13 Sep 2023

ACT may have to walk back promises after state of govt books

From Checkpoint, 5:07 pm on 13 September 2023

ACT leader David Seymour says tax plans will have to change after Treasury revealed the state of the government's books, and is pledging to work "tightly" with National to ensure real change. 

The pre-election economic and fiscal update (prefu) inspection of the country's finances revealed the deficit has ballooned to $11.4 billion from the previously forecast $7.6 billion - driven by a lower than expected tax take.

A return to surplus is now delayed another year until 2026/27, inflation isn't forecast to drop to the target 1 to 3 percent until December next year, and interest rates may rise again before gradually easing in late 2024.

Many economists say there's little fat for new government spending, and Seymour told Checkpoint host Lisa Owen his own party's tax plan would likely need to change. He said National should be reviewing its promises too. 

He said ACT was more interested in decreasing total rates than shifting brackets, as National had proposed - but was open to shifting the brackets in the short term. 

"I think you have to accept that if there's been a big shock - and PREFU was a big shock, I mean if you look at where we'll be by 2026, $100 billion of debt even on Grant Robertson's debt measures $9.2 billion per year in interest payments, more than primary and secondary education ... then you do have to take note of that."

Asked what he would do to make the numbers add up if he was finance minister, he said that was an "extremely hypothetical" scenario but New Zealand needed "lower, flatter taxes" to be more competitive and productive in the long term. 

"I think what we'd be looking at is working together very tightly and collegially with the Nats to see what we can make work," he said. "We need to give tax relief to people who are pretty hard up right now, and balance the books in order to ensure that we take pressure off inflation and interest rates. 

ACT leader David Seymour on law and order

David Seymour at the party's law and order announcement on Wednesday. Photo: RNZ / Calvin Samuel

"Obviously there's not a huge amount of space to be uncollegial, and that's going to take some very hard and intense work regardless of who the finance minister is, regardless of who the government is - but obviously, we'd like to see it being us."

He said some people had overreacted to his suggestion that ACT could offer a confidence-only deal to National if the larger party refused to "fully share power", and had always been clear it was not their preferred option. 

"I mean, what I've been saying - and I want to say it again now for anyone who's unclear - is that our first priority is to change the government, I mean that is absolutely critical. 

"Our second priority is a tight working relationship with the Nats to make sure this is not just, you know, change Chris to Christopher and wear a blue tie on Monday - it's real change. 

"The third point I made is that no one's ever really been here before with two parties working in this sort of partnership and I think that we have to be prepared to turn down the baubles of office and say 'look, if you really don't want to play together, then we're prepared to negotiate vote by vote'. It would be a very difficult situation for everyone involved - certainly not our first preference."

He bristled at questions over a recent decrease in polling numbers for ACT. 

"Everyone's got their favourite poll, don't they? I could point to one that has National in the low 30s and ACT in the high teens, because that poll's real from last week as well."

However, Owen challenged him on it, saying National was still clearly the senior partner. 

"Okay, yeah okay, okay," Semour said. "But when you have at least one in 10, possibly as high as one in five New Zealanders going to a party like ACT - that is a pretty strong mandate.

"I think probably your attempt to peg the support for real change to the lowest number you can find from the last year or so is probably not a fair shake at how much change New Zealand needs and how much the New Zealand public appreciate that we need ACT in there, to make sure that the change we get is not just a change of tie colour, but actually a change of direction."

The 1News-Verian poll - broadcast on Wednesday after Seymour's interview - showed ACT at 10 percent, while this week's Newshub-Reid Research poll from Tuesday had the party on 10.1 percent. 

Seymour said ACT being part of the partnership with National had also been polled, revealing it was a popular idea with National voters.