Labour has unveiled its fiscal strategy, promising a return to surplus in the 2029/30 financial year and pledging to restore the Reserve Bank's dual mandate so that employment levels are considered in monetary policy decisions. The strategy, released this morning, outlines the party's plans to balance the books by that time, as reported by the NZ Herald.
The dual mandate pledge would see the Reserve Bank's monetary policy decisions take into account price stability and maximum sustainable employment. This marks a shift from the current focus, which Labour argues has overlooked employment considerations.
As part of its fiscal plan, Labour has also promised to set up an independent Parliamentary Budget Office, aiming to enhance fiscal transparency and accountability. The party says it aims to reduce net debt to 20 percent of GDP over time, a target that would help maintain fiscal discipline.
In the longer term, Labour plans to keep core Crown expenditure and revenue at around 33 percent of GDP after the capital gains tax is fully implemented. This would ensure that the government's fiscal footprint remains stable, while also funding key investments.
Labour has also promised to restore wellbeing reporting so that decisions take into account the impact on New Zealanders. This would be a return to previous practices, where the effects of policies on people's well-being were considered.
The announcement has drawn reactions from opposition parties. National's finance spokesperson Nicola Willis said the strategy amounted to 'spending more, borrowing more and taxing more', criticizing Labour's approach as fiscally irresponsible.
ACT leader David Seymour said hipkins was 'going back to the future', referring to what he sees as a reliance on past policies.
Meanwhile, Finance spokesperson Barbara Edmonds said a more detail would be laid out once the Pre-election Economic and Fiscal Update (PREFU) was outlined. This suggests that Labour's full plan will be published in stages, with more specifics to be released timely.
This fiscal strategy comes as the Labour Party seeks to differentiate itself from the current government's approach, and as the election campaign begins to unfold.