Labour-Greens promise surpluses, reduced debt

Labour and the Greens say they're committed to running budget surpluses, paying debt and keeping spending down.

The two parties will present their 'Budget Responsibility Rules' to business leaders, economists, NGOs and academics on Friday morning.

"People want to know the kinds of principles that we're going to manage the books by," Labour leader Andrew Little told The AM Show.

The two parties' economic policies have differed in the past, and while they'll still have separate policies, the rules are a "framework" for working together in government, said Labour finance spokesman Grant Robertson.

Among the rules are:

  • running surpluses (barring major economic shocks or natural disasters)
  • keep Crown spending to about 30 percent of GDP
  • a progressive, fairer tax system
  • reduce net debt to 20 percent of GDP in five years
  • increase investment in superannuation, climate change and infrastructure.

"We're committed to running surpluses over an economic cycle," says Mr Little.

"We're going to be responsible with the government budget. There's stuff we've already committed to - we've got to fix housing, we've got to fix health, we've got to fix education."

Crown spending currently is at 30 percent of GDP, according to Treasury figures. The 2016 Budget predicted it would drop to about 28 percent by 2020, under National. It peaked in 2011, in the wake of the global financial crisis, at around 34 percent.

The last time Labour was in government, Finance Minister Michael Cullen ran up a series of significant surpluses, but came under fire for not cutting taxes.

No tax increases are planned if Labour does win the upcoming election.

"Every commitment we've made we can fund out of existing tax revenue," said Mr Little.

The Greens went into the last election promising a new top tax rate of 40 percent on income over $140,000. Co-leader James Shaw wouldn't say if that would be the case this year, saying the party's focus wouldn't be on income tax.

"A lot of people don't know this, but at the last election we actually promised a tax cut for 97 percent of New Zealanders," he told The AM Show.

"That was going to be funded out of a tax on pollution that causes climate change."

A capital gains tax would likely be included in the Greens' economic policy, but not Labour's.

"It won't be exactly the same as what we've said in the past," said Mr Shaw.

Coalition negotiations

As for who'll take what job should the left bloc win the election, Mr Shaw says it's wide open.

"The largest party in government is guaranteed the Prime Minister and Minister of Finance. Everything else depends on what happens on election night."

Mr Little isn't ruling out overlooking deputy Jacinda Ardern for the Deputy Prime Minister role, should the Greens' share of the vote demand it.

"We've got a good close relationship, but one thing we're very clear about - we're not allocating jobs, responsibilities, portfolios or anything before the numbers come in."

A new Newshub poll on Friday has found Mr Little has the support of Labour voters, but Ms Ardern isn't far behind.

She pipped him in the preferred Prime Minister stakes however, when asking voters of all political persuasions.