Election 2023 live updates: Labour releases fiscal plan showing how it will raise and spend money
Labour promises a relatively tight next term in government according to its fiscal plan, released this morning in Auckland by Labour leader Chris Hipkins and finance spokesman Grant Robertson.
The fiscal plan is effectively a draft budget for its third-term setting out whether its spending promises fit within the money that is available, and detailing how much money is left once the promises are taken out.
As the party is in Government already, there are no huge surprises. The plan sticks to the tighter spending constraints Robertson outlined in August, and hits the same targets: a surplus of $2.1 billion in 2027 and net debt remaining under 30 per cent during the forecast period.
The plan includes Labour’s election promises, like taking GST off fresh and frozen fruit and vegetables, and a pledge to train more doctors.
Who won Newshub leaders’ debate? The verdicts on Hipkins and Luxon
Royce
Our political writers give their verdicts on tonight's performances.
Read more here:
Steve Braunias: Luxon bores himself to sleep at debate
Royce
OPINION:
Reader, it happened again. Last week I was the man who fell asleepon live television in the studio of the leaders’ debate filmed at TVNZ; and during Wednesday night’s debate, another man dozed off in front of a watching nation. His name was Christopher Luxon.
I fell asleep last week because the debate was boring. Luxon bored himself to sleep at the Newshub debate. The body, dressed in a really badly tailored pair of suit pants, was upright. But the mind had switched off. He was political leader as somnambulist, gabbling nonsense like a man talking in his sleep, saying random and senseless things.
Read more here:
James Wheeler
James Wheeler
Chris Hipkins said he was a 9 out of 10 in tonight's debate. We'll have our experts' verdicts shortly to see if they agreed.
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That's a wrap for the media standups with the leaders. Stay tuned for further updates, commentary and analysis on nzherald.co.nz.
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Luxon said he debate was "good fun" and ended up giving himself a rating of 7/10.
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Luxon didn't give himself a rating for his debate performance, saying it was up to the New Zealand people.
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Luxon called it a "robust" and "free willing" debate.
He said Hipkins "came out pretty aggressive".
"At the end of the day, it was a great debate, it was good fun."
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"We're very confident in our numbers," Luxon says.
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Now it's Luxon's turn to take questions from the media.
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"Are you the king of the zinger?," ZB's Jason Walls asks.
"I'm the king of the gingers," Hipkins replies.
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"Election campaigns are a marathon, not a sprint, but you do get a sprint at the end." - Hipkins
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Hipkins said he makes sure his numbers add up. "Christopher Luxon can't make the same commitment."
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"I'm determined to turn this around."
"It's going to be a slightly different campaign in the next couple of weeks," Hipkins said.
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"I'm not sure what Christopher Luxon's position was by the end of the debate because he had multiple positions throughout the debate." - Hipkins
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"Winston Peters' decision making is erratic. He's an unstable force of chaos," Hipkins reiterated.
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Asked what his target is, Hipkins said "my target is to win".
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"NZ First are absolutely playing the race card in this campaign," Hipkins said.
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"I've been enjoying the campaign all the way through but I particularly enjoyed tonight," Hipkins said.
He said he will not be holding back now.
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"This is the level of energy you're going to see from me in the next two and a half weeks," Hipkins said.
"I'm fully enjoying myself now."
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Hipkins gives himself a 9/10 rating for today's debate.
FACT CHECK
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Christopher Luxon said the All Blacks have never lost a World Cup under the last National Government. He was right.
The All Blacks did win in both John Key's terms of 2011 and 2015 - but had not won in the National Government prior to that.
The All Blacks finished third in in the Rugby World Cup in 1991 and also lost the in 1995 - both during a National government (the Bolger–Shipley government).
The All Blacks also lost two games in the 1999 World Cup in the final days of the government led by National's Jenny Shipley.
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We will back shortly with the post-debate media standups with the Chrises.
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Paddy Gower thanks "the red Chris" and "the blue Chris" and ends the debate.
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The Chrisses don't really push the boat out with their favourite prime ministers.
Hipkins chose Labour's Michael Joseph Savage and Luxon chose National's Keith Holyoake.
Really pushing the boat out there Chrisses.
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Luxon also promises a knighthood for Ian Foster "if he wins the World Cup."
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Luxon says second harbour crossing should be tolled.
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Both said cats should be in predator free 2050.
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Asked who New Zealand's greatest PM is, Luxon says to Hipkins "are you going to say Chris Hipkins?"
Hipkins: "Are you?"
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Luxon claims he caught a bus from the Waiheke terminal. Hipkins with his kids in the last year.
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"Winston Peters will never be Prime Minister, do not worry about that." - Chris Luxon
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Neither could easily say when they last caught a public bus.
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Both said they were open to churches paying taxes.
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"it's not a great endorsement of Judith," Hipkins says when Luxon prevaricates over the question.
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On foreign affairs portfolio and if it should be Judith Collins or Winston Peters, Luxon said "I haven't thought about it".
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Hipkins said conditions didn't work last time: "it's cruel."
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Hipkins said no to live animal exports, Luxon said with conditions.
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Gower bit of sledge on how much a tax on AI would raise, says to Luxon "you could work it out."
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Luxon said NZ should embarce GE while Hipkins said it could be done carefully.
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Luxon said he wants to bring Defence spending to 2 per cent of GDP, a target used for members of the Northern Hemisphere’s NATO alliance, although he said he would not get there immediately (he said there are other priorities).
This is a tough number to calculate. Defence spending is pretty lumpy because a large component of it involves buying expensive machinery, which occurs infrequently.
Two per cent of GDP would be $8.3b a year.
An OECD metric says we spend 1.5 per cent of GDP on Defence, leaving a gap of about $2b a year.
Treasury’s Prefu figures put spending at $3.2b, about 0.7 per cent of GDP.
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Both said they would look into menopause leave.
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Asked what is more harmful out of alcohol and cannabis, both said alcohol.
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Time for the quick fire questions.
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Neither would ban TikTok.
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On AUKUS and joining pillar 2, Luxon said it was undefined and would need to look into it.
Hipkins said they would cooperate with those partners, but would not commit to joining.
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Both said NZ should not get drones that kill people.
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Both leaders avoided saying if NZ needed to be prepared for conflict, saying everything needed to done to avoiding it. Luxon said it was good there was bipartisanship on this.
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"Do you ever answer a question straight?" Hipkins to Luxon
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On defence spending, Luxon said he wanted to get to 2 per cent of GDP but there were other pressing priorities.
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If the Greens and Te Pāti Māori made a wealth tax a bottom line, Hipkins said he did not think it would come to that. He said they had worked constructively together before. Luxon said he didn't think Labour would have the leverage to make that decision.
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Asked if Peters was good or bad for the country, Hipkins immediately said "bad." Luxon repeatedly said "I don't know him. That's a decision for the voters of New Zealand."
Which incidentally is Peters' usual quote too.
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The Chrises have just wandered into a very complicated issue, what’s the best way to lower emissions: the Emissions Trading Scheme, or individual policies like the Clean Car Discount.
It boils down to this. Investments in policies like the NZ Steel deal and the Clean Car Discount reduce emissions from those particular polluters. This keeps the ETS price down, but does not necessarily lower the country’s overall net emissions.
Labour argues that National getting rid of these policies and relying on the ETS to reduce emissions would require the price to rise dramatically, putting up the price of fuel by 40 cents a litre.
They have a point there - the ETS is going to need to rise, and quite a lot. National’s counter argument is Labour’s policies do not actually reduce net emissions. For the county.
We covered this issue in detail in the piece below:
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On his plan to manage Peters and David Seymour given their hostility to each other, Luxon again avoided answering the question.
He said it was not his preference and it would be better than a "five ring circus" if Hipkins got in with the Greens and Te Pāti Māori.
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Hipkins was very quick to answer that Peters is bad for the country.
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Asked if Winston Peters was good or bad, Luxon avoided answering and said he didn't know him.
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"You can't even keep a consistent position during a debate." - Hipkins to Luxon
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Hipkins then pointed out Luxon had earlier said he thought drugs should be treated as a health issue.
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On decriminalising cannabis, Hipkins said he would not rule out further changes but wanted to seek a bipartisan approach. Luxon said his party was not supportive of that.
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"We all have our views about pro-life, or pro-choice views. I've been very clear those laws are settled."
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"You haven't answered the question," said Hipkins. He pointed out there were people in National's caucus that celebrated abortion laws being overturned in the US.
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Luxon answers the question about abortion in the only way he really can, repeating his promise not to change abortion laws.
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Asked if Luxon regretted saying abortion was "tantamount to murder", Luxon avoided answering the question and said if abortion laws changed he would resign.
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Neither said they would abandon their principles for politics.
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Time for another break. When they come back, they'll be talking about coalitions.
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Asked if they had stole a road cone, Luxon said he hadn't.
Hipkins said they did have one in a student flat he lived in.
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On potholes, Hipkins said they were spending more fixing them that any Government in history.
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On speed limits, Hipkins said on new roads where it was safe it was appropriate to raise them, but not on dangerous roads.
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Luxon says it's "corporate welfare." "You should not be giving taxpayers' money to companies making $2.1 billion of profit."
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Luxon said instead Labour was subsidising corporates making billions in profits.
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Hipkins argues that the big corporates won't take emissions reductions measures themselves. "They won't."
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On subsidising corporates to reduce their emissions, Hipkins said they were good investments as they reduced the country's emissions overall.
Luxon said they would do that themselves if the Emissions Trading Scheme was working properly. Hipkins said if that occurred petrol would go up immediately 40c a litre.
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On the clean car discount, Hipkins said it had seen among the fastest uptake in EVs and hybrids in the world. Luxon said the discount wasn't needed, and instead the focus needed to be on increasing chargers to make them mor attracetive to consumers.
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Hipkins said not harvesting the trees was not a good option as they could still pose a danger. He agreed harvesters could lose their licenses to operate.
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That could include shutting down the forests.
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Luxon said there simply needed to be greater penalties for breaches.
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Hipkins said it was not as simple as shutting down forests. It was about doing it responsibly.
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Both said forestry companies had to take responsibility for forestry slash.
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Both leaders said they agreed to a bipartisan approach to how to shift communities impacted by climate change.
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Hipkins he wanted to be a progressive leader on climate change, pointing emissions had reduced three years in a row now.
Luxon said he too wanted to take a lead on the issue.
He rattled off National's known climate policies.
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Now onto climate change.
How much would it cost?
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Chris Hipkins and Christopher Luxon both committed to reducing the bowel cancer screening age Australia’s level, of 50 or 45 if a test is requested.
How much would it cost?
We can put together a rough estimate from currently available figures.
In Budget 2022, the Government extended free bowel cancer screening to Māori and Pacific people to people aged between 50 and 60 (it is currently 60-75 for non-Māori and Pacific).
It cost $36m over four years ($9m a year) and was said to give 60,000 people a test a year - $150 a test.
Stats population data says there are 653,940 people in the 50-60 age bracket - 593,940 if you exclude the Māori and Pacific already funded.
That’s about $98m for each one of those people to get an annual test, half if they are only tested once every two years (as is the case under the current policy).
$392m over four year forecast period or $196m over the period for a test every two years.
FACT CHECK
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Luxon claimed "I’m not tolerating an education system where 40 per cent of kids don’t show up at school regularly" and Hipkins said "that's not true."
Education stats show in Term 1, 59.5 per cent of children attended school 90 per cent of more of the time.
A further 23.3 per cent attended 80-90 per cent of time, and 17 per cent attended less than 80 per cent of the time.
So probably a win for Hipkins on that one.
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Going back to Luxon's claims regarding school attendance rates, it is worth resharing this insightful column by Herald senior writer Simon Wilson:
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Hipkins called out Luxon on that, saying the rainbow community was not all about mental health issues.
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Luxon said he would help the rainbow community and high suicide rates by having a mental health commissioner.
The only big change since August is a further $50m saving on Covid-19 spending.
The plan is incredibly tight, however, with the next three budgets each promising less new spending than any budget in the last term of Government.
The operating allowance (a Treasury term for new day-to-day spending) will be $3.5b next year, $3.25 the year following and $3b in the two subsequent years.
That is well below the three operating allowances this most recent term of $4.8b, $5.9b, and $4.8b.
The plan tallies up promises Labour has made on the campaign trail and leaves scant headroom for new promises.
The health budget increases each year and in 2027 will be 17.5 per cent larger than this year.
While health and some other sectors have had cost pressures funded in this plan, other sectors have not. They will have their cost pressures funded from funding left-over from what has been committed in the plan.
There is $662m left-over in Budget 2024. This rises to $1.9b in 2025, and $3.1b in 2026 - although those figures are cumulative.
Essentially, there is about $1b left unallocated from each year, Robertson said this would be enough to fund cost pressures each year.
The opposition National Party is yet to publish its own fiscal plan, showing how its promises add up. It is rare for a party not to publish a fiscal plan before the first votes in an election are cast. Votes can be cast in the election from today for people overseas and with certain disabilities.
Robertson challenged National to meet the health cost pressure funding outlined in this budget.
Robertson said a re-elected Labour would meet its self-imposed rules of fiscal responsibility by returning an OBEGAL (operating balance before gains and losses) surplus by 2026/27 and keeping net debt below 30 per cent of GDP.
An OBEGAL surplus means the Government is spending less money than it is receiving in revenue.
“We are on track to meet these rules,” Robertson said.
“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 (Pre-election Economic and Fiscal Update).
“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.”
He said Labour would not change income tax settings, and the party would continue to look for savings across hte public sector, having already found $8 billion earlier this year.
An additional $7 billion would be added to the capital allowance in every year of the next term, which would be used to build 6000 additional public homes that Labour has recently announced.
The existing health budget would cover the initial business case for the Hawkes Bay Hospital, he said.
“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.”
The announcement follows the Prefu, which came out earlier this month and showed no recession, and a return to surplus in 2027.
It also showed the economy growing 2.6 per cent on average over the next four years, unemployment rising to 5.4 per cent next year, and annual wage growth forecast to average 4.8 per cent over the next four years compared to CPI inflation of just over 2 per cent.
In the September 2023 quarter, annual net migration was forecast to peak close to 100,000, and house prices were expected to reach annual growth of 3.9 per cent by June 2027.
Robertson, in revealing the Prefu, said the economy was turning a corner.
Robertson is addressing how he expects to keep this while spending the money he needs for Labour’s election promises.
Those include GST off fruit and vegetables, free dental care for those under 30 by 2026, subsidised public transport for those under 25, and boost to Working for Families.
Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery and is a former deputy political editor.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.