Labour’s fiscal plan will continue its focus on carefully managing the books while protecting critical public services like health and education and investing to deliver high wage jobs and a low carbon economy.
“Labour’s fiscal plan is responsible, balanced, costed and credible. It has been endorsed by an independent analysis from Infometrics, who have concluded that the new spending commitments Labour has made can be accommodated within the future spending allowances set aside in PREFU,” Grant Robertson said.
“Our approach is underpinned by our fiscal goals to achieve an OBEGAL surplus across the forecast period and to keep net debt below 30 percent of GDP.
“We are on track to meet these rules. OBEGAL is forecast to reach a surplus of $2.1 billion in 2026/27. Net debt peaks at 22.8 percent of GDP in 2024/25 and declines over the forecast period, well below the ceiling of 30 percent of GDP.
“To support meeting these fiscal rules, Labour’s fiscal strategy will continue our responsible and balanced fiscal approach. We will drive further savings and efficiencies across government on top of the $8 billion we have found this year. We will prioritise investment in essential public services that New Zealanders rely on and build a stronger and more resilient economy that delivers high wage jobs and transitions to a low carbon future.
“Labour will maintain income tax settings to provide consistency and certainty in these volatile times. Now is not the time for additional taxes or to promise billions of dollars in unfunded tax cuts which would add to inflation and take money away from health, education and housing.
“ Our savings and revenue measures include the removal of depreciation for non-residential buildings. Our existing fiscal sustainability and effectiveness programme will lead to further opportunities for savings and repriorisations to ensure government spending is directed toward the areas and people who need it most.
As set out in PREFU, operating allowances are set at $3.5 billion in Budget 2024, declining to $3.25 billion in Budget 2025 and $3 billion in 2026 as inflation continues to come back down to the Reserve Bank’s 1 to 3 percent target band.
The multi-year capital allowance for the forecast period is currently at $2.9 billion. At each Budget across the term, an additional $7 billion will be added to the multi-year capital allowance, with this already built into the Treasury’s fiscal projections. This will provide space for business-as-usual capital investments as well as Labour’s commitment to building an additional 6,000 public homes during the current forecast period.
Initial business case work for the Hawkes Bay Hospital will be able to be funded from the existing envelope in the health budget for capital projects. This business case will determine the amount of future capital investment necessary for the build – which will be covered by the expanding MYCA once a decision is made.
“The next few Budgets will be tight as the Government moves to reduce expenditure after the necessary investments through COVID and to ease the pressure of the cost of living. There is room in Labour’s plan to meet cost pressures and for a limited number of new commitments, as announced during the campaign.
“Our plan adds up and has been independently verified. National’s proposal fails to do this. Experts have cast doubt on the credibility of their costings for new taxes, which require $5 billion of prime Kiwi property to be sold each and every year to foreigners and for Kiwis to gamble four times as much online. They need to front up and be honest with New Zealanders about their policies, which public services will be cut and how much more debt will be needed to prioritise tax cuts for the wealthiest and landlords,” Grant Robertson said.
Find out more here
Infometrics was commissioned by the New Zealand Labour Party to provide an independent fiscal review, to verify that the spending and revenue commitments contained in the Labour Party’s 2023 election policies can be managed within the revised Budget allowances outlined in the Pre-Election Economic and Fiscal Update 2023. You can read the independent review here.