National’s fiscal plan: No tax cuts but a fight over health spending

Nicola Willis confirms no tax cuts in the next four years and less unallocated spending than Labour, writes Henry Oliver in today’s excerpt from The Bulletin.

The downside of releasing your fiscal plan after your opponent’s is that they can say again and again in a leaders’ debate that you can’t back up whatever financial projections you’re talking about. The upside is that you can edge out your opponent when it comes to popular spending, like on health (more below). Well, yesterday, National finally released its fiscal plan, which had been the subject of many of Chris Hipkins’ debate retorts last week. 

The headline is that no, National (much like Act) will not promise income tax cuts if re-elected, with finance spokeswoman Nicola Willis saying reducing debt must come first. “While our fiscal plan shows a pathway to potential tax relief for working New Zealanders, now is not the time to cut taxes,” she said, as reported by 1News’s Justin Hu.

The plan largely follows the spending track in the pre-election economic and fiscal update, according to The Post’s Henry Cooke. It adds National’s campaign commitments, including $784m in extra KiwiSaver costs, a $604m top-up of Pharmac’s budget, and $1.75bn, for the Mill Road project (read Joel MacManus’s piece on The Spinoff today about that one).

National gives itself $7.5bn in unallocated operating headroom over four years – less than Labour;s $10.5bn. It funds its plan partly through about $1bn in spending reductions, including $431m from foreign aid and $583m from what it calls “stronger welfare expectations and case management.”

The health numbers compared

The Herald’s Thomas Coughlan reports the main new commitment is a fourth year of health cost-pressure funding. Treasury’s Prefu anticipated three years; Labour matched that track but did not fund the fourth, saying it will decide later from its headroom.

National funds four years at $14.6bn against Labour’s $13bn – the first three years being the same, with the gap entirely from 2030/31. National's cost-pressure funding climbs to $5.9bn by that year; Labour’s plan implies a freeze. But Labour has funded new initiatives – three free GP visits, free scans, removing the $5 prescription co-payment – which raise its overall health funding above National’s. Willis put National’s total at $15.4bn over four years. 1News reports Labour’s at $15.5bn, split differently: about $2.5bn for new policies and $13bn for cost pressures.

Willis said the $7.5bn headroom would cover “the usual yearly uplifts for areas like education and policing.”

Costings and consensus

RNZ’s Jo Moir reports that National is committing to an independent costings unit at the 2029 election, to prevent the “constant public bickering” over fiscal holes. Willis attempted to establish one this term but was blocked by Act and NZ First.

On superannuation, Christopher Luxon clarified National is not running on changes, despite its long-held preference for lifting the age. Willis and Labour’s Barbara Edmonds agreed to cross-party talks on retirement after the election – spanning retirement villages, aged care, housing and KiwiSaver. Edmonds said she wanted a firm commitment that superannuation contributions would not be stopped.

Labour’s response

Edmonds dismissed the plan as “more cuts, more chaos, and absolutely nothing for the cost of living.” 

Willis pushed back: “National is the party of low tax,” she said, claiming Labour and its partners have proposed “at least nine new taxes” costing the average household $2,263 a year. Labour has proposed a capital gains tax but denies wanting others.

Both parties have now signed up to the same $2.4bn operating allowance and a return to surplus in 2028/29. The difference is how much each would tax and spend within those limits – and, as RNZ notes, National is dangling tax cuts only after the books are back in the black.