Watchdog needed to quell election-year squabbles over spending - economist

An election-year tiff about policy spending highlights the need for an independent watchdog to weigh in on the country's big, expensive problems, an economist says.

On Sunday, National finance spokesperson Nicola Willis unleashed on Labour, claiming the opposition was $18.2 billion short on funding for its promised policies.

Labour finance spokesperson Barbara Edmonds fired back, calling National "desperate" for producing the document it called 'Labour's Hidden Bill'.

Economist Cameron Bagrie said the argument was nothing new.

"We saw this in 2017, 2020, 2023... one side has a crack at the other in regards to making their numbers sort of stack up," he said. "We've been here before, not surprising."

All political parties partook in "promise me-nomics", claiming they could get the books back to surplus - and all would struggle to do so, he said.

"You've got to make tough decisions and those tough decisions involve trade-offs between tax versus infrastructure versus spending cuts.

"There's no easy way out, going from a large deficit back into surplus, and everybody's promising that, the question is, how do you achieve it?"

Bagrie said cross-party money squabbles could be solved by an independent fiscal watchdog, separate from Treasury.

Both Treasury and the Organisation for Economic Co-operation and Development (OECD) suggested that measure.

"Guess what, when you bring a little bit more independence into the game, the evidence, according to the OECD, is you do start to see a little bit more fiscal responsibility across the political fence," Bagrie said.

An independent body would not assess election campaign promises, he said.

"You'd expect [it] to be wading in pretty heavily - and a lot more active and vocal than Treasury is - on big issues such as population age, in particular, the fiscal cost," Bagrie said, referring to superannuation.

"These watchdogs... they bring a lot of independence and autonomy to the table, that pours a lot more sunlight on some of these key issues."

Labour comitted to pay equity

Edmonds told Morning Report the Labour party was committed to reinstating pay equity legislation but said the party could not give an exact cost yet.

"We have to see which claims have actually already been paid out and which new claims have started, because the government also says that there is still a pay equity regime."

The National party said the policy would cost $10.9b over four years.

Edmonds said Scrutiny Week would give the Labour party another chance to get more information in order to estimate a cost.

"We get another chance at trying to crack into the redacted information that Treasury redacted when they released it last year."

She also said discussions were also taking place with the unions for the sectors representing affected workers, to get information about their pay negotiations.

Edmonds said the party did not have a ballpark figure on the costs yet but would try to ensure they have a sufficient contingency in its fiscal plan.

"For us, we have clear priority areas, we need to make sure that that's where the focus is.

"If it means we need to reprioritise some of this government spending, we will do so."

Edmonds said it was not unusual that all its planned spending details had not yet been announced.

"Nicola Willis is not a junior politician," she said. "She knows what happens during campaign years, she knows that parties release fiscal plans closer to the election, which shows the fully costed plan."

National has not released its plan either.

Both Edmonds and Willis indicated their fiscal plans would be revealed closer to the election, but neither would set a date.

Luxon says Labour needs to 'front up'

National party leader Christopher Luxon said if Labour had a way to fill the gap in their plan it would require increasing taxes or borrowing and they needed to "front up".

"I think they do need to be held accountable for actually, how are they going to fund their spending intentions?"

He said he was not worried that some of Labour's cost of living policies would resonate with voters.

"I'm struggling to see how they make sense... I think voters understand we need responsible, disciplined financial management in government and not spend more, borrow more, tax more, which is what is the default policy of Labour."

He said the country had been through economically difficult times and said they did not want to put economic recovery at risk.

"We've got a surplus coming into track in 2028, we want to make sure we don't put any of that at risk."

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