'No one understands economics over there': National takes aim at Labour's fiscal plan

'Here we go again', one economist told RNZ.

The National leader says "there's a real hole" in Labour's fiscal plan, which the party says is "fully costed and fully funded."

It comes as independent economist Cameron Bagrie told RNZ: "here we go again, we're going to go through a big debate about fiscal holes."

He acknowledged all parties putting fiscal plans on the table, so "technically, there will be no holes, but realistically, there will be an awful lot of holes across the political parade."

Speaking to Morning Report on Monday, Labour's finance spokesperson Barbara Edmonds backed her plan, including not specifying a cost for fully re-implementing the pay equity legislation.

"We're not going to disclose our bargaining envelope. No government does," she said, referencing the point that the coalition hadn't specified the total costs either in their pared back scheme.

Edmonds maintained Labour had "sufficient headroom in our fiscal plan, and I stand by that".

"I am confident there is sufficient funding in there to settle the pay equity claims, which we are absolutely committed to."

But National's Christopher Luxon said about the plan, it was "pretty sad because clearly no one understands economics over there."

"You want to restore the previous pay equity scheme. You've told everybody you want to do it, and there's $8.5 billion of that unfunded," he said referring to Treasury's figure of around $11b to restore the old regime.

Labour has said there is $10.5b of future operating allowances unallocated, but Luxon said that meant there was nothing for schools, police, prisons, defence or other frontline social services.

Asked about the language used, with National's Nicola Willis calling the plan "fraudulent" and accusing Labour of lying, Luxon suggested that Morning Report co-host Ingrid Hipkiss "as a journalist dig into that fiscal plan."

"You should get into it because I think you'd really find that there's a real hole there, and there's a really unsolvable problem," Luxon suggested again.

Asked how much the government had set aside for funding its pared back version of the scheme, Luxon only said "we have money set aside."

But in many ways, Labour and the National-led coalition are largely on the same track.

The government's pre-election economic and fiscal update (Prefu) forecast a return to surplus by 2028/29 and shrinking spending as a share of GDP to 29.8 percent by 2031.

Labour has forecast the same return to surplus and plans to bring spending down to 30.4 percent of GDP.

The government's 2026 Budget included a $2.4b annual operating allowance, that is extra spending on new initiatives, and Labour is budgeting for the same.

Bagrie said it didn't matter which political party you look at, "there's going to be gaps, there's going to be challenges, there's going to be some pretty complicated trade-offs."

On pay equity, he said no party would commit to pay-equity costs up front, "because then it becomes open season".

Bagrie also argued each offered insufficient funding for roads and were punting the problem by not hiking fuel taxes. Labour's freeze is for three years, National's is for one.

"No-one's prepared to take a stand and put the rates up, because, of course, it's election year," he said.

"All that's going to take place is that we're going to walk into reality in about 2028 and realise there's a gaping hole, and it doesn't matter which side of the political fence that you look at, but they're all pretty well the same."

That, Bagrie warned, would create literal holes - potholes - on crumbling roads up and down the country.

On Monday morning, Labour then put out a press release saying the real question was what National planned to cut to fund its own promises.

"National has had plenty to say about Labour's finances, but remarkably little to say about its own," Labour campaign chair Kieran McAnulty said.

He said National's "desperate attacks" came because National couldn't campaign on its own record of "cuts, chaos, and higher prices."

"They have spent weeks throwing around absurd claims and made-up numbers, desperately hoping no one notices that they've failed to fix the cost of living."

McAnulty said Labour had a plan to tackle the cost of living - "National doesn't."

He said National needed to front up: "which schools, hospitals, roads or public services will National cut to make its promises stack up?"

"Every one of Labour's commitments are costed and funded, meanwhile, National still hasn't put its full fiscal plan on the table.

"Nicola Willis hasn't got a leg to stand on, Labour's promises are paid for."

McAnulty said New Zealanders were asking a "very simple" question of National: "what of our public services are you cutting?"