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Labour trims new spending plans by $300m a year

The Labour Party has trimmed its new spending plans by about $300 million a year to take account of weaker economic forecasts and smaller Budget surpluses presented in last week's Pre-Election Economic and Fiscal Update, published by the Treasury.

The main casualties of the policy, assuming a Labour-led government was elected and that its policy platform survived intact through coalition negotiations, would be the elderly, who would have to wait an extra six months to April 1, 2017, to be eligible for free doctors' visits and prescriptions. The six-month delay wipes some $140 million off the 2015/16 financial year's spending total.

Some seven smaller policies have also been canned, for possible development later, leaving Labour only one major new spending announcement worth around $100 million a year still to be unveiled before the election on Sept 20.

Labour leader David Cunliffe insisted there would be "a number of things that aren't fiscal announcements" to entice voters and Labour was determined to demonstrate it would run the government's books conservatively.

"We will run a surplus every year unless there an unforeseen crisis," said Cunliffe.

The reworked fiscal plans for the next six years show a slightly lower government debt track than the forecasts produced in June, meaning Labour expects to reduce net government debt, including the assets of the New Zealand Superannuation fund, more quickly than National's forecasts, with net debt reaching 3 percent of Gross Domestic Product in 2020/21.

The 3 per cent was "symbolically important" because that was the level of debt prevailing when Labour left office in 2008. It rose under National because of the economic recession, tax cuts, and the one-off costs of the Canterbury earthquakes, although National expects debt under its fiscal policy to fall to 4.9 percent of GDP by 2020/21.

Labour's plan also assumes $100 million a year of additional new spending for its partners in government, most likely the Green Party, with whom Labour is aligned on several policies.

The Labour plan is heavily predicated on raising substantially more tax than the National-led government's forecasts assume, with the top personal income tax rate rising to 36 percent, backed up by raising the tax rate applying to income from trusts, a capital gains raising $1 billion by 2020/21, and new revenue from more aggressively targeting tax avoidance, especially by multi-national companies, and ring-fencing losses to prevent losses in one company being easily applied to the activities of another. The latter initiatives are expected to raise $335 million by 2020/21.

The revised plan updates the fiscal projections first published in June and are a key plank in Labour's claim to be fiscally responsible, forecasting a lower spending track and faster debt reduction than the forecast under the National-led government's forecasts.

It also includes two major new capital spending items worth $2.1 billion a year, to resume contributions to the New Zealand Superannuation Fund, which National suspended after the global financial crisis in 2008, and a revolving fund to pay for its KiwiBuild plan to construct and sell 10,000 affordable homes a year.


Comments and questions

Cynical dog whistle from Labour - nothing less.

For Labour to get anywhere near needing to deliver on promises, they firstly have to cobble together a 5 or 7 headed Taniwha, then convince the majority of NZ they're credible enough - over and above Key & National. (There's got to be a Tui billboard in there somewhere)

Then they have to stop complaining about National borrowing money so the additional $18Bn they promise to spend doesn't look like more double speak from Cunliffe. Then they have to accommodate the additional $10Bn the Greens want to spend also...

So trimming a few Milion from the additional $28Bn and counting... call me a cynic, but...

It would be all so horribly inconvenient for Labour and the Left - so just as well Norman has the credibility to recommend printing money to get these promises delivered...

The only Govt with the 5 or 7 headed Taniwha is the current National Government who have gifted billions to Iwi in Treaty of Waitangi settlements - far more than any Labour Government ever has in two terms. Every time national is in power they make enormous settlements with Iwi

So what does that say about Labour's ineptitude with progressing reparation then?

Maori should be taking notice that it's only with National they get any traction. Labour are nothing but a hollow, empty promise undelivered...

You seem to have forgotten that in 2011 the National Party said it would have settled all Treaty claims by 2014. Like the rest of their polices, it was more spin than traction.

You wouldn't happen to be a paid professional blogger for the extreme right?

Cunliffe has a proven track record for money management in the private. Isnt it time we had balance to this discussion, rather than comments from someone who supports unsustainable tax cuts who can afford to pay the tax anyway?

Of course the Gnats tax cuts will be entirely affordable. Just like the lSt ones. Meanwhile the healthsystem goes to hell in ahandbasket, regions fall into economic dispear, and the buliders get rich.

Feel free to give the tax cuts you've received from the National government back again in the form of a voluntary payment to the IRD if you really feel that way Tricyclist. If you'd prefer to not to give it back to the govt. you can still donate it to another good cause, how about the child cancer fund or the food bank, that would be 'nice'.

As it so happens we already donate to those charities.
\what would be 'nice' is if you debated the issues, and not resort to some bizarre game.

Sure you do.

i don't care if you believe me or not, however your comments show how credible your thinking is.

Ohh, and ad hominem. 'Nice'

If they can cobble a govt. together by weight of numbers then that's it. I'm not sure why you say they would then have to convince the majority of the public they are credible.
That's the frightening thing. A vote for Labour is also a vote for Greens and Mana, and if they total more than 50% - that's the govt.

Labour/Greens/InternetMana don't have to total 50% to be in the govt - depending on the turnout of National voters and the potential 'wasted votes' if votes for potential National coalition partners such as Conservatives, ACT and possibly the Maori Party don't result in a seat or they don't cross the 5% threshold.

The prospect that the total votes against a Labour/Greens/ InternetMana government could be well over the 50% by some margin is the thing that really worries me - mainly because I have no real idea what the policies of a government that would be and it may not reflect the preferences of the majority of voters.

Obviously percentages only apply to eligible votes cast. The difference between National and in the strength of the parties. Labour has reduced itself to an almost irrelevant opposition which allows their partners to grab it by the short and curlies, whereas National will dominate any coaltion they enter.

That has been the situation with the last two governments - in powere due to a manipulated electortae system - but however quite legal and thus the legit government. Then, the problem starts - with a PM making policy on the hoof and deal-making late at night. Examples? The PM's offer of NZ tax dollars for those christchurch home owners who had opted out of insurance; shonky agreement with australian/american casino operators to extend volume of gambling machines in exchange for a 'larger' convention centre (designed to bring more folk into the casino only, with a trickle-down dream). There could a slightly better government if Labour got in but I am not sure!

Or you could say that a vote for the Nats is a vote for Colin Craig, Peter Done and Nact. Each with their own looney tunes and unwillingness to be honest, despite Jamie Whytes demands that everything else be open to examination. When is he going to demand transparency of the charter schools?
Of course we also have lurking in the Nats background Judith "Mad dog" Collins, and the Slaterati. Nice. yeah right.

The reason for a drop in expected spending is probably the fact that the nats have gotten us into so much debt (hundreds of billions in total) that the requirement and pressure to repay foreign lenders can't be ignored. This is only one example of how ordinary NZers are paying for, among other things, tax breaks for the wealthy. It is also the best reason to dethrone King Key, since the nats have proven themselves fiscally incompetent.

In reply to the Doctor, you ought to understand that the Treaty of Waitangi gravy train was started by the former Labour Justice Minister & academic, Geoff Palmer - a left wing wet. We'd all agree that the settlements are an unfair fiscal burden, but then we'd be called racists. National has been left with this 'white man's burden'.

If they can't get even their sums and policies right before they get into government, what on earth do people think they will do once they get elected? Put simply, they are making up promises that they cannot keep. This is as clear a sign as any that you can get that Labour still thinks that money grows on trees, that the rich pricks have unfairly stolen all the trees, so they will sting them with taxes to get the money and then start spending it up like drunken sailors after 3 months at sea. Or a gaggle of sozzled women storming the door of an all male revue.

If you could read the article it is about adjusting to the reality f an economy based on insurance proceeds and a bubble in the price of one commodity.
Nats KNOW money grows on earthquakes, and it is running out. They don't have Plan B, because they don't have a Plan A

I was wondering why so many free loading lefties were commenting on this NBR article all of a sudden.. then I noticed it was not behind the paywall... and it all made sense.

Correct. Since the NBR publishes articles behind the paywall that they do not want contentious discourse over, and free to 'inform' the public about what the left is doing 'wrong'. Don't forget, there is poverty rife in NZ (thanks nats) and those suffering the effects want to have their voices of dissent heard by all, so changes can be made to that, and can't afford the cost of a subscription (let alone a first home or even, sometimes, food). Your 'point' reflects your class bigotry. Go figure.

as opposed to ??? Freeloading? Soeone has to keep an eye on Planet key....Not for much longer though.
Maybe JK can take you for a spin sometime.