17 July 2002
Please note … correction
The costings of National policy released today contained a small error, the effect of which was to understate the level of National’s fiscal indiscipline.
The total on page 10 should read $2610 million, not $2440 million. Our initial conservative allocation for National’s health promises was $230 million a year but we subsequently raised this to $400 million after Bill English told Hawkes Bay Today that National would pump another $400 million a year into health on top of the $500 million a year increase over the next three years already factored into the 2002 budget.
We neglected, however, to carry the new figure through to the page 10 total. This measures the combined costs of National’s programme against the $2,400 million Labour has earmarked for the New Zealand Superannuation Fund.
National is claiming that it can finance its spending promises out of the “savings” it will make by dismantling the Fund. Plainly, it cannot.
And the problem is worse than the $2610 figure suggests as we have been deliberately conservative in our costings and, where the policy was too vague to be costed in any meaningful way, we have left it out.
Corrected Page 10
operating surplus track will be radically lower. But even then, the amounts it intends to commit to tax and spending plans are larger than the amounts of fund transfers by some 74 percent.
There are therefore three possibilities:
- Radically smaller operating surpluses with the threat of a return to deficits if the economy weakens.
- A halt to, or paring back of, vital capital works in the areas of schools, hospitals, roads and the like.
- Increased debt.
Even that is just the start of the story. With conservative assumptions and no costing of large elements of National’s list of promises, it is easy to see how National would use up more than the full $2,400 million a year envisaged by the time of the end of the Parliamentary term.
It would go on ($million a year)
Tertiary education 230
Children’s policies 100
Law and Order 130
If the intention is to continue with a rising health funding path, the $400 million annual increase that ends in 2005 will need to be added in to this list of 2006 expenses.
This would require no other extra spending during the term. It implies a three-year wage freeze for police, teachers, the defence forces and other public servants. It assumes no unforeseen events like peacekeeping duties or response to biosecurity threats.
Worse, it leaves out the myriad of uncostable promises to do things like put “a lot more money in the budget for industry and regional development”, increase funding for aged care residential services, and dozens of other big ticket items.