Economist behind Labour's fiscal plan slams National's claims

"We have a fiscal plan that has been independently assessed and that adds up," Grant Robertson says.
"We have a fiscal plan that has been independently assessed and that adds up," Grant Robertson says. Photo credit: Getty

BERL executive director Dr Ganesh Nana has spoken out against claims from the National Party there is a "hole" in Labour's fiscal plan.

Labour commissioned BERL to do an independent audit of its fiscal plan, which National campaign manager and finance spokesman Steven Joyce claimed had an $11.7 billion "hole".

Labour finance spokesperson Grant Roberston refuted the allegations and said it was "a desperate act from a flailing Finance Minister".

Dr Nana said the allegations of a "hole" in the plan were largely down to a misunderstanding of the definition of Labour's operating allowance.

"Some administrations choose to use this allowance to include future spending that is known but not yet allocated (e.g. population adjustments for health and education funding). The Labour Party Fiscal Plan explicitly allocates these items to their relevant spending lines. This leaves the resulting 'operating allowance' as a clear measure of what is available for future spending for policies or initiatives currently unknown."

The economist added Labour had costed its policy for 26 weeks of parental leave and it was included in the "family package" line of the fiscal plan. 

Dr Nana said BERL had worked with a range of governments and administrations over the past 60 years, and the organisation had no political affiliation.

"As stated in our report to the Labour Party, we make no assessment of the individual policies themselves, nor do we judge their worth. That is for the voters of New Zealand to judge. But the numbers do make sense."

Steven Joyce says the Labour Party have a "big hole" in its sums.
Steven Joyce says the Labour Party have a "big hole" in its sums. Photo credit: Newshub.

Mr Robertson said Mr Joyce was being disingenuous in his claims that Labour's fiscal plan didn't add up. 

"Mr Joyce might not agree with all the priorities that are in the plan and that's fine because I think New Zealanders should be able to debate whether or not now is the time for tax cuts or now is the time to invest more in our public services," Mr Robertson said. 

Mr Joyce said Labour failed to roll its operating allowance in subsequent years, and this alone means it has missed $9.4 billion of spending.

But Mr Robertson said that came down to semantics over the use of the term "operating allowance". 

"What Mr Joyce has done is taken effectively our leftover cash at the end and then tried to accumulate that out as if we're going to spend every dollar of it every year. I've never said that. I've never said that our fiscal plan did that."

Mr Robertson said the bottom line of Labour's fiscal plan document is spare money, and not an accumulating operating allowance.

"We're not comparing apples with apples; he's taking a line item that's actually left over money and calling that an accumulating operating allowance. I've never said that's what it was."

National claimed other mistakes in Labour's costings included failing to allow for the cost of increased paid parental leave, counting revenue from multinational tax revenue twice, and including costs from its Family Package three months later than planned.

Earlier on Monday Labour leader Jacinda Ardern said the party stood by the independent assessment of its fiscal plan conducted by BERL.

"I'll certainly take a look at Mr Joyce's accusations but I stand by the independent view we've had from an independent economist.

"We did this because we knew we would have scrutiny."

National said the errors meant there were $11.7 billion of extra spending and Labour now needed to re-work its proposals.

"These are significant errors that raise questions about Labour's whole spending approach and their fiscal competence," Mr Joyce said. "Their spending numbers were already high and this makes them a lot worse."

Economist Shamubeel Eaqub told Newshub any party's policies would be fully costed once they were in power, and he preferred to focus on what values the parties were prioritising. 

"In MMP policies may not go ahead anyway, so I tend to focus on what values each party is trying to bring with it. That will dictate what any future Government will spend on policies, which areas and how to fund it."