Finance Minister Nicola Willis has been surprised by the number of policies left unfunded by the previous government, which she says violate the spirit of the Public Finance Act.
The legislation was designed to prevent a repeat of the handover from the Fourth Labour Government, which left behind a worse fiscal situation than it had disclosed.
Willis has alleged the Sixth Labour Government has left behind similar, albeit smaller, problems as the Fourth to the tune of “billions of dollars”.
This includes fiscal risks that were not fully explained before the election because of commercial sensitivity and government programmes that were funded on a short-term basis.
While there were legitimate reasons to use short-term funding, she said many were “extremely disingenuous” in this case.
“This is because it makes the books look better in future years, even though it is highly unlikely ministers genuinely intended to stop funding those programmes,” she said.
Willis gave three examples—funding for Pharmac, school lunches, and cyber security in schools—although all three had been disclosed before the election.
Treasury was still working through the full list of short-term funding that would expire during the forecast period and the final number was likely to be in the billions, she said.
“It would have been helpful, pre-election, to have collected, in one place, a list of all of the programs the Government had chosen to short-term fund with an explanation of why”.
“Because in many cases, when I'm asking that question … there is no good answer.”
Willis said she would seek advice on whether the Public Finance Act could be amended to require a list of all time-limited funding and more transparency around fiscal risks.
Already exists
Grant Robertson, Labour’s finance spokesperson, said the allegations were not true and that New Zealand already has one of the most transparent public finance systems in the world.
“The thing Nicola Willis wanted today already exists. It's called the Budget. We put it out every year and all of those things are in here,” he said.
Robertson pointed to page 89 of Budget 2023, which showed school cybersecurity services were being given funding for just the next year — $31 million.
However, there isn’t a single list of short-term funding commitments. That would need to be compiled by going through the Budget documents line-by-line.
Robertson himself did not know how many times short-term funding had been used in the last budget.
He also admitted that Treasury had a preference for funding to be included in the baseline and projected forward forever, but he didn’t think it was always appropriate.
Combing the books
Willis said while many of these details could be found by going through all the Budget documents with “a fine tooth comb”, that wasn’t sufficiently transparent to the public.
Providing a list of time-limited programmes and more analysis about their implications would be an “important step forward for fiscal responsibility”.
She said the return to surplus and debt reduction forecast in the pre-election update wasn’t credible if it was based on lots of short-term funding expiring in the future.
“If it depends on them stopping funding for things they don’t intend to stop funding, then actually those commitments aren't worth the paper they're written on”.
Willis stopped short of saying the pre-election update misrepresented the fiscal position of the New Zealand government, but said the Public Finance Act may need tightening.
Any changes to the legislation will be outlined as part of a mini-budget, which will be released on December 20th alongside the half-year economic and fiscal update.
Willis said it would lay out funding for “time-sensitive decisions” the Government had made, a set of fiscal responsibility practices, and a high-level fiscal approach.
This will include establishing a Cabinet Expenditure Control Committee and directing public service agencies to cut their baseline spending by approximately 6.5%.
69 Comments
She said, he said and back again. Is it just me but the phoney war, the six weeks or so after the election, was of quite some peace and quiet wasn’t it. If only both National and Labour could just get on with just doing the job, what it is is what is for heaven’s sake, that they were elected to do without all the grandstanding. Oh, but then there’s the question of the media having to have headlines. There it is.
Unlikely. But possible. But trying to front foot your own mistakes in such a way sounds very shrill.
The most likely scenario is we're being softened up for a total fizzer of a mini-budget. Or worse, a howler so evil, even Ruth Richardson will wet her knickers!
It'll be lots of, "You know we said [blah]? Well. We're not going to do that now. And [blah]? Yeah. Well. Not that either. And [blah]? Well. Maybe. In 2025, perhaps ..."
And when people start asking the soft questions? "It's all Labour fault. They didn't make us read the PREFU. And we knew you'd never read it. So yeah. We conned you."
And when MSM start asking about how NACT will fix this? "Well. You know GST hasn't been raised in a while? And we could sell stuff. There's lots of stuff we could sell. We'd get a good price too. We know lots of rich people. And Prince, sorry I mean, Sir John has offered to manage the sales. He knows lots of rich people too."
After 6 years of the National cohort mocking labour for having a finance minister with just a BA... They serve up a finance minister with an English and journalism degree...
I usually give people the benefit of the doubt as a degree doesn't necessarily say much but it's not exactly a great start.
I pointed this out yesterday, I voted for National and this coalition could quite possibly be the worst Govt we have ever had.
My kids are better qualified to be Finance Minister, she has already lost all credibility. It's quite obvious she is out of her depth and has not understood the numbers. Not only that, National have never revealed how they are going to fund their tax cuts and now the foreign buyers ban is dead, it is resembling a scene from Life of Brian.
My pick, she doesn't last 3 years.
How did she get this role?
Is there not a Nat Party MP who has a background in finance, accounting and economics who would be more suitable?
She would never get this role in a corporate interview process with a major coy.
Even more staggering when you consider the criticism of the previous Ministers back ground.
Can someone enlighten me?
I suspect politicians are using politics/the taxpayer as a way to "cut their teeth" into areas they have no formal qualifications, but would like to hold a career in post-politics.
Apparently Willis was a better candidate for finance than Simeon Brown, who was a senior associate commercial banker for BNZ.
Oh please Andrew, and she was supposed to guess what Robertson (who, by the way, is a financial illiterate) was going to fund the following year and the year after that? I could create a budget in a few days that you would coo and goo over that would have more holes in it than a colander. And the chances of you recognising those holes would be virtually zero.
A financial illiterate who has such a sophisticated handle on the nation's finances he managed to hide, well not hide exactly as they were all contained in the PREFU, but somehow managed to disguise these terrible secrets from the brightest National minds in the country.
Bollocks, Luxon either doesn't understand national finances or he lied before the election.
No she wasn’t supposed to guess what Robertson would or would not finance long term . She was supposed to work out what a National Government would or would not finance. Instead she and her team either couldn’t or wouldn’t do the work. And the result is they either stuffed up their coatings or are deliberately misleading us and they are looking to blame Labour for not delivering what they promised. So … either incompetent or deceitful.
An excellent point. The National refused whenever they were asked. That reinforces the view that they knew before the election and just kept up with the lies.
I wonder, did they have even a spreadsheet? Or was it a paper napkin?
While Willis is looking incompetent with this bleating, Luxon's leadership is looking worrisome. Fancy leaving all this to a relatively inexperienced minister without checking she was completely on top of all the complexities. Who'd want a boss like that.
This is exactly it. They need a new revenue stream to pay for income tax cuts & reinstatement of interest deductibility on residential property.
They can’t touch the pension system . The welfare system isn’t as bloated as we like to admit. That leaves deficits or a new revenue stream.
GST increase maybe….
Maybe they'll legalise Meth and Heroin, of course they will make sure there is more than 1 retailer sorry I mean more than 35 retailers in Northland to avoid any harm to communities.
Chris Bishop was a tobacco lobbyist, any former drug dealers on their list? That Tauranga guy looks like he's definitely dabbled.
All New Governments come across surprises. And start out to blow them out of proportion and blame the previous Governments. There is an element of hyporcrysy in these positions when taken in Opposition and while in Power. That is what Politics is. Budgets hide more than they reveal, fact of life.
Having said that, it is a good thing to consider the Public Finance Act to minimise such fooling around.
Will National have a deadline on passing the Amendments ?
Good thing National have their own budget to work from right? Nothing in Labour's budget should really matter, they're no longer in power.
The only reason you'd rubbish your predecessors/opposition is you're well out of your depths. I assume Nicola only been reading the Reader's Digest version, "budget at a glance"?
https://budget.govt.nz/budget/pdfs/at-a-glance/b23-at-a-glance.pdf
They have no room to manoeuvre and are bankrupt of ideas - remarkably so for a 'we know how to change this' crowd.
No Government, this last 50 years, has funded ahead; for the likes of pension expectations it's been extend-and-pretend for decades. Well, the pigeons are coming home - for all sides. Poop everywhere. The putch for depleting fisheries (election funded by?) land-rape (election funded by?) and underground rape (election funded by?) is - luckily - a dead-cat bounce.
Growth is over, folks. This is the System trying to stay alive, by devouring its support resources. And - this being exponential growth they're peddling - that devouring will be over before it began. Willis should have read history.
Some of the other should have just read...
And journalism has a job to do, this next wee while...
Pity Nicola didn't read my interest.co.nz comments on the 2023 budget! Many of the agency budgets reduced over the 4-year period - did she think they were all making pain free savings?!?
Anyone who actually looked through the budget data in any detail would know that the budget is far from expansionary - glad to see Paul Conway and Adrian Orr agree with me (for once).
Is anyone really surprised ? I said the books were in tatters weeks before the election, in fact I thought they were going to be opened just before the election which would have shown that Labour have been wasting money like drunken sailors. Probably a little surprised that National have disclosed it, cannot be a good look for us internationally but maybe they are so bad its stuffed what National intended on doing going forward in the short term.
"Labour have been wasting money like drunken sailors" - if that were true then Nicola wouldn't have any problems, she could just cut the wasted spending for her tax cuts. The real problem is that she can't find the wasteful spending they were gambling on, and now they have to make out it is Labour's fault.
Too late the wasteful spending has already created mountains of debt that is even more impossibly large than that caused by a global financial crash. You can't just make more debt up without having to pay the piper first. We don't have the funding and finances to support the debt we have now hence both labour and national hung their hopes on massive immigration increases so they could scam some new residents to start paying it for them and for us.
Like Labour made out for 6 yrs that all the problems were the previous Nat govt fault. Remeber it was the one line JA always rolled out when she was put under pressure and couldn't smile, it's the previous govt fault. Yet after 5 yrs of hearing that you start to wonder .....
"Willis said while many of these details could be found by going through all the Budget documents with “a fine tooth comb”, that wasn’t sufficiently transparent to the public."
So National either didn't go through the budget with a fine tooth comb despite saying they had or they did and lied in the pre-election period.
For a centre-right party whose pitch was that they were competent economic custodians this is just embarassing. Luxon is taking National down a rabbit hole of favours for their donors and bare faced lies. Worse National leader in lving memory.
Stuff: "Finance Minister Nicola Willis is playing down expectations for her pre-Christmas Mini-Budget, saying it will set the tone of fiscal policy for the Government - rather than outline all spending plans."
Oh good. More waffle about how wonderful they'll be but short on substance.
After doing some checking it certainly does appear that the May budget clearly identified the time-limited funding that Willis is now complaining of.
Ergo, the NACT didn't read it, or didn't understand it, and made a huge numbers of faulty assumptions that led to promises about how much they could slash whereas in fact was there was little.
At what time did they know they were mistaken? At what time did they know they were, in fact, lying? That they knew only after the election is not believable.
Looking across the globe the there are myriad examples of poor political leadership where the governed are generally unhappy with their government. Is seems that our technical advances as a species has not been matched by equivalent advances in leadership quality. Either self serving or incompetent, take your pick. No matter which part of the political spectrum one comes from. Looking at COP 28 from afar I despair of our ability to avert climate disaster. Mind you, they are all simply a reflection of our good selves, varying degrees of self serving and incompetent. Sigh…..
"It was Grant what did it, and I'll be able to prove it once I understand that bit of paper, trust me. I do know we can still afford to backdate tax relief for landlords. Not the other tax relief, obvs, Dave and Christopher's bosses don't want that."
"We'll start by selling the future, deleting the past, and killing another generation of smokers, Chris B says it's not fair that his bosses lose anything and we need Winston to keep his hands busy and off David's neck. After that we'll sell the silver and ensure poverty by getting rid of workers' rights and FPAs so we have someone to blame for ramraids and crime. We'll keep the farmers onside by allowing them to carry on like it's not their fault either."
(Aside): "We can build bigger embankments for our bunkers using the spoil from Onslow, can't we Christopher?
(Looks around): Christopher?"
(Sotto voce): "Forever behind you I shall nod, like a Pavlovian parcel-shelf dog."
Remember that from the 1970's the standards within our education systems have been very watered down. In some cases we were down right lied to, especially in the humanities, but generally speaking, standards have slipped across the board as our results in international tests keep showing. That means a lot of those currently in parliament were taught what to think, rather than how to think, which we can now witness on both sides of the house. The left went further left [far left] while the right went left into the centre. Neither works that well. The far left ran the schools, our media, the state services & increasingly our legal systems - none of which are anywhere near world class. The right [centrists] have been bullied into all sorts of leftist ideologies which not only confuses those on the right, but leaves a huge gap on the right where the capitalists once stood. The capitalists are the ones who create the jobs remember. Although with nobody that keen to work any more, that may be why capitalism is struggling. Anyhow, my point is that the whole of society is now generally dumber than it was say 50 years ago, & this shows up everywhere, including in our political classes. This doesn't end well, as we're all seeing.
The main problem with education currently is from National introducing "National standards". Now they have another crackpot idea, an hour a day of reading writing and arithmetic. Just like with "National Standards" I am sure they have plenty of evidence from overseas implementations of the same policy that show it works well.. <crickets>
There are plenty of capitalists around making plenty of money. Just look at the inequality statistics and the home ownership rates. A shortage of capitalists is not a problem any part of the world has that I can see.
Capitalism is struggling for the obvious reason that it is based on ignoring the end game. The end game being the use of finite resources to enrich a dwindling number at the top of the pyramid. It's best for capitalism if the. next generation is not financially literate nor questioning of why there is this great trickle up.
I see both my kids and now mokopuna getting a good broad education that's equipping them well for life.
I guess it helps that I haven't been a watcher of network news for ten years or so.
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