Election 2017: A rough guide to Labour and National's spending plans video

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Bill English denies finance spokesperson Steven Joyce embarrassed the party over Labour $11.7b hole accusation – and offered further critiques of its fiscal plan.

Tonight, from 7pm, Stuff is hosting a debate between the two blokes who want to look after the nation's bank account.

To help you prepare, here's a guide to the big stuff Steven Joyce and Grant Robertson will argue over.

We take a closer look at how much they plan to spend and how they'll pay for it.

Grant Robertson (left) will go head to head with Steven Joyce in Stuff's finance debate.

Grant Robertson (left) will go head to head with Steven Joyce in Stuff's finance debate.

SPENDING PLANS 

More spending on core public services or an income tax cut and faster repayment of debt?

That's the choice being offered to voters by the fiscal plans of our two biggest political parties.

Just what is the big stuff Steven Joyce and Grant Robertson will argue over?
WALT HAMER

Just what is the big stuff Steven Joyce and Grant Robertson will argue over?

Labour plans to spend about $12b more than National between now and June 2022.

This is on operating expenses - the ongoing stuff like health, welfare, police funding and education. It doesn't include capital expenses.

For context, total operating expenses between 2017 and 2022 will be more than $400 billion.

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The chart below shows how much new spending the parties have promised. It's broken down into spending that has been allocated to a new policy or area of the public service (new spending) and that which is still available (remaining allowance).

 

A significant proportion of Labour's new spending has already been accounted for. In some cases this isn't tied to a new policy, but has been earmarked to boost spending in health and education.

The decision to put some of this money into a spending category rather than leave it unallocated in the operational spending allowance was the essence of Steven Joyce's debunked claim, that Labour's plan didn't add up.

It does mean Labour has less cash left over than National each year - but they have, of course, already accounted for spending in two of the most expensive areas.

REVENUE

So Labour wants to spend a bit more than National, how will they pay for it?

Mostly by recouping between $1.8b and $2b per year by cancelling National's tax cuts, which are due to kick in in April of 2018. 

 

The tax cuts are set to boost the incomes of workers earning between $26,000 and $52,000 by $560 per year and by $1000 for those earning more than $52,000. 

Labour also say they will get $200 million a year by cracking down on tax avoidance by multinational companies - this is offset by the $30 million per year to fund the extra tax investigators for this - and raise $300 million by 2022 by increasing the bright line test for taxing property speculators from two to five years.

DEBT

Labour will also fund their extra spending by paying debt off more slowly than National. National's forecasts show net debt down to 20 per cent of GDP by 2020, while the Labour forecast doesn't have it reaching that level until 2022. 

 

Paying off debt more slowly means Labour's plan will incur greater interest costs. An extra $1.1 billion by 2022 compared with National's plan.

CAPITAL SPENDING

Both parties have also made capital spending commitments that are accounted for outside of operational spending. Labour will re-start payments to the New Zealand Super fund - $1.5 billion over the first three years in Government - and put $2 billion towards Kiwibuild in the first year.

National's new capital investments are headlined by $10.5 billion for roads over the next 10 years. They have also earmarked $120 million for a new stadium in Christchurch, $267 million for commuter rail upgrades in Auckland and Wellington amongst other smaller announcements.

ARE THEY ALL THAT DIFFERENT?

In the grand scheme of things, not really.

Both parties are committed to keeping core Government spending below 30 per cent of GDP and reducing net debt below 20 per cent of GDP. Both of these targets are below debt and spending levels in most other developed countries.

The Labour plan proposes paying off debt more slowly than National and it would of course raise more revenue and spend a bit more.

UNCERTAIN FORECASTS

It's also worth bearing in mind that the baseline numbers from which these spending and revenue plans are drawn are only forecasts. These numbers can - and almost certainly will - change between now and when the forecast period arrives. 

If economic growth isn't as strong in the next 12 months as the current forecasts suggest, then whichever party is in Government will have less tax revenue and will have to change their plan.

They might pay off less debt, run a smaller surplus (or run a deficit), or cancel an election spending promise. 

Of course, economic conditions could also be better than forecast.

 - Stuff

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