Analysis: "Show me the money," John Key called to Phil Goff during the heat of the 2011 election campaign.
Wednesday was National's turn to show the money.
And they did. Politically, National did what it was under pressure to do.
Find savings. Come up with new sources of revenue. Make sure it adds up. Throw out some lollies while ensuring it didn’t look overly irresponsible with the treats.
It can now largely brush aside criticism of tax cuts for the wealthy by capping the cash those in the higher tax brackets will receive.
Adjusting tax brackets for inflation was a no-brainer. It needed to happen to help people simply break even.
A tax on online gambling also makes sense and has long been called for. But it will be difficult to manage and comes with potential fishhooks.
In a cost of living crisis, the key question is what it'll mean for inflation.
Any extra cash in the back pocket can be inflationary, assuming people spend not save.
For those struggling to put food on the table, that $20 a fortnight will be swallowed up in those eye-wateringly expensive grocery shops.
National said any inflationary impact will be balanced out by cuts and savings in other areas. Labour could argue it’s done the same with the $4 billion in savings it magicked up this week.
But it’s the lifting of the foreign buyer ban that may create headaches for National.
There’s an assumption cashed-up foreign buyers are eagerly waiting to snap up a Grey Lynn villa or a Wānaka estate.
If we see a flood of buyers, it’ll heat the housing market up. Much of the domestic inflationary pressures come from various aspects of the housing sector.
Middle New Zealand – those National seek to help - will be the ones who suffer if the housing market heats up too quickly.
Throw in the reduction of the brightline test and restoring interest deductibility for landlords and interest in the housing market just warmed up.
But that assumption may be wrong. Many of the problems facing our economy are mirrored globally – inflation, soaring interest rates, recession fears, rising unemployment.
And China is in a precarious state. If those buyers don’t appear, that 15% tax on a $2 million home disappears. And instead, holes will start to appear in National’s forecast tax take.
National did what it promised to do.
But with a very quickly changing global and domestic economic situation, all that modelling could be quickly thrown out the window. And that’s an issue whoever holds the finance portfolio post October 14 may face.
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