National's finance spokesperson says in the wake of COVID-19, "nice-to-have" Government spending must be temporarily held back - and has suggested suspending new payments to the Super Fund.
While Nikki Kaye and Amy Adams' resignations dominated headlines, Paul Goldsmith spoke to the Institute of Financial Professionals New Zealand (INFINZ) about the country's financial direction following the devastation COVID-19 has left, and continues to inflict, on domestic and global economies.
As well as continuing to pledge to not introduce any new form of tax, Goldsmith said National would temporarily hold back "nice-to-have spending".
"An obvious place to start is suspending new payments to the New Zealand Super Fund for the next four years. That alone would reduce core crown debt by $9 billion over four years."
National stopped payments to the fund under Sir Bill English before they began again under Grant Robertson's stewardship.
Robertson called the idea "a backwards step by National".
"New Zealanders went for nine years without the previous Government contributing to the Super Fund. We restarted contributions because we know this is an important investment in future-proofing the New Zealand economy by putting money aside for people’s retirement. The returns that the Super Fund has been making means it remains a smart investment."
Goldsmith's idea has the backing of former Reserve Bank Governor and National leader Don Brash.
"I think it is an entirely sensible thing to do. Borrowing overseas, which we are doing at the moment, to invest in shares in New York, doesn't make much sense at all currently and I think stopping that borrowing makes very good sense," he told Newshub.
"It was set up some years ago to provide some of the cost of providing New Zealand Super long into the future. New Zealand Super is not affected by what we do right now, the Government still needs to cover that cost."
It could be popular with voters if National explains it clearly, Dr Brash said.
"They have got to explain it in terms people understand. Would you borrow on the mortgage to invest in the sharemarket? That is the question. Most New Zealanders would say, 'That would be a crazy thing to do, why would you do that?' That is what we have been doing for the last couple of years."
Interest rates are at record lows - far below the long-term annual return on international share markets. Robertson in November said it "makes sense to take advantage of this low debt and record low interest rates to make investments now to benefit generations to come".
'Profoundly vulnerable to the inevitable next shock'
Goldsmith's Thursday speech outlined National's approach to debt, which is set to skyrocket. At the Budget, net core Crown debt was forecast to jump to 53.6 percent of GDP by the 2023 fiscal year as a result of the need for increased spending, and borrowing, in the wake of the pandemic.
"The actions we will take today could leave a legacy of debt for future generations. We are making choices that will impact them tomorrow," Goldsmith said.
"Such levels of debt would leave our children and grandchildren - and also ourselves - profoundly vulnerable to the inevitable next shock."
Along with holding back some "nice-to-have spending" for a time, Goldsmith wants to run the ruler through "spending in the current COVID-19 fund", asking "tough questions" about whether it is all required.
He would see "poor quality spending" reprioritised, including not pouring money into the "absolute failure" of KiwiBuild.
"That is just a start - just an indication that with discipline, and focus on priorities and results we can still have plenty of scope for investment during a crisis, and to maintain critical health and social spending, while at the same time reduce the size of the debt mountain and set a credible path back to prudent levels in a reasonable time."
