Labour’s fiscal plan was never realistic

Labour campaigned with a fiscal plan last year, and it was the centre of a controversial claim by Steven Joyce that demonstrated an $11b fiscal ‘hole’.

The reality is that the fiscal plan was not a plan as it could never have been implemented – there was virtually no chance of Labour governing alone. And this is Labour’s excuse for budgeting $12b more than specified in their plan, the cost of governing arrangements with other parties.

This is an obvious reality of single party campaign policies in an MMP environment where single parties have never governed alone, so it may be more a problem of how parties (and media) portray campaign policies.

NZH: Labour’s first Budget vs its campaign plan: Does it match up?

A comparison of Labour’s campaign fiscal plan with its first Budget shows things are not tracking quite as Labour planned during the campaign, something it put down to its coalition agreements and higher costs than expected.

Analysis by NZ Herald data journalist Keith Ng shows total Crown spending is forecast to be almost $12.5 billion higher over the five years to 2021/22 than Labour forecast in the “fiscal plan” it campaigned on in the last election.

That takes it to $24 billion more than National had planned over that period.

Labour campaigned on its fiscal plan against criticism from National that it had not allowed enough to cover the costs of its policies as well as increases in Government spending such as wage increases.

The higher spending also indicates the cost of securing the support of NZ First and the Green Party was higher than Labour allowed for in its fiscal plan and some policies were costing more than expected.

Finance Minister Grant Robertson said the Budget should not be compared to Labour’s fiscal plan because it was based on Labour Party policy while the Budget reflected the Government arrangement with NZ First and the Greens.

In one way that’s a fair claim by Robertson. Labour was never likely to govern alone.

But did Robertson make it clear that his fiscal plan was not a plan?

He could not know which parties Labour may combine with to form a Government. But he must have known his fiscal plan would never remain intact in an MMP government, and should have expressed it with that clear proviso.

Will this happen next election? It’s likely to be glossed over again, or at least Labour may try that, but having been in Government with two other parties it should be much harder to get away with.

Unless Labour campaigns with the expectation that NZ First and Greens will miss the cut and won’t impact on Labour’s fiscal plan.

 

 

 

48 Comments

  1. PDB

     /  June 5, 2018

    Prior to the election Labour were asked about the costs of their likely govt partners and they assured us at the time that they had it all covered – to say the opposite now is simply dishonest. Add in the fact they had a chance during negotiations to keep reins on their spending but they chose not to in order to seize power whatever the cost.

    On the other side National had plenty of room to move if NZL First had to be accommodated due to the fact they promised far less than Labour during the election campaign & from what we know of post-election discussions were unwilling to concede too much to Winston.

    • Gezza

       /  June 5, 2018

      If they promised far less then how would that make them any better when they also had to spend more than promised? We don’t know what they were prepared to spend to get NZF’s nod, do we?

      • PDB

         /  June 5, 2018

        Their overspend is massive & suggests in negotiations with Winston they really sold themselves out – putting aside only $878 million for coalition negotiations in the first year was simple dishonesty when Winston alone was promising well over $20 billion of extra spending. Winston was never going to go with National as utu was more important to him so he bluffed Labour into conceding far too much – Labour only have themselves to blame for that.

        No wonder Winston was all for releasing the Labour-NZL First agreement and Labour wasn’t.

  2. Corky

     /  June 5, 2018

    Mikey had Grant Robertson on this morning. While Mikey had limited material to work with, the fact was Grant shut him down with measured and concise answers. Maybe Gezza is right, that Grant will grow into his job. It certainly looks that way. From a Rightie perspective, all I can say is thank god for Jacinda, Andy and Winston.

    • PDB

       /  June 5, 2018

      Robertson is still living off money created by others before him – lets see how he goes next budget when the new govt’s policies start to bite and they are shown as having no where to generate more income without there being a major bump in taxes.

    • High Flying Duck

       /  June 5, 2018

      Talking coherently has never been a weakness for GR. Coherent policy-making however…

    • Zedd

       /  June 5, 2018

      ho hum corky.. what are you really saying here ?

      • Corky

         /  June 5, 2018

        Mikey had the brains not to push any issues with an empty magazine. Robertson had the bases covered and was confident as a speaker. The only way Robertson will fail is like PDB says, when his policies start failing. When that happens Mikey will be ready to go Rambo with a full ammo belt and magazine.

  3. NOEL

     /  June 5, 2018

    The past has taught me that any claims by parties in opposition at election time will be amended or not carried out after the election. No surprise here.

    • High Flying Duck

       /  June 5, 2018

      It’s only not a surprise because Steven Joyce called it – pretty accurately as it happens.
      With more strikes and wage rounds in the offing to put further fiscal pressure on too.

      • Blazer

         /  June 5, 2018

        Joyce had inside information on the hole…he dug ,it through non allocation of spending in sectors that badly…needed it.

        • High Flying Duck

           /  June 5, 2018

          Is that right Blazer? Which sectors were these given Labour received an extra circa $1B in tax revenues to play with and:

          Budget 2018 contained $3.35B less for Health than Labour’s pre-election fiscal plan.
          Budget 2018 contained $3.25B less for Education than Labour’s pre-election fiscal plan.
          Budget 2018 contained $90.0M less for Core government services than Labour’s pre-election fiscal plan.

          But:

          Budget 2018 contained $2.24B more for Social security and welfare than Labour’s pre-election fiscal plan.

  4. PDB

     /  June 5, 2018

    “Finance Minister Grant Robertson said the Budget should not be compared to Labour’s fiscal plan because it was based on Labour Party policy while the Budget reflected the Government arrangement with NZ First and the Greens”

    That is yet another Labour lie – their fiscal plan allowed a paltry $878 million in the 1st year (followed by $1.8 billion the second year) under “Labour spending allowances for unannounced policies” which Grant Robertson described at the time as being for “managing and dealing with coalition partner commitments”.

    https://www.nbr.co.nz/article/labour-outlines-fiscal-plans-jw-205413

  5. Blazer

     /  June 5, 2018

    What Robertson said is correct.He is the Labour Steven Joyce.Tends to be understimated by…National.

    • High Flying Duck

       /  June 5, 2018

      It is Labour who have spurned his advancement many times.
      He speaks very well and always has done.

      • Blazer

         /  June 5, 2018

        Many commentators here have opined that he’s not up to the..job.

        • Alan Wilkinson

           /  June 5, 2018

          He’s certainly up to the job of spending money and inventing new taxes.

          • Blazer

             /  June 5, 2018

            gee Al..Nats spent over $100 mil on a problem’…that didn’t..exist!

            • Alan Wilkinson

               /  June 5, 2018

              $24 billion by Labour is a tad bigger, B. You probably don’t have enough fingers.

            • Blazer

               /  June 5, 2018

              Labour is spending money on core issues,Health,Education,Defence Social investment….big diff.

            • Alan Wilkinson

               /  June 5, 2018

              National’s big spend was on infrastructure … big diff.

            • PDB

               /  June 5, 2018

              Blazer: “Labour is spending money on core issues,Health,Education,Defence Social investment….big diff.”

              You forgot rich students, overseas visitors catching a tram from the Auckland CBD – airport and back, more diplomats and a new embassy in Stockholm, the racing industry, 100+ committees, a large slush fund for Shane Jones to lord over & a shit load of money for Winston to (unsuccessfully) fight off the Chinese in the pacific islands.

        • High Flying Duck

           /  June 5, 2018

          He isn’t. But he speaks very well.

  6. Zedd

     /  June 5, 2018

    only this to say.. ‘did any one REALLY want 3 more years of Natls; trickle down B-S economics’ ?
    Tax Cuts & privatisation that was mainly focused on making the ‘fat-cats’ even fatter !
    “No Thx” Im very happy to see Lab/NZF/Grns in Govt. 😀

    • Grimm

       /  June 5, 2018

      “Tax Cuts & privatisation that was mainly focused on making the ‘fat-cats’ even fatter”

      You actually have no idea what happened for nine years do you Zedd? It’s like you read some article in the 70’s about Tory Scum, and have been repeating the same lines ever since.

    • PDB

       /  June 5, 2018

      Zedd: “Tax Cuts & privatisation that was mainly focused on making the ‘fat-cats’ even fatter !”

      You continue to spread untruths – what we do know is this govt has given well-to-do students free taxpayer money they don’t need and hit the poor the hardest by allowing regional fuel taxes to help better-off folk living within the inner suburbs of Auckland City get around the city easier.

      • Zedd

         /  June 5, 2018

        ‘You continue to spread untruths’
        ditto pantzi

        “I just sez it at I seez it’ dood

  7. Alan Wilkinson

     /  June 5, 2018

    Labour is never realistic so of course none of their plans ever will be. They live in a socialist fantasy where most of them are cocooned for life in Government sinecures.

    • Zedd

       /  June 5, 2018

      well you certainly ‘laid that straight on the line’
      what happened to your usual ‘LOONY LEFT’ remarks.. or have you decided (or been advised) to tone it down ? 😀 😀

      • Alan Wilkinson

         /  June 5, 2018

        Labour MPs don’t usually qualify for loony Left status though I must admit they seem to be trying for it at present. We won’t really know until their 120 working groups report back.

    • Blazer

       /  June 5, 2018

      I’m guessing you worked for the Govt…Al.

      • PDB

         /  June 5, 2018

        I’m guessing you’ve never worked…Blazer

        • Blazer

           /  June 5, 2018

          don’t know why you’re guessing that…WRONG bigtime.Notice Al hasn’t replied… 😉

          • PDB

             /  June 5, 2018

            Through taxes all workers work for the govt in some way or another Blazer…

          • Alan Wilkinson

             /  June 5, 2018

            Hadn’t seen it – busy day.

      • Alan Wilkinson

         /  June 5, 2018

        Indirectly for 13 years, B, although technically the universities are independent institutions. After that I was self employed.

  8. Corky

     /  June 5, 2018

    This Asian gentleman should be compulsory viewing for all socialists, poor and middleclass. To switched on investors, he’s saying nothing new. But the majority of people in my experience are pig ignorant about these strategies.

    For example, he correctly states, ‘your home is not an asset, it’s a liability.’

    Maybe Labour could learn something,too. Taranaki oil and gas isn’t a liability, it’s an asset.

    ps- love the Bentley and how he paid for it.

    • Blazer

       /  June 5, 2018

      first 2 minutes showed he has no clue.
      Family home in Auckland has been making $1000 a week while you sleep…for years.
      A Bentley is a depreciating…asset.

      • Corky

         /  June 5, 2018

        First sentence shows you have no clue.

        ”Family home in Auckland has been making money while people sleep”. That’s not historically true. The home would have to be sold to reap any profit. Selling the home means selling a potential asset if it was rented out, or used as a B&B. Associated costs with selling would include lawyers fees and possible taxes and deprecation of money liquidated from the sale deposited in a bank.

        ”A Bentley is a depreciating…asset.” True, even though it’s a liability, but the Bentley was bought with money generated from assets..and not outright like the middlecalss would do if they had such money. So he still has his money making assets. And now he has a Bentley.

        I guess you now understand why you are as socialist, Blazer.

        • Blazer

           /  June 5, 2018

          you can by a Van Gogh and it is an appreciating asset,but until you sell it is not realised…same premise…you have NFI.
          confirmed by more nonsense…’money generated from assets..and not outright like the middlecalss would do if they had such money.’…so the middle class would save up for one from their wages…!!!

          • Corky

             /  June 5, 2018

            ”you can by a Van Gogh and it is an appreciating asset,but until you sell it is not realised…same premise…you have NFI.”

            Then it’s a liability until its sold…or stolen.

            As for the second part of your comment..that’s just bluster . I don’t think you read what I wrote.

            I’m sorry, Blazer. I did my best to educate you..but it would seem, apart from winning lotto…that socialism is forever with you.

            Now , there’s a conundrum…is winning Lotto a asset or liability?

            • Blazer

               /  June 5, 2018

              must be a liability according to you…someone might steal it.
              So what assets do you recommend that have…no liability…think about it!

            • Corky

               /  June 5, 2018

              Context, man. We are talking about money generation. Liquard funds. Don’t obfuscate… How did this chap buy his Bentley?

            • Blazer

               /  June 5, 2018

              @Corky ..he states the blindingly obvious …his Bentley is a waste of money.Cannot go anywhere a Honda ..cannot.