Labour did not cause Nationals’ $4b mistake

National’s campaign launch was stymied on Sunday when Labour pointed out a gap in its rival’s budget. But despite pointing it out, Labour had nothing to do with the actual mistake.

The problem was with National’s calculation of how much it would save by stopping contributions to the Superannuation Fund, the huge Government investment fund intended to smooth out the costs of superannuation in future decades. National had used the number as projected by Treasury back in May, not the more recent figure released by Treasury at the preelection economic and fiscal update (Prefu) last week.

This might seem small, but the difference totalled $4.3b, and National had explicitly waited for

Prefu to release its alternative budget. National’s finance spokesman, Paul Goldsmith, owned up to the mistake, explained how it happened, and said the difference would be made up by having a slightly higher debt target for 2034.

End of story? Not quite. National MP Brett Hudson weighed in on Twitter saying Labour had ‘‘quietly’’ reduced contributions to the Super Fund and then sprung it on National to ‘‘try a gotcha’’. This is not the case. Treasury has confirmed Finance Minister Grant Robertson had absolutely no input on the fund projection used in the Prefu. Here’s why. Contributions to the New Zealand Superannuation Fund are decided by a formula which is set in law. That formula is an Excel spreadsheet you can download yourself. Treasury takes this formula every year, inputs a bunch of figures – things like GDP growth and population – then uses the formula to decide how much the government will invest. It also uses the formula to calculate how much the model is likely to pay out in future years.

This is where the problem arose. Treasury is required by law to update these projections every mid-year Budget, every December, and just before every election. Between the May Budget and the September Prefu Treasury changed its predictions quite drastically, projecting a slower rebound from the Covid-19 crash. Hence the $4b difference.

Robertson certainly would have been happy to find the error National made. But it is clear he did nothing to create it.