Nicola Willis’ mini-Budget: Tax cuts shouldn’t be priority says Labour

Labour’s Grant Robertson says he agrees with National that Government savings are needed but that these shouldn’t be used to immediately hand out tax cuts in the challenging economic environment.

National’s Nicola Willis, meanwhile, says the new Government campaigned on delivering tax cuts and will do so in 2024 - however, she can’t yet say how much tax relief Kiwis can expect.

It comes as the Finance Minister Willis yesterday unveiled her mini-Budget, saying she’d found $7.4 billion in spending cuts.

However, it contained few details on how National would deliver tax relief and how much it will cost.

Appearing on Newstalk ZB’s Summer Breakfast show this morning, the ex-and-current Finance Ministers traded barbs about the state of the economy and where spending cuts should be made.

Robertson said his team had been required to spend through the Covid pandemic and Cyclone Gabrielle to support the economy, but had now been on track to reduce spending in 2024 as a way to meet the new challenges facing the economy.

To then use these savings to hand out immediate tax cuts would be “foolish”, he said.

“Budget 2024 was always going to be one where there was going to be some difficult tradeoffs to be made,” Robertson said.

“That’s why I just don’t believe it’s a budget where tax cuts should be the priority.”

But Willis said the tax cuts would be going ahead.

“It was always our commitment prior to the election that tax relief would come in 2024 and we are keeping that commitment,” she said.

Grant Robertson, Labour's finance spokesperson, says National should quit the hyperbolic talk and actually tell how it is going to deliver tax cuts. Photo / Michael Craig

She said the Government would tell Kiwis the “precise” dollar amounts in tax cuts they would receive closer to the release of next year’s full Budget.

Willis yesterday also accused the previous Labour Government of “economic vandalism” over its handling of the economy.

But Grant Robertson refuted that this morning, saying all the main ratings agencies, like S&P, Moody’s and the likes of the IMF had consistently said the economy was well-run in difficult circumstances.

He said Willis has “no evidence” for her attacks on him and she should stop with the hyperbole and “diversions and focus on telling New Zealanders how she’s going to pay for what she wants to do”.

Robertson also defended Labour from National’s accusations it had abused the use of so-called “time-limited” funding in the Budget to make promises to voters it couldn’t keep.

That included Willis’ accusation Labour had given money for Pharmac to buy new medicines for New Zealanders in need, but only provided enough funding for a few years without working out how the medicines could be funded in the long term.

Robertson said when Labour first came into power they had also had 155 instances of “time-limited” funding in the Budget put in by the previous National Government.

Willis said National did not plan to delist these medicines from the list of those funded by Pharmac.

But she said she it wasn’t right for Labour to commit to funding the medicines for a short time, “and then for the funding to completely fall off a cliff.

“I don’t think that’s a responsible way to manage things and we want to do things quite differently,” she said.

“That’s also why I want to make some changes to the Public Finance Act, so future finance ministers, if they’re going to do that, they’re going to have to jump through some serious hoops.”

Willis also said while National would keep existing subsidies for families that granted them 20 hours extra childcare, it wouldn’t be continuing the policy.

Instead it would shift to a policy granting families tax rebates on childcare costs.