Analysis: National and Labour's key cost of living policies face unresolved credibility issues, writes Q+A presenter Jack Tame.
The central cost of living policies for the two major parties have become increasing liabilities in the context of their election campaigns.
Labour's GST-free fruit and vegetable policy has been so soundly and uniformly criticised by tax analysts and economists, campaigning MPs seem loath now to even mention it on the trail.
It was notable that in his speech to launch Labour's campaign, Chris Hipkins focused only on his dental policy and didn't mention GST once. A month since the GST policy was confirmed, he still cannot name a single expert who thinks it's a good idea.
Corrupting the simplicity of the tax system for a few bucks a week?
For a party that has tried so hard to improve voters' perceptions of its economic credibility, GST-free fruit and veggies is an ignominious warning about the pitfalls of policy-by-opinion-poll.
But National is not without its own issues. The party has promised $16 billion in tax cuts that it says are self-funded and impervious to the fiscal conditions described in this week's PREFU. But a central revenue stream to fund the tax cuts continues to face scrutiny.
To pay for the cuts, National has to raise almost $3 billion in tax revenue by levying a 15% tax on foreign property buyers who purchase properties worth more than $2 million.
Over four years, this requires almost $20 billion in total property sales for properties over $2 million being sold to foreign buyers.
When questioned about the credibility of the tax revenue projections and the policy's potential legal issues, both Nicola Willis and Christopher Luxon refused to release the underlying modelling which the party says validates their forecasts.
But the issue received further scrutiny this week when a group of economists published their own revenue projections and analysis of National's policy. The critique found a hole which could amount to more than $2 billion over the four year projection.
Christopher Luxon is rejecting the claims as just more "opinion", sticking to the party's own projections.
In considering National's numbers, economist Michael Reddell told the NZ Herald it was "almost beyond comprehension how you can get to a number as high as they [National] do".
There is, of course, one very simple way to end (or at least inform!) the debate. National could release its modelling.
It could release full, expert legal advice which affirms the party can tax foreign tax residents — including Chinese buyers — whilst carving out an exclusion for all New Zealand citizens.
These aren't the nuclear codes or Saturday's Lotto numbers.
If the party is so confident in its projections, why not release the information and put the debate to bed?
It's true — some experts have suggested National's revenue forecasts might be plausible. But the public deserves an informed debate on the legitimacy of their forecasts. After all, this isn't just any policy. National's tax plan is the centrepiece of its campaign.
If the revenue projections fall short, National will have to make up the shortfall in cuts, borrowing, or new tax revenue.
The party sells itself as having the economic chops to govern New Zealand through a tricky period. Credibility should be earned.
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