Analysis: Even an editor needs to be edited; when I publish my editorials without a second set of eyes, they inevitably contain typos, and at worst factual errors that I’m obliged to correct the next day.
(Let’s quickly pass over the time I alluded to China v USA in the Pacific theatre of WW2 – whoops!)
Policy costings need checking too – however competent Nicola Willis or Grant Robertson may be. That’s why, before publishing its wide-ranging and comprehensive tax policy yesterday, the National Party asked policy consultancy Castalia to run a rule over it.
The party didn’t publish Castalia’s critique alongside its policy package but last night, at my request, they supplied me a copy.
Castalia’s numbers are broadly in agreement with National’s costings. In some instances, National corrected its numbers in response to Castalia’s feedback. Where they still differ (and I commend the party for being transparent about the differences), National is actually more cautious.
First, National estimates the Family Boost tax rebate policy will cost the taxpayer $996 million over four years; Castalia’s estimated cost is $124m lower. The difference is because Castalia’s extrapolated the average hourly cost of childcare by indexing a 2013 report; National took a sample of costs from a number of city-based early learning centres.
“We are not aware of any evidence that additional spending has led to increase in useful outputs.”
– Castalia, on Govt spending
Secondly, at $2.36 billion, National’s estimate of the revenue to be clawed back from its so-called climate dividend is lower than Castalia’s projection ($2.55b). The consultancy worked from Budget 2023 estimates, then subtracted all funding already committed by the Energy Efficiency and Conservation Authority.
An opposition party lacks the governing party’s army of public service advisors. So in all, this is a constructive critique for National, which has helped the opposition party hone its costings.
However, opponents will point out that Castalia was commissioned by the National Party Leader’s Office, on his terms. They will quote its surprisingly broad criticism of this Government’s additional investment in public services: “We are not aware of any evidence that additional spending has led to increase in useful outputs.”
Castalia has been a robust critic of the Labour-led Government on some other matters, most notably its Three Waters reforms. In my view, this shouldn’t count against the consultancy’s neutrality – but there are those who will disagree.
So what this highlights is the potential value of the maligned and forgotten Independent Fiscal Institution. The proposal (part of the Labour-Greens confidence and supply agreement after the 2017 election) was designed to monitor the Government’s fiscal strategy and provide independent costings of political party policies, following claims and counter-claims over “fiscal holes” during election campaigns.
But the plans were put on ice due to a lack of political consensus. That’s unfortunate. The OECD backs the importance of independent fiscal institutions, and NZ is one of the few member nations that doesn’t have one.
More in-depth analysis from an independent fiscal institution, privy to Treasury’s costings, might – for instance – tell us whether there is really the supply of big houses and the demand from wealthy overseas buyers to raise $2.96b from National’s foreign buyer tax. (Robertson says there isn’t).
It might tell us whether Willis is being wildly optimistic in projecting $715m revenue by taxing dodgy online gambling providers, as my colleague Andrew Bevin suggests today.
As polls stand, there is every chance the National Party may be in a position to form a Government after October 14’s election. It is important the independent media scrutinise their policies, not just their politics and personalities.