5 Sep 2017

National's fiscal claims 'pure fiction' - economists

6:36 pm on 5 September 2017

National campaign manager Steven Joyce is doubling down on his attack on Labour's alternative budget, despite a series of economists saying he's wrong.

Steven Joyce at the Beehive this morning, criticising Labour's fiscal plan.

Steven Joyce at the Beehive yesterday, where he first criticised Labour's fiscal plan. Photo: RNZ / Craig McCulloch

Mr Joyce yesterday claimed Labour had mistakenly not accounted for rolling out operational allowances year on year.

Labour said the figures were robust and the claim was a cynical attempt to distract voters.

Mr Joyce insisted today that outside of laying down its spending on health and education, Labour had left no allocation for increased spending in any other area of government.

"Either they've mucked up the allowances and it's an $11.7 billion hole, or they've just ignored the expenditure they'd have to make over the next four years - which is also an $11.7 billion hole."

He said Labour's figures would mean a two-year freeze on most government expenditure, with no new money for things like funding for the new Ministry of Vulnerable Children.

Mr Joyce reiterated his criticism on Checkpoint with John Campbell this evening.

"Forget who's saying what, it's not a vote as to whether these numbers are here. They are either accurate or they're not."

But experts said today National had made an error and did not read Labour's policy properly.

Dr Ganesh Nana, Chief Economist at the consultancy BERL

Dr Ganesh Nana Photo: Supplied

BERL, an independent company Labour employed to check its books, stood by its work. Chief executive Ganesh Nana said Mr Joyce was categorically wrong.

"It's just pure fiction, based on disagreement over definitions. Nerds like me love it, but I wouldn't expect voters to be at all interested in what an operating allowance is. I would expect voters to be more interested in where is the spending happening, and is that spending actually worthwhile?"

The New Zealand Initiative - a libertarian think tank - said National appeared to have made a basic accounting error in its criticism.

Research fellow Sam Warburton said it looked like Mr Joyce had zeroed in on one line in Labour's plan and ignored 16 other lines.

"When you take one part of the equation and don't include the other part ... you're going to get the wrong answer.

"It's not my position to say whether it's a good or bad budget, but [the numbers] add up, they balance, and in that sense, they are sound."

Cameron Bagrie - ANZ Chief Economist

Cameron Bagrie - ANZ Chief Economist Photo: RNZ / Alexander Robertson

ANZ chief economist Cameron Bagrie also suggested Mr Joyce went too far in saying there was a "hole" and said that term was "too strong".

But he did say it would be a challenge for Labour to govern within its budget.

"They just haven't left themselves any money in the kitty for the 2019 and 2020 budget.

"There is some leeway ... quite a big uplift in health and education spending, but if you look beyond that - law and order, core government services - the working assumption is they are not going to get anything."

Labour's finance spokesperson Grant Robertson said today Mr Joyce was actively misleading New Zealanders "in a desperate and disingenuous hit job".

"Every respected economic commentator has come out and said that Labour's fiscal plan adds up.

"Labour's plan has been independently audited, it's responsible and it allows us to make essential investments in health, housing, education and police."

Mr Robertson said Mr Joyce should "ditch the dirty politics" and debate the issues fairly.

Labour Party leader Jacinda Ardern said Mr Joyce was digging himself into a hole.

"My message to Steven would be just put the spade down, lets enjoy a campaign that is based on fact, not fiction."

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