The Front Page: Is there really a $20 billion fiscal hole?

National Party Finance spokeswoman Nicola Willis and Finance Minister Grant Robertson. Photo / Greg Bowker

The race is heating up for October’s general election, and the go-to phrase of recent polling day bouts has started to resurface.

The ‘fiscal hole’ accusation has been a political favourite recently, with National’s Steven Joyce famously throwing it at Labour during the 2017 campaign - before Labour got their own back in 2020, with Finance Minister Grant Robertson attacking National’s $4 billion alleged hole.

Now, both sides of the political divide are getting the accusations out there, with National facing criticism over the costings for its transport policy, while NZ First kickstarted an attack on the Government, accusing Labour of having a $20 billion hole.

NZ Herald Wellington Business Editor Jenée Tibshraeny told The Front Page podcast that Peters should come forward and explain his maths.

She said in the 11 months to May, businesses paid $2 billion less tax than expected by the Treasury at the Budget.

“So what Winston Peters might have done is extrapolate that $2 billion into the future and say, ‘well, if there was the shortfall in tax over this period, there might be a shortfall in tax over the next wee while’.”

Tibshraeny acknowledged economic growth is slowing, as interest rate hikes bite and growth slows in China. She also noted New Zealand faces big costs longer-term related to climate change, plugging the infrastructure deficit and covering health costs associated with New Zealand’s ageing population.

But she believed there wasn’t a ‘fiscal hole’, as this implies a politician has made a mistake or omission when costing spending promises.

Rather, she noted the books are simply in deficit, and making forecasts in an environment where interest rates are changing at pace is difficult.

“The government is spending more than it’s receiving in tax revenue and other types of income, and it expects that there will be deficits over the next few years as well.

“The concern is that we might have deeper deficits in the future or a deficit for longer than otherwise expected. To me, that is a different situation to a fiscal hole.”

So what do these deficits mean for the parties heading into election? When do we all get a look at the Crown accounts before polling day? And what do we need to keep in mind when it comes to economic promises?

Listen to the full episode of The Front Page podcast to hear more about fiscal hole woes before the election.

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am.

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