A capital gains tax, not spending cuts, is a key part of how Labour says it would get the government's books back in the black by 2029/30 as it lays out a set of fiscal pledges for if it were to be voted in at the election.
The party released a fiscal strategy this morning, adopting effectively the same surplus timeline forecast in the Government's Budget 2026 but promising a different route to it.
Labour leader Chris Hipkins said National had failed on its own terms on the economy.
"You can't cut your way to growth," he said.
Labour promises a surplus but says it won't cut to get there - Watch on TVNZ+
"National came in promising to fix the economy. Instead, unemployment is up, businesses are struggling, and everything costs more.
"Labour will get the books back into shape, but we won't do it by making life harder for New Zealanders or cutting the services they rely on."
National campaign chairman Simeon Brown called Labour leader Chris Hipkins a “serial flip-flopper”. (Source: 1News)
The plan committed the opposition to six key headline measures.
They include returning to surplus by 2029/30 on Treasury's traditional OBEGAL measure, instead of Finance Minister Nicola Willis' preferred OBEGALx, which excludes ACC.
Net debt would be reduced to 20% of GDP "over time", and core Crown spending and revenue would be held at about 33% of GDP when the party's proposed capital gains tax was "fully implemented," according to Labour.
The party's usage of net debt differs from the traditional use of net core Crown debt.
Labour is also proposing to revive the Reserve Bank's dual mandate of maximum sustainable employment, as well as price stability and low inflation.
Wellbeing reporting would also be brought back into the Public Finance Act.
An independent Parliamentary Budget Office would also be set up, a longtime obsession of some wonks and a feature of legislatures overseas. The office would provide "independent analysis of the government books and election commitments".
Labour has said its plan hinges on a fully implemented capital gains tax, and the document doesn't include costings, capital allowance, or date for hitting a debt target.
Finance spokesperson Barbara Edmonds said the party would be "responsible with taxpayers' money".
"Under National, unemployment is at an 11-year high, business liquidations are up 71%, homelessness and KiwiSaver hardship withdrawals are at record levels, and public services are under pressure. That isn't economic success," she said.
"Labour will be responsible with taxpayers’ money, balancing the books and bringing down debt, while giving New Zealand the capacity to invest in its future.
"Labour will return the books to surplus by 2029/30 and reduce net debt over time, but we won't do that by cutting the foundations of our economy."
National Party leader says: “When you want to spend more tax... borrow more, we ain't doing business with you”. (Source: 1News)
The party's choice of measures differs from the Government, which reports a Budget surplus in 2028/29 using OBEGALx and the net core Crown debt measure.
National's targets were stated earlier this month, when Willis set out three Budget Responsibility Rules — a surplus in 2028/29 on OBEGALx, net core Crown debt bent below 40% of GDP "over time", and core Crown spending reduced towards 30% of GDP.
Labour's released strategy today doesn't rule out new borrowing for capital works.
"Day-to-day spending must be sustainable, but we must also make responsible capital investments in the things New Zealand will rely on for decades – like hospitals, schools, and infrastructure," the document said.
The commitment to reintroduce the Reserve Bank's dual mandate would reverse the coalition's 2023 decision to strip maximum sustainable employment from the bank's remit and return it to a single inflation focus.
The coalition had argued the dual mandate led to higher than otherwise desired inflation.
Labour noted the US and Australia continued to run dual mandates.
Willis critical of Labour's commitments
National's finance spokesperson Nicola Willis rejected the policy, saying it amounted to "nothing more than spending more, borrowing more and taxing more".
"Their approach amounts to nothing more than spending more, borrowing more and taxing more – the same approach that led New Zealand into the sky-high inflation, exploding debt and economic vandalism Labour imposed on Kiwis last time," she said.
"Targeting revenue at 33% of GDP means that by 2031, Labour would need to be collecting an additional $10.3 billion in revenue every year - far more than the $1.35 billion they say their capital gains tax will raise in that same year.
"The proposal to water down the Reserve Bank’s inflation target risks faster rising prices for every Kiwi."
Willis had been pressing Labour on its fiscal intentions earlier this month, when she set out National's three budget rules and challenged the opposition to publish its own.
"It is well past time for parties of the opposition to set out the fiscal guardrails they intend to uphold," she said on August 9.
Government parties continue to press Labour on its fiscal discipline and ability to rein in spending promises made by potential coalition partners such as the Greens.
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