The age of the fiscal hole – the nickname usually given to a political accounting error – may be drawing to an end thanks to not one, but two efforts to establish a new office that would independently assess the costings of political parties.
Finance Minister Nicola Willis and Green finance spokeswoman Chlöe Swarbrick exchanged letters getting the ball rolling on such a scheme earlier this year.
Willis confirmed to the Herald she is still keen on the idea and that she has sought advice from Treasury on the proposal.
She added that it was early days and establishing such an office is not in the coalition agreement or officially part of the Government’s work programme. Meanwhile, Labour’s finance spokeswoman Barbara Edmonds this month put a bill in the members’ ballot this week, which, if passed, would establish a parliamentary budget officer role.
Edmonds’ model is much broader than what has been envisaged in the past, which could cost it the support of National and the other coalition parties.
Not only would her officer assess election costings, but they would also model the effect of a party’s promises on inflation, GDP growth, and even the country’s level of greenhouse gas emissions.
Poking holes in the opposite parties’ costings has long been a feature of New Zealand elections, however, the practice has become particularly pronounced since allegations, later discredited, of an $11.7 billion hole in Labour’s fiscal plan in 2017. Similar spats broke out in 2020 and 2023.
Labour and the Greens had attempted to put a stop to this by pledging to set up a new Officer of Parliament to assess political party costings during the 2017-2020 term. It was thought an Officer of Parliament, which is accountable to Parliament, rather than the Government of the day, would be more appropriate than a separate government agency, which could be seen to be influenced by whoever was in government.
That attempt collapsed when National, whose support was needed to establish such an office, refused to back the idea. Last term, the then new National finance spokeswoman Willis changed the party’s position, writing to then Finance Minister Grant Robertson offering to work collaboratively on setting up an office. Robertson declined the offer, saying it was too late to be included in the Budget and the Government had other priorities.
Willis told the Herald she still has an “interest” in the idea.
“I want to make sure that any proposal for doing it balances a couple of things: on the one hand, minimum cost to the taxpayer and not adding layers of extra institutional bureaucracy and at the same time protecting the neutrality of the public service,” Willis said.
“So I have asked Treasury for advice on how we could achieve that and it is something that I’m continuing to explore,” she said, adding it was not a coalition commitment and had not been to Cabinet.
Willis said she had not yet seen Edmonds’ bill, but added she was keen that any office be established in a “light touch” way.
“I’m really cautious about creating duplicative bureaucracy and new institutions with big personnel costs, big administrative costs, standing armies at it were were, because I’m conscious that becomes another form of state funding for political parties, which I’m not sure that the public really wants to see,” Willis said.
“My interest is more about the fact that I think New Zealanders want to have elections that are about issues and policies and if we can have some sort of independent appraisal of the costings of policies that might make for a better debate,” she said.
Swarbrick told the Herald that shared time on the Finance and Expenditure Committee last term with Willis taught her that while both had “ideologically different perspectives”, there was a clear drive and need for “objective fact”.
She said there had been casual conversations and letters between herself and Willis on the matter and that she believed an office could be up and running by 2026.
“Our engagement would be premised on the fact it has cross-party buy-in,” she said, adding that it was encouraging to see Labour effectively back the idea by putting a bill in the ballot.
Previous iterations of the costings unit idea have been more like Willis’ model – and have narrowly focused on simply making sure a political party’s promises add up and match the level of funding available in Treasury’s forecasts.
Edmonds’ bill goes a bit further and would establish something like a mini-Treasury that reports to Parliament, rather than to the Ministry of Finance.
Under her model, every year, the parliamentary budget officer will, off their own bat, suggest a list of “matters of particular significance relating to New Zealand’s finances or economy that, in the parliamentary budget officer’s opinion should be brought to the attention of the House of Representatives”. If the House agrees, the officer can then inquire into these matters and present reports on them back to the House.
The officer’s remit for costings is also far broader than previous proposals. Instead of simply assessing whether a policy adds up in a fiscal sense, Edmonds’ bill would assess the effects of a party’s election manifesto promises on inflation, GDP, child poverty, unemployment, carbon emissions, and “any other indicator the officer considers appropriate”.
The officer would then publish its report on the manifesto no later than 14 days prior to polling day.
Edmonds told the Herald she had based the idea on the Australian Parliamentary Budget Office.
“The OECD and IMF have long advocated for jurisdictions to establish independent authorities as part of good-practice fiscal frameworks.
“The broader scope allows parliamentarians, and therefore the public to have an authoritative and independent view and analysis of the Government’s financial and economic decisions, [including more analysis on distributional impacts]. Greater transparency aids in democracy,” Edmonds said.
Swarbrick supported the idea of publishing reports on broader criteria like emissions and child poverty.
“I think that would be phenomenal,” she said.
She said objective criteria for discussion would need to be agreed to, but Parliament had already signalled cross party consensus on several issues like child poverty and emissions reduction, as shown by the broad consensus behind the Child Poverty Reduction Act and the Zero Carbon Act.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
Expectations tempered around return to surplus in 2027/28.