Election 23: Nicola Willis hits back over economists' doubts on National foreign buyers tax numbers

The National Party is standing by its projections on how much money it could raise through its foreign house buyers tax, dismissing the latest economic analysis as plain wrong.

Independent economists claim there would be a multi-million dollar hole each year because there's no way enough houses - costing more than $2 million and taxed at 15 percent - could be sold.

National claims to be able to raise about $740m, which Finance spokesperson Nicola Willis insists is achievable.

She said National rejected the analysis by the economists, Sam Warburton, Nick Goodall and Michael Reddell, published by RNZ today.

Asked if she would put the methodology on paper, she said this had already been done and National had been transparent with New Zealanders.

She claimed it was not unusual for economists to have different views on the effect and cost of policies, even if they had identified a shortage of $500 million.

"We disagree with that. We think they are wrong, we think that their modelling is flawed, that it makes flawed assumptions and we stand by our costings."

'One of the least transparent oppositions NZ has seen' - Hipkins

Labour leader Chris Hipkins has also criticised the plan again today, during a visit to Greymouth. He said National's tax plan simply doesn't add up and would result in "massive cuts" to the country's public services or significant borrowing.

He claimed Willis had boasted yesterday that many of those cuts would be made before Christmas which would result in thousands of people losing their jobs.

It was time leader Christopher Luxon released the costings and was more upfront with the public about which public services would be cut.

"Nobody with any economic credibility is saying that their numbers add up ... Trust is something that you earn and you don't earn it by being one of the least transparent oppositions New Zealand has ever seen."

He said it was hard to understand why National had to keep its costings secret.

"I think not only is National's tax plan completely cooked - I think their economic credibility has gone down the toilet with it as well. Frankly, if they were so confident in their numbers they wouldn't hesitate to release them."

However, Willis said no political party would be willing to release excel spreadsheets with costings "and I'm not going to be the politician that starts".

She referred again to the backing given to the party's modelling by Castalia economic advisors.

She also said Infometrics economist Brad Olsen believed the estimates were plausible while other economists shared the party's view that taxing foreign buyers would be a good thing to do.

Olsen has told RNZ today National's costings could be made to work by assuming a much larger proportion of foreign buyers purchase $2m-plus properties, however, the figures provided by the economists challenging the costings were also "realistic".

Willis said National had been conservative for its tax policy and its external reviewers had given feedback that in some cases the party might make greater savings than had been estimated.

In the first year it would take in $600m more in revenue and savings than were needed to fund the tax policy, she said.

"We've put this together extremely carefully. We stand by our costings. We will be delivering tax reduction to working people and that's what it's all about."

She said those economists who disputed National's costings were being "incredibly pessimistic".

They had made a second wrong assumption in judging the number of luxury properties that would sell in future on the number being sold today.

"We think it's actually far more likely that that market will include more transactions of $10 million, $20 million homes because there are foreign buyers and also because the Brightline test which is an effective capital gains tax will be taken back to two years.

"So we think there will be more transactions at that higher end of the market than these economists are predicting."

Borrowing for tax cuts ruled out

Willis was adamant that National would not be borrowing to fund its tax plans and could deliver it as it had been promised.

"We have every basis to be confident about this."

Willis said National had looked at the number of sales to foreign buyers before 2017 when the ban was put in place. The party needed fewer than half of the 4000 buyers who were buying annually at that time which amounted to a "conservative" approach to get the revenue they needed for the tax cuts.

Secondly, the assumption among critics was that the market for homes over $2 million would be the same once the ban is lifted as what it is today.

"And we just don't think that's plausible because we think once foreign buyers are able to buy homes here you will see a lot more transactions at the luxury end of the market."

National had considered the tax might deter foreign buyers as had occurred in British Columbia and Ontario in Canada.

While it would discourage some, others would still be keen to proceed and this was backed up by real estate agents working in the high end of the property market.

Olsen said National's costings could be made to work by assuming a much larger proportion of foreign buyers purchase $2m-plus properties.

While it was possible, "we just don't have any direct evidence for it", Olsen said.

The economists' figures released today seemed to be "a realistic representation" of the revenue that could be collected.

"Everyone's always got different assumptions that they make. I would assume that the National Party has accepted that there is a higher proportion of foreign buyers that buy more expensive properties.

"That's not directly and explicitly laid out anywhere but there have been murmurings of that in some of the conversations and interviews that have been provided publicly."

Smattering of voters questioning National's credibility

Some Aucklanders said they had lost confidence in National following the criticism of its tax plan. In Henderson on Thursday, RNZ spoke to shoppers about the party's tax policies.

Local man Simon said National could not be trusted with the economy if they could not back up their policy costs.

"They sell themselves as sound economic managers but they're caught out now in a bald-faced lie and their numbers don't add up."

"I understand there are a lot of voters that are beguiled by the very thought of a tax cut and the fact National doesn't have the money to pay for it seems far less important. But it's very important to me."

Nick Noon from Timaru thought the economic downturn meant all political parties had likely miscalculated the cost of their policies.

"I'm sure if Labour, ACT and the Greens were put under the microscope they'd have the same issue in reality," he said.

Henderson shopkeeper Vinesh said political parties trying to get votes should not be making numbers up.

"I'm a person who believes people on their word and that's how I vote."

He liked the idea of tax cuts but did not think National's offering was enough to support people.

Local woman Dianne agreed: "Every little bit counts but I'm not sure if it's going to be a tax 'relief'."

On the criticism over the foreign buyer tax, she said National was not being honest.

"They're saying 'get us in and who cares after that, so what if the numbers don't add up, it's too late we're already in government'."