Nicola Willis accuses previous Labour Government of leaving finance books in state of chaos

Finance Minister Nicola Willis is proposing changes to the Public Finance Act after discovering what she's calling billions of dollars' worth of fiscal cliffs.   

Willis said the Labour Government may have followed the law but not the spirit of it, while ex-Finance Minister Grant Robertson is urging her to do some homework.   

On Monday afternoon, Willis declared inflation "enemy number one".    

The Finance Minister then quickly honed in on enemy number two, Robertson. She accused him of leaving the Government books in a state of chaos.   

"Now that I am behind the curtain, I am seeing things I didn't expect to see," she said.  

"Some of the fiscal risks that were updated in the pre-election update were referred to, but I didn't know the quantum of how big those risks were."  

When the Government publishes its Budget it funds things in a four-year cycle. However, in some cases, it elects to time-limit funding.  

Examples include the food in schools programme. Originally a pilot, it was given short-term funding rather than permanent.  

Willis said there is a lot more of that than met the public eye.   

"I have been surprised by the sheer number of Government policy programmes for which funding is due to expire."  

She's asked for advice on how much it's going to cost her.  

"The sum is likely to approach many billions of dollars."  

Willis is considering a law change to ensure all fiscal risks, complete with dollar figures, are presented in a list before an election. It's currently all there buried in the budgets and subsequent fiscal updates by law.  

"If she can't read and understand what is in the Budget document, then I am deeply concerned how she is going to do the job of Finance Minister," said Robertson.  

Willis said someone with a "fine tooth comb" could go through the estimates and find cases of time-limited funding. 

"What I think is at issue here is the sheer scale of those, some of which are buried deep in the estimates and the need for that all to be revealed in one place," Willis said.  

The Public Finance Act was introduced in 1989, following Robert Muldoon's reign and the catastrophic financial surprises he left behind.  

Asked if she was painting the Labour Government with the same brush as Muldoon, Willis said: "I think I have been saying for quite some time that these were people who were reckless with the taxpayer dollar, they committed economic vandalism."  

Robertson said Willis was creating a "desperate diversion from somebody who can't make their tax package add up".

The fiscal fight just got even scrappier.

Jenna Lynch Analysis

Nicola Willis says there are two types of fiscal cliffs Labour has built for her to take a tumble.  

One is essentially project cost blowouts that weren't clear - a lot of infrastructure-type projects that will run over budget and the Government will have to go through those item by item and decide whether to fund them, scale them back, or scrap them. The same process goes for time-limited funding.  

The Finance Minister is still confident the Government can deliver coalition commitments, but the timing and phasing may be tricky to navigate. 

Grant Robertson is steadfastly denying irresponsibility, saying it was all there for Willis to find if she did her homework.

But during the campaign behind the scenes Labour knew they were doing this.

It was a strategy to leave fiscal booby traps to trip the Nats, and some Labour operatives were even openly boasting about it.

The question now is which party ends up being falling victim to the fiscal cliffs in the eyes of the public.