Election 2023: Cameron Bagrie warns National could get 'reality check' when they open Govt books, tax cuts no certainty to happen

A leading economist is warning National's promised tax cuts are no certainty to happen given the state of New Zealand's economy.

National cruised to a comfortable election victory on Saturday night, with the makeup of the Government still up in the air with just over 500,000 special votes still to be counted.

A major part of National's campaign was promising tax cuts to New Zealanders but getting it across the line following negotiations with ACT and potentially New Zealand First is no certainty.

On top of that, independent economist Cameron Bagrie told AM on Tuesday the state of New Zealand's books might also make them hard to deliver.

He told AM co-host Ryan Bridge the National Party will get a shock when they open the Government's books for the first time.

When asked if he thinks National will deliver on their tax-cut promise, Bagrie said "anything is possible".

"It's certainly a big part of the policy platform and there will be pretty high expectations to deliver on that and I guess the real issue was going to be what's the real state of the economy, the state of the books," he said.

"The new government is going to get various updates by what we call briefings to incoming ministers once we get the final government formed. I suspect that could be a bit of a reality check in regard to possible versus what could be probable. So everything's going to be on the table and there's obviously electioneering at play here."

Given the state of New Zealand's economy, Bagrie said he wouldn't be rolling out tax cuts as part of his policy prescription.

"I guess if I step back and look at it through an economic lens as an economist, thinking about inflation, thinking about pressure on the fiscal books, tax cuts while promised, wouldn't be part of my policy prescription," he said.

Bridge said National would argue they're self-funded through their foreign buyer's tax so wouldn't impact inflation, but Bagrie was sceptical about that.

"Self-funding once again, possible in regards to getting that big number out of the foreign buyers tax. But being possible does not make it highly probable."

Another area of the economy National will look at is inflation.

Stats New Zealand will release the latest figures on inflation for the September quarter later on Tuesday. Inflation is currently sitting at 6 percent but has been dropping over the course of the year, but it's well above the Reserve Bank's (RBNZ) target range of between 1 and 3 percent.

Bagrie predicts it's likely to remain around the six percent mark.

"A lot of that we can put down to fuel prices, end of the subsidy, rise in international oil prices, rates look like they're going to be up somewhere between 8-10 percent, which is partly a by-product of local authorities needing more money... so inflation doesn't matter whether you look globally or locally, it's proven to be a lot more persistent, sticky," he said.

"That era of throwing money around like confetti is coming to an end, that era of incredibly low interest rates has come to an end.
"So the growth we're going to need to see going forward has got to be of real substance. The danger is we tend to go for quick fixes in regard to growth which is just let a lot more migrants in, which is precisely what we are doing."

Watch the full interview with Cameron Bagrie in the video above.