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National has $4 billion mistake in its economic plan

A basic error has left a $4 billion gap in National’s economic plan, Labour Finance spokesperson Grant Robertson says. 

“If National can’t even do the basics required on their own policy costings, they cannot be trusted to run the country. Making mistakes like this have real world consequences that New Zealand does not need in this challenging time in our history.

“On Friday National threw out a desperate economic policy that included $4.7 billion of tax cuts that would give Judith Collins $4,000 at a time when New Zealand needs to be investing in services like health and education for our future. 

“National claimed in its plan that cancelling Super Fund contributions for the next decade would give it $19.1 billion. The PREFU contains just under $15 billion of contributions over that time. National has used the wrong numbers.

“The mistake means they have $4 billion less of so called ‘savings’ to pay for their ill thought-through plan. This begs the question of whether there are other mistakes in their plan,” Grant Robertson said.

“Not only is National’s proposal irresponsible when New Zealand needs stability and certainty, they are showing they lack the experience to run the economy. There is no John Key or Bill English there anymore. No one who knows how to run a Budget would have made a basic mistake like this.

“Nor would they propose Budget allowances that will see massive cuts to public services. In each of the next two Budgets after taking into account their new policies, National are left with total spending that is less than that required to run our hospitals each year. That means cuts to services in health, education, courts, Police, disability services and more.

“National’s policy is desperate, irresponsible and unaffordable. Labour has shown the leadership to guide New Zealand through the health and economic crisis and we have our balanced five-point plan to recover and rebuild our economy. This is a time for stability and certainty, not policy made up on the fly that does not add up.”

Note to editors:

The projected required contributions to the Super Fund are calculated by the Treasury’s New Zealand Superannuation (NZS) Fund Contribution Rate Model, which is always publicly available on the Treasury’s website. 

The differences between the current projections under the PREFU model, and the numbers used by National are shown in the table below. It shows National’s mistake means it has counted on $4 billion more in savings than there are available from cancelling Super Fund contributions forecast and projected in the PREFU.

 

Table 1: Contribution Rates to NZ Superannuation Fund 

$(bn) 

2021/22

2022/23

2023/24

2024/25

2025/26

2026/27

2027/28

2028/29

2029/30

2030/31

Totals

PREFU FSM

2.420

1.360

1.788

1.720

1.616

1.488

1.357

1.224

1.036

0.849

14.859

National Party ‘plan’

2.400

2.000

2.300

2.300

2.200

2.000

1.800

1.600

1.400

1.200

19.100

Difference

0.020

-0.640

-0.512

-0.580

-0.584

-0.512

-0.443

-0.376

-0.364

-0.351

-4.341

 

The numbers provided in the table above have been verified by Infometrics.