National lays down three budget 'rules', challenges Labour to match

<p>National has unveiled three "Budget Responsibility Rules" it says a re-elected government would operate under, challenging its coalition partners, Labour and other political parties to say whether it will match them.</p> <p>Finance spokesperson Nicola Willis promised to return the Government's books to surplus in 2028/29 under an OBEGALx measure, bending net core Crown debt below 40% of GDP over time, and reducing core Crown spending towards 30% of GDP.</p> <p>Prime Minister Christopher Luxon cast rules as a matter of national security, saying "an economy that cannot support itself in a crisis is a strategic risk, not just a financial one".</p> <p>"If the Crown's own books aren't in order, the whole country stays exposed and vulnerable to major shocks here at home and abroad," he said. </p> <p>"Fiscal discipline is how we … buy the resilience that much bigger, richer, better cushioned countries take for granted."</p> <p>Luxon challenged opposition parties to say whether they would sign up. </p> <p>"These three rules are not just National Party policy — they are, in effect, a national security imperative," he said.</p> <p>"Publish your numbers, come clean on your fiscal rules... and then answer New Zealanders one very simple question — will you commit to these three rules? Yes or no.</p> <p>"Our status as a high-income nation is not guaranteed, and fiscal credibility is a precondition of our prosperity."</p> <p>The targets themselves are not new, as the 2028/29 forecast surplus — under the Government's preferred OBEGALx measure — was brought forward in Budget 2026, and Willis said the Government is already on track to reach 30% spending as a share of GDP. </p> <p>Debt would still sit at 44.4% of GDP in 2029/30 on Budget figures, and Willis acknowledged the sub-40% goal is "highly unlikely" to be reached next term. </p> <p>No hard deadline was attached to the debt or spending rules in National's announcement.</p> <p>Willis said in a media release: "These rules reflect a more volatile world, where the cost of borrowing has risen sharply, and international ratings agencies are watching New Zealand's books closely.</p> <p>“As a small, commodity-exporting country a long way from anywhere, without a deep pool of domestic savings to fall back on, New Zealand carries more risk than bigger countries when the next earthquake, pandemic or global shock hits.</p> <p>"That is why these rules are so important for any Government. The only way to be ready for the next crisis is to get our books in order now, while conditions allow it."</p> <p>Asked what the point of today's announcement was, given the rules described National's current approach, Willis said they "set the parameters for this campaign".</p> <p>"It is well past time for parties of the opposition to set out the fiscal guardrails they intend to uphold. I accept the premise that says they are not yet in a position to provide a detailed fiscal plan," she said.</p> <p>"However, they should be well able to say whether they will commit to these three basic things that have informed the fiscal strategies of successive governments and which represent what it is to be a responsible fiscal manager. </p> <p>"It is striking to me that in the lead-up to the 2017 election, not only was Labour able to set out its own fiscal responsibility rules, it did so in agreement with the Green Party. </p> <p>"As I stand here today, I am not even aware whether they believe a surplus target is appropriate, where they think debt should be, or whether or not they believe that we need to reduce core Crown spending in order to keep taxes low. Those are very basic questions, and they do form the parameters for National's campaign."</p> <p>She said the rules could be set aside in a genuine crisis, on the scale of the Canterbury earthquakes or a pandemic but said the Middle East conflict had not met that bar.</p> <h2>ACT wants more, Greens think it's too much already</h2> <p>Reaction from across the spectrum was swift, including from National's own coalition partner. ACT leader David Seymour said the promise lacked a true plan to deliver it. </p> <p>"Cutting the waste to grow the country is desperately needed, but National’s promise is three years too late. Saving money needs a strategy to achieve it, and a strategy takes courage to implement," he said in a media release.</p> <p>"Achieving 30% of GDP will take real courage to face down the causes of higher spending. They are rising superannuation and health costs, rising welfare costs, and the size and complexity of Cabinet and Government departments."</p> <p>Asked whether coalition partners would be required to sign up to the rules in negotiations, Willis said their fiscal plans were "for them to speak to".</p> <p>Meanwhile on the other side of the political spectrum, Green Party co-leader Chlöe Swarbrick accused Luxon of wanting "us arguing about fiscal metrics because he doesn't want to talk about his record".</p> <p>“Headline figures are meaningless if people’s lives are going backwards. Reducing the Government’s debt and expenditure through merciless cuts only increases New Zealanders’ debt and cost of living," she said in a media release.</p> <p>“Luxon’s cuts so far have resulted in higher prescription fees, higher public transport costs, higher road user charges, higher rates bills and a higher cost of living. These things make the Government’s books look better, but life harder for working people.</p> <p>“Not all Government debt nor spending is created equal. When Nicola Willis took on $3 billion more in debt to pay for landlord tax cuts, she created no new jobs and no greater productivity.</p> <p>“That’s a very different prospect to $3 billion the Greens would invest in renewable energy generation, lowering power bills, keeping and creating jobs here and reducing our exposure to fossil fuel inflation.”</p> <p>The announcement echoes the Budget Responsibility Rules Labour and the Greens jointly published ahead of the 2017 election, a point Willis leaned on in challenging Labour to match the commitment now.</p> <p>National says its full fiscal plan, including operating and capital allowances, will be released later in the campaign after the pre-election fiscal update and "other significant policy announcements", according to Willis.</p>