‘$11b hole’ in Labour’s fiscal plan

"We absolutely stand by that plan." Labour leader Jacinda Ardern

National has launched an attack on Labour’s fiscal plan, claiming basic errors could add billions to New Zealand’s debt over the next five years.

Built mostly around a belief that Labour has mistakenly failed to include increases in operating allowances beyond the year they are introduced, National’s finance spokesman Steven Joyce claims the error amounts to an ‘‘$11.7 billion hole’’.

Labour has responded by claiming Joyce was deliberately choosing to misinterpret the figures, calling the accusations a cynical attempt to divert attention.

Questioned about Joyce’s claim, Labour leader Jacinda Ardern defended the plan, without addressing all of the accusations individually.

‘‘We’ve had our fiscal plan independently assessed by an economist, we absolutely stand by that plan,’’ Ardern said in Auckland.

‘‘What I’d say on our operating allowances is that unlike the government we’ve allowed for inflation adjustment, population growth and added that in particularly for our health and education budget line. We stand by our fiscal plan, it’s absolutely robust and been independently assessed.’’

One of the errors claimed by National, that Labour had doublecounted an increase in tax from multi-nationals, was dismissed outright by Ardern, who said the party had outlined how it would take more tax from that area.

Ardern also rubbished claims Labour has failed to include the cost of increases in paid parental leave, an accusation National first made last week.

‘‘Paid parental leave is included in the package. It’s included in the families line,’’ Ardern said.

No one from Business and Economic Research, the economics consultancy which audited Labour’s plan, has responded to a request for comment.

Earlier, Joyce claimed Labour had made four errors in its plan.

By far the largest is a claim that the party had failed to roll out new operating allowances for each year into subsequent years. This makes up about 85 per cent of National’s claim.

Joyce said the operating allowances issue amounted to a basic error.

‘‘If you pay increased salaries to police out of an operating allowance for a year, that then must continue in subsequent years,’’ Joyce said, claiming that Labour had failed to do this. They’re in effect only one-off items of expenditure [in Labour’s plan],’’ Joyce said.

National claims the errors would lead to New Zealand’s national debt climbing from just over $60 billion now, to $80b by 2021/22.

Labour finance spokesman Grant Robertson has dismissed National’s claims as ‘‘completely wrong’’.