Today we have provided updated estimates of the spending (or cost saving) amounts for the announced policy proposals for six political parties contesting the General Election on 20 September, including all policy announcements made up to 28 August.
These spending and saving estimates have been published on the Taxpayers' Union website: http://www.taxpayers.org.nz/bribe_o_meter along with some brief commentary. National have quantified their post-budget new spending proposals, and Labour and the Greens have published their Alternative Budget and Fiscal Costings. We have generally accepted their estimates as fair and reasonable. However, we have treated new tax credits (in the social policy area) and tax concessions (such as accelerated depreciation and R&D deductibility) as spending as these are classified as "tax expenditures" in Government financial measures. There are some areas where our estimates differ from the party costings, and we cover these in other posts. We are excluding proposed tax cuts and new taxes from our estimates.
All new spending must be funded in the short term by raising more revenue or by increasing debt, while that debt must be covered by raising revenue in the longer term. Spending therefore drives the need for revenues. As National, Labour and the Green Party all propose to maintain fiscal surpluses throughout the term of the next Parliament, which will determine budgets for 2015/16, 2016/17 and 2017/18, their new spending promises (including any tax cuts) will have to be covered from provisions and allowances included in their fiscal plans, or from tax increases. We note that Labour and the Greens propose to increase taxes.
National and Labour have included provisions for new spending in future budgets in their fiscal plans, while the Greens have made provisions to maintain the real value of spending in the Health, Education, Welfare and Environmental areas. Beyond this, the Greens have no allowance for future budget spending, claiming instead that they will run larger surpluses.
ACT propose to make huge cuts in government spending, cutting back on individual, family and corporate welfare, trimming government administration costs, and abolishing some entire agencies and programs. The other parties have not provided costed policy proposals, and we have made our own estimates independently. The Conservative Party propose to get tough on criminals, increasing prisoner numbers, which imposes a fiscal cost. United Future have several priority policies, but one (income sharing for families with dependent children) involves tax cuts, so we have excluded it from the posted information. Our basis for costing their other policies is given in another post in this series.
Finally, we have not been able to quantify the extensive list of proposals made by New Zealand First, as these are mostly policy intention statements rather than specific implementable proposals. We do note that they propose to remove GST on food ($9 billion) and on local authority rates ($2.16 billion). That means they will need to raise $3.75 billion a year from other sources before they can provide for new spending. We have yet to estimate policy proposal costs for the Internet-Mana Party and for the Maori Party. We do not plan to cover any other parties.