Parliament offshore online gambling operations were already subject to GST after a change brought in by National in 2016, and far more gamblers would be needed to cover National’s expected costs.

“Based on the estimates I’ve seen we believe that New Zealanders lose $350m offshore due to online gambling, that’s based on the GST count that we’re getting,” she said.

Her colleague Kieran McAnulty said the $350m figure was backed up by figures produces by the TAB and Lotto as part of the review of the Gambling Act.

“The TAB has been producing figures to demonstrate why there needs to be regulation of online gambling, Lotto have done the same. If they believed there was four times the amount of people gambling overseas they’d say so because it would strengthen their case.

The shortfall over four years could be in the vicinity of half a billion dollars.

And on the cuts side there is what appears to be another $100 million a year hole, this time from National using 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. It appears that National is capable of using questions to find out how much money was spent on budget engagement with Pasifeka communities so it could then mount racist attacks on the Government but it was incapable of doing the same to find out now much its policies would cost.

And National’s latest policy announcement, a cut and paste of a UK Conservative policy, has the unfortunate feature of potentially reducing the numbers of foreigners having to pay tax. National’s policy requires 1,700 eligible transactions at an average sale value of $2.9 million. The latest policy allows for up to 250 successful applicants being granted Global Growth Tech Visas. These are the people National wants to tax. This new policy potentially significantly reduces the potential income from the tax, by up to $100 million a year.

Using my back of the envelope very rough calculations National has underfunded its policy by $3 billion over 4 years. Cuts on top of those already promised will be required to balance the books if National win.

And Act will put National’s cutting tendencies on steroids. David Seymour wants to sack 15,000 public servants by Christmas and attack beneficiaries with drug problems. Let that sink in.

The response from right wing supporters is indifference to the problem as long as they get a tax cut or a very public hope that cuts do occur. For them competence does not matter.

But this goes to National’s claim to be competent with economic issues. A couple more weeks of this will damage its desire to become Government.

The media is really focussed on this issue and it cannot be helping National. If it does not find a way to deal with this issue then it could hemorrhage support all the way to the election.