National Party Finance spokesperson Nicola Willis with two of her four children --- she is focussing on families and how they are doing it tough with inflation and rising mortgage repayments.

Sometime before the new Prime Minister Chris Hipkins announced that this year would be about “bread and butter issues”, National’s finance spokesperson Nicola Willis decided to move from Wellington Central and stand for Ohariu, which spreads across north Wellington from the central city to Johnsonville and Tawa.

It’s an electorate very similar to Hipkins’ Remutuka; working people, mainly public servants, who are about to get hit hard by mortgage rate increases.

For Willis, this will be the story of the campaign; how what she argues has been profligate spending by the Reserve Bank and the Government to get us through Covid has stoked inflation, and which is now stoking the mortgage increases.

And to get a feel for that, she intends door knocking in Ohariu.

“You can’t understand the economy unless you understand human nature and human circumstance,” she told POLITIK.

“The conversations that resonate with me are when I meet with families, and I talk to them about the sacrifices they’re having to make in order to make their mortgage payments; when I talk to small businesses and I understand what their priorities are and what’s driving them nuts and what would actually help them turn the dial.

“And you have those conversations when you’re on the ground and when you’re talking to people.

“And so I think the hours I spend talking to mums and dads on the doorstep, talking to educators, talking to small business owners will be crucially important and making sure I’m in touch with the real economy.”

That statement is an important insight into where Willis appears to be positioning National’s economic policies, some distance to the centre away from where ACT or maybe a predecessor like Ruth Richardson might have positioned the party.

You get another revealing indication when she talks about climate change.


There has been an internal debate within the party about the role of the Emissions Trading Scheme; about whether the NZ Initiative view that it could do all the heavy lifting on climate change without any parallel measures from the Government would be the way to go.

“ I absolutely see a case for complementary measures, to use the technical term,” she said.

“And that’s because we recognize that there are interventions that the state can make that might accelerate change.”

But though Willis takes a broad view of her responsibilities as Finance spokesperson and tends to look at the economy in a much more holistic way than some of her predecessors, ultimately, National’s economic approach has been framed by Leader Christopher Luxon’s advocacy of tax cuts.

The first problem confronting National is how they might be afforded.

“We believe that we are not getting enough value out of the spending that’s currently occurring,” she said.

“And we put that down to a lack of discipline and the way that that public service has been both instructed and held to account for performance.

“We want to have a return to targets, clear, measurable, specific targets that both give clarity of where performance is, but also being encouraging collaboration and encouraging a focus on single issues.

“We think this Government’s had a tendency to throw the kitchen sink at public agencies, and they are left wondering which bit to pick up and which bit to relax, and the result is that not enough gets done.

“So we want to bring back targets in focus and more discipline and getting execution out of money.”

That is all very well, but National is up against demography as well.

Treasury’s Long Term Fiscal Statement published in 2021 shows that without increasing taxes and just projecting spending on the long-term historical trend, the country will be headed for growing deficits from about 2030.

Much of the increased spending will be in health. Blame ageing baby boomers with heart and cancer problems, new expensive high technology treatments and the globalization of healthcare workers’ pay for that.

“There is no question that New Zealand, in order to be able to afford the living standards New Zealanders rightly expect, like the continued progress in improvement in frontline education and health services, then we will need to grow our capacity to pay for those things,” she said.

“I think the best way to do that is by growing the productive capacity of the economy, and that’s where we have stood historically as a party; that if you want better services, you want to be able to afford the things that we all want, you grow your economy.

“You have to back the productive sectors and businesses.”

That is for the medium to long term, but immediately, among the voters of Ohariu, this year, the issue will increasingly be the cost of living, inflation and how to pay for it all after mortgage payments have probably doubled.

For a start, Willis believes the Reserve Bank needs to be brought to account for the $55 billion it pumped into the economy with its Large Scale Asset Programme and another $26 billion in low-interest loans to banks to sustain the economy during Covid.

She wants a “review” of the Bank’s actions and would return its mandate to dealing only with inflation.

But she believes that is only part of the answer; that business needs a stable environment within which to operate.

“I think there are some things that are easily forgotten and that I fear the current administration is forgetting that are critical to growth and investment,” she said.

“And they are business confidence, business certainty and a stable fiscal and regulatory environment, and by that, I mean some of the orthodoxies matter.

“We think the Reserve Bank mandate measures should be focused on price stability.

“We think having the willingness to review their performance with the amount of stimulus they did is really important.

“We think that having a really laser focus on what is the cost of the regulatory burdens being imposed on our productive sector. 

“We think it’s important that you have capital flows working so that people can access funding.

“We think it’s important that people can access labour; I think there’s been a tendency to think that the current immigration challenges are short term, are momentary, but I tend to think that we’re going to see a medium term demographic pressure where the rest of the world will be competing for skilled workers.

“And we in New Zealand are going to have to make sure we’ve got our citizens and our offering right if we’re to have the people needed to fuel productive growth.

“And I do think this question of being disciplined about the way the Crown does its part of the economy, how it delivers outcomes is also important.

“So those are all orthodoxies, but they are important to productivity. “

And then there are the tax cuts. Initially, with the proposal to drop the top 39 per cent rate, it was easy for the Government to portray them as tax cuts for the rich.

But leader Christopher Luxon, last November, said National was reviewing that. No more has been heard about it since.

What still stands, though, is the proposal to index tax brackets to inflation.

What might worry National is that the Hipkins Government could easily match that in the Budget using the savings that it will come from its “reprioritization” of spending.

But for the meantime, Willis is portraying National’s tax cuts as cuts for the kind of lower and middle-income people who live in Ohariu.

“We see that there is an immediate need for New Zealanders to have income relief,” she said.

“What people are talking to me about constantly is the fact that their wages aren’t keeping up with the household costs.

“If it’s the young person who bought their house two years ago, who leveraged themselves massively to get into a very high priced market, entered it with an interest rate with a two or three in front of it now is looking at an interest rate with a six or seven.

“That is hundreds of dollars every fortnight, and they look to the future and don’t see that being sustainable.

“ So we think the case for permanent income tax reduction is very strong because we do think we’re going to have to continue to show people that working in New Zealand comes with rewards.”

Inevitably cutting taxes will have an impact on core Crown revenue, but the other area where Willis believes much more spending is required is infrastructure.

National went into the last election proposing a state Infrastructure Bank, which, apart from anything else, would seem to take the infrastructure borrowing off the Crown balance sheet.

It was an idea of Andrew Bayley enthusiastically backed by then-leader Judith Collins. Nothing has been heard of it since the election.

Willis appears to be leaving the door open for it to be revived.

“We haven’t announced our infrastructure policy yet, but that is still something that we think there’s a really strong case for in looking through some of the reports from the Infrastructure Commission,” she said.

“Certainly, they see the need for more aligned funding instruments, and we see their potential.”

All of this, though, inevitably comes down to the big macroeconomic indicators; the surplus (or deficit) and net crown debt as a percentage of GDP.

During the Key-English years, Bill English and Stephen Joyce were almost obsessive about sticking to a surplus and reducing debt to 20 per cent of GDP.

Ministers in 2017 complained that the debt target took precedence over some common-sense areas that needed spending, like health.

With Willis proposing to forgo revenue from tax and understanding that there will be massive pressures from health on the Budget, she is in danger of the Government constantly claiming she will be making savage cuts in other spending to meet her fiscal targets.

The Public Finance Act requires the Finance Minister to regularly report on projected fiscal surpluses or deficits and the debt target.

So Willis will eventually have to front up – and she says she will within the next few months — and set National’s objectives out, but for now, she is leaving her options open, which in itself is an interesting departure from the English/Joyce approach.

“I think New Zealand does get debt, and we are seeing now that a huge part of what’s driving our increase in costs are interest costs.

“We are a small country; we are exposed.

“We need to be prudent about debt but equally, and this is important; we do see the case for investment in productive infrastructure and infrastructure that supports good growth.

“And we do need to make those long-term investments and consider New Zealand’s overall wealth position and not just not just the operating position.

“And so those are the things that we’re weighing up.

“But will we remain careful? Well, we remain fiscally orthodox. Yes, this is the National Party.”