4 Dec 2023

Nicola Willis, Grant Robertson clash over shorter-term 'fiscal cliffs'

7:02 pm on 4 December 2023
Grant Robertson and Nicola Willis

National's Nicola Willis says Labour did not fully account for future funding for some programmes adequately, but Labour's Grant Robertson says it was all set out in The Budget, available to all to read. Photo: RNZ / Angus Dreaver

Minister of Finance Nicola Willis has accused the previous government of finding "workarounds" to hide the scale of short-term funding, a claim Grant Robertson says is "desperation".

Willis says changes may be made to the Public Finance Act to safeguard against these kinds of changes - which was "upholding the letter of the law but not necessarily its spirit" - in future.

Robertson, who is the Labour Party spokesperson for finance and the previous Minister of Finance, says the attack is a desperate diversion "from somebody who can't make their tax package add up", and it shows Willis had not read the Budget.

Willis raised her concerns with the media in this week's post-Cabinet briefing on Monday afternoon, saying the early advice suggested a shortfall of "many billions" of dollars.

Nicola Willis

Nicola Willis (file photo) Photo: RNZ / Samuel Rillstone

"I am concerned by the scale of the financial challenges left to us by the outgoing government. I am still receiving advice on both the number of those challenges, their size, and the options available," she said.

They came in two broad categories, Willis said: Risks referred to in the pre-election update but with their true scale and urgency not made clear for reasons including commercial sensitivity; and government programmes set to expire because they were only funded on a short-term basis.

"I think what they did is they found clever workarounds to make the books look better than they really are. For example, it is absolutely permissible for a government to only short-term fund a programme, that is allowed, but where you know that you will have to go back to fund it in future Budgets - then actually you should just be funding it for the long term."

One example for that second category was Pharmac funding, she said.

"Did they really intend to withdraw funding for listed medicines, and if not why didn't they account for that in their pre-election update?"

Other examples she offered were a cybersecurity programme for schools, and funding for the school lunches programme.

The practice was "extremely disingenuous," she said. "It makes the books look better in future years even though it is highly unlikely ministers genuinely intended to stop funding those programmes."

She suggested changes to the Public Finance Act could in future require a single list of all programmes that were set to expire, with explanations of why.

"I think it's appropriate in future pre-election fiscal updates that there be collected in one place a list of all of the programmes, all of the policies, for which funding falls off a cliff in future years."

Robertson, however, said such a list already existed.

"It already exists, it's called the Budget. We put it out every year. And all of those things are in here," he said, holding up a copy. "How can we be hiding something that's literally in this document?"

Deciding how to handle time-limited funding was just part of the job, he said.

Grant Robertson after the Labour Party caucus meeting on 17 October 2023.

Grant Robertson (file photo) Photo: RNZ / Samuel Rillstone

"I inherited a number of time-limited pieces of funding and what you do at each Budget is you go back and you look and say 'Well are we going to extend that? Are we going to baseline it? Are we going to look at another way of doing it? This is literally the job that Nicola Willis has signed up for and she seems to think it's some kind of scandal."

He pointed to the school cybersecurity funding.

"Nicola Willis seemed to suggest that particular example she gave today was, quote: 'Buried in the estimates'. It's on page 89 of a 154-page document. It is not buried.

"If she couldn't make it to page 89 of the Budget I'm really, really concerned at what kind of finance minister she'll make."

Different pieces of funding could be time-limited for a range of reasons, he said.

"When it comes to the school lunch programme, that was a Covid initiative initially, it's been carried on as the cost of living crisis has continued and it's shown its worth - both parties decided in their fiscal plans to extend that out.

"We wanted to align Pharmac with the overall health funding, so we did the two years of health funding and now we're moving into a three-year health funding phase - again, both parties acknowledged that and made the decision that we would spend some of the new operating allowance into the future to fund that.

"There was time limited funding for that education cybersecurity initiative, that's because we were making sure that at each stage of that project, we knew it was working and because we were looking for a more efficient way of delivering those services across government."

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