The temptation now is to believe that the election is a foregone conclusion; last night’s One News Verian poll showed no real movement on either side.
National is slipping a bit, but more importantly, Labour is not making up ground.
Political parties, particularly on the centre-left, all hold on to the dream that they can pull off a come-from-behind-victory in the last week like Paul Keating did when he led Labour to the “sweetest victory of all” over John Hewson and the Liberal-National coalition in 1993.
Kevin Rudd claimed he could do it over Tony Abbott in 2013. He failed.
There are no signs that Labour can do it here and now.
For Labour, as a last resort, the campaign must now simply be an attack on National.
The time when it might make up ground by campaigning as “the Government” is over.
And so yesterday, Deputy Prime Minister Grant Robertson went on the offensive, once again, over National’s fiscal plan.
“At every level. National’s tax policy is wrong,” he said.
“It doesn’t add up.
“It inflates the housing market, and it’s going to lead to an increase in interest rates.
“We’ve now had numerous economists come out and say this, and for Christopher Luxon simply to say I disagree is not good enough.
“He actually needs to show why it’s not true, and he hasn’t done that.”
Robertson was able to brandish reports from more economists to sustain his argument.
Andrew Boak, Goldman Sachs’ chief economist for Australia and New Zealand, and William Nixon, vice-president of global investment research, said National’s policy suite would boost property prices and households’ disposable income, which could potentially push the Reserve Bank to lift interest rates even further.
But Westpac, in a “Pre-Election Primer”, offered a more ambivalent view of future economic prospects.
“Given plausible coalition possibilities after the October 14th General Election, we think that the short-term outlook for the overall economy will likely be little changed regardless of the result,” they said.
“This reflects the starting point for the public finances – an OBEGAL deficit despite the economy operating above trend – and little apparent desire by either the National or Labour to take decisive action to cut spending or raise revenue to achieve a surplus before 2026/27.”
The Primer argued that Treasury’s growth forecasts were optimistic and that would affect tax revenue, which in turn would affect the future deficit forecasts.
And they said expenditure would need to be higher than in the PREFU.
“We estimate that expenditure may be at least $7.7 billion higher than forecast in the PREFU if public services are maintained at current levels and total expenditure grows in line with population growth and inflation from 2024/25 onwards,” they said.
“This contrasts with the flat expenditure trajectory that is built into the PREFU, which implies cuts to public spending given population growth and inflation.
“Not surprisingly, Westpac forecasts that the goal of returning to surplus in 2026/27 will not be met – we estimate a small deficit of around $0.2bn in 2026/27, compared to the $2.4bn surplus forecast in the PREFU.”
As a result, they said, regardless of who is in power after the election, the Government will face tough fiscal choices.
“Unless the Government is prepared to run higher operating deficits and higher levels of debt, future budgets will likely require further cuts to spending and additional sources of revenue.
“And that will be in addition to what all parties have factored into their fiscal policies for this election.”
National simply won’t debate this. Leader Christopher Luxon and the party’s Finance spokesperson, Nicola Willis, both respond to questions about holes in the funding for their tax cuts by repeatedly saying they will deliver them.
In a statement responding to yesterday’s Reserve Bank decision to hold the Official Cash Rate at 5.5 per cent, Willis ignored the comments about the need for further cuts and cherry-picked the Westpac Primer and found a sentence which said: “‘We would assess the risk around the Labour Party’s fiscal plan as being skewed towards delivering a slightly weaker fiscal position compared to the right-leaning parties.”
According to the Pre-Election Economic and Fiscal Update and National’s Fiscal plan, the two parties would run similar operating allowances for new expenditure between now and the 26/27 Budget. Their total expenditure would differ by only $2 billion.
But Finance Minister Grant Robertson admits that Labour’s allowance is tight.
“It is going to have be a very tight budget in 2024 and a slightly less tight but still tight budget in 2025,” he said.
“I’ve been signalling that for some considerable time.
“It’s the reason why we’ve sought the one to two per cent savings that we have.
“Bear in mind that cost pressures amounted to about 79% of new spending in the last budget.
“We are factoring in about the same as that, and we are prioritising health spending, and we announced it the other day.
“But yes, as Minister of Finance, I’ve gotten used to saying no a lot, and there will need to be more of that in these coming budgets.”
ACT leader David Seymour is the only leader proposing big government spending cuts.
He was keen to point that out yesterday after the Reserve Bank announcement.
“Until there’s a government which cuts wasteful spending and eases the pressure on inflation, there will be no relief to households,” he said.
And in what might be a warning to National for the government formation talks, he said: “To tackle inflation, the next Government needs ACT as its fiscal conscience,”
“Without a massive reduction in spending, it will be impossible for the next Government to balance a budget.
“Without a balanced budget, more Government spending will only further add to inflation.”
National appears unshaken by the widespread attacks on the credibility of its funding proposals for its tax cuts, but Labour also is having to go on defence on recurring reports of its backbench MPs favouring a wealth tax.
Robertson had one alongside him at Victoria University yesterday, Ibrahim Omer, who is standing in Robertson’s old Wellington Central seat.
Omer said during a recent debate that the party was still discussing a wealth tax.
Not so, said Robertson; it is not in the party’s election manifesto.
“Our manifesto was approved by our caucus, and it’s approved by our party’s council. And that manifesto is the one that we’ve laid out,” he said.
If Labour is not making headway over the economic debate, it has also stalled over its attempts to scare voters off Winston Peters and NZ First being part of the next Government.
POLITIK has been told that it was Peters who insisted on the Government introducing the ability of commercial building owners to claim depreciation as part of the March 2020 Business Continuity Package designed to help business cope with Covid.
The proposal was estimated to cost $2.1 billion.
That has raised questions about whether he was under pressure from the property sector to push their case.
“Obviously, there have been accusations, and I’m not going to be the one that makes them, but they’ve been made by others around Mr Peters, his view of property and who’s supporting him,” Robertson said.
Nevertheless, it is his unpredictability, as evidenced in the depreciation matter, which Labour focuses on to suggest that he would be a negative factor in any government he was part of.
Robertson said Labour had worked very hard to make the relationship with Peters and NZ First work.
“It certainly wasn’t easy. And there were a lot of things that we didn’t get done during that period of time,” he said.
“But I’m focusing on the Winston Peters of today. I don’t think Christopher Luxon’s got the political skills to manage Winston Peters or David Seymour. “
But it is clear National doesn’t want Peters in any government they form.
The party’s campaign chair, Chris Bishop, last night issued a fundraising plea to party members clearly aimed at avoiding having to deal with Peters after the election.
“Tonight’s TVNZ poll showed we do not yet have the numbers to form a stable coalition with ACT,” Bishop’s email said.
“We are two seats short. Just a few per cent off.
“This means that we could end election night with no clear winner.
“Then there would be weeks and weeks of coalition talks after October 14th.
“During that time, there will be no action to rebuild the economy, no action to reduce the cost of living, and no actions on the important issues that matter to you.
“And even with weeks of negotiations, there is still no guarantee of a certain outcome.”
It is close, but it does seem like there is a likely winner.