Problems with National and Labour fiscal policies

There’s one major problem with the National and Labour party fiscal policies that they are campaigning on – Winston Peters. Labour has a second but possibly lesser problem, the Green Party.

No matter what individual parties ‘promise’ to voters, what they try to deliver will be influenced probably by NZ First and possibly by the Greens, and both those parties have promised to spend a lot more than the two major parties.

Vernon Small: Peters’ demands the wild card in Labour’s carefully shuffled budget

But of course the sustainability of Labour’s draft budgets – when translated into coalition government reality – may be a different thing.

The Greens ought not to be a major threat to Labour’s plans if they are true to their signature on the Budget Responsibility Rules deal. Ironically, these cut in from election day, just as the memorandum of understanding between the two parties expires.

Ominously, there are rumblings of discontent within Labour about the Greens’ policy costings. Is this what Robertson was hinting at – although it could equally apply to NZ First – when he said, “as a party that wants to lead government it is our duty to be able to say to people ‘this is what we are planning and this is how we are going to pay for it’. That perhaps isn’t required of all parties …”?

But the biggest risk to Labour’s carefully laid fiscal groundwork will be NZ First. Its tertiary policy alone starts at $4.6 billion, by its own estimates.

Voters have to try to take into account what policies various coalition arrangements end up delivering.

To meet other demands, Labour has earmarked $878m next year – and a total of $9.9b over four years. That pool of cash will have to cover future new initiatives and Labour campaign promises as well as coalition agreements, augmented by a spot of “reprioritisation” from its own policies.

It is, if you like, where any fiscal plan runs smack into the cost of Winston’s bottom lines. And it is a problem National will also face – though with potentially more leverage – if it needs NZ First.

It’s one of the wicked ironies of MMP elections.

However hard Joyce and particularly Robertson work on fiscal responsibility, they stand to be judged as much on Peters’ spending – or at least how far they are prepared to curb it – as on their own carefully wrought budgets.

Fiscal campaign promises to voters fly out the window when coalition negotiations begin the day after the election. Promises to prospective coalition partners take over. That’s the reality of MMP.

In particular this year the fiscal policies followed by our next government are likely to be heavily influenced by NZ First demands, whether they end up in government or not.

And Peters typically hints at all sorts of things but won’t commit to anything, even his bottom lines seem to have some flexibility, so voters are left guessing.

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  1. Reply
    • PDB

       /  20th July 2017

      More like a choice between financially responsible or not financially responsible.

  1. Problems with National and Labour fiscal policies — Your NZ – NZ Conservative Coalition

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