Thread by @CLRenney

Fiscal Plans - the good, the bad, and the ugly. With both National and Labour now having released fiscal plans we can see how the decisions of the 2 main political parties add up. It’s a story of the good, the bad & the ugly – and it’s not all one-sided. A long 🧵(apologies)

First the good news. There aren't arithmetical errors in either plan. National has given themselves an extra fiscal year, meaning $3bn more than Labour has given itself. To compare numbers, you should remove $3bn from National’s “Unallocated Allowances” to get a true comparison.

Both parties commit to funding health according to the Treasury estimate of need. As a consequence, the minimum amount needed to keep the lights on in the health system is provided. This is to be welcomed - and signals cross-party consensus on the need for health investment.

Sadly, that is where the good news ends. Neither Labour nor National has made cost-of-living provisions for education. That should be rectified, as the ‘buffer’ that both parties have said exists isn’t real unless they are prepared to cut education in real terms.

For National, the bad continues with the foreign buyers’ tax, the casino tax, and interest deductibility These have been questioned by economists across the spectrum. Using more credible numbers means their unallocated allowance essentially disappears in the first year of office.

This is important because neither party has set aside money for day-to-day public service expenses in their plans. Labour has around $660m in spare money in Budget 24. National would have around $100-200m if we make more reasonable assumptions on revenue.

Treasury at Budget 23 states that around $1.3bn after health expenses are needed for cost pressures in 2024/25. On this basis both parties will require cuts to public spending, but very deep cuts in the order of $1bn+ for National. This is nearly twice the cuts already identified

All of this is before we get to the uncosted elements of the fiscal plans. Most of their spending plans are covered in the document. But there are some notable outliers. There is no costing of Nationals policy to provide building depreciation for build-to-rent properties.

There is no costing for “City and Regional Deals”. Nothing for "Teaching the Basics". No pay for the 1,000 nurses from overseas. Nothing for Nationals water, energy, or agricultural emissions policies. These could only be paid for by deeper cuts to other public services.

Of the two parties' fiscal plans, National’s indexing of benefits to inflation rather than wages is downright ugly. Reducing debt by taking money from some of the poorest and most vulnerable households in New Zealand is not only questionable ethically, it’s bad economics.

The $2bn savings made through these cuts will inevitably be paid for through other services, such as health or housing. Making these cuts while providing $2.3bn in tax cuts to landlords is a sign National has lost its moral compass. This is no longer the party of Bill English.

Neither party's fiscal plan is perfect & both need work. But Nationals is balanced on the back of those who have the least and for that reason alone shouldn’t be considered a credible plan. Adding in problematic assumptions & uncosted policies, it fails the most basic tests.