Labour costs $4-an-hour care pay rise but not its plan to restore pay equity
Labour's fiscal plan, released on Sunday, pays for a $4-an-hour rise for 65,000 care and support workers. It does not put a figure on Labour's wider promise to restore the old pay equity regime. National says the plan has an $8.5 billion hole.
Labour says every promise it has made is "fully costed and paid for". Under the plan, care and support workers would get the rise from January 1, 2027. The Herald reported that an average full-time worker would be $8,320 a year better off, or $160 a week before tax. The Otago Daily Times (ODT) put the cost at $2.5b over four years.
The rest of Labour's pay equity promise has no costing. Labour reconfirmed that it would restore the pay equity legislation in its first 100 days. The Herald reported Labour's reason for leaving out a figure: "Pay equity is determined through negotiation. It would undermine the process to announce in advance how much had been set aside for individual claims."
According to the ODT, leader Chris Hipkins said there was "plenty of headroom" in the plan to pay for pay equity overall. In the Herald, workplace relations spokesperson Jan Tinetti said Labour was "doing what Christopher Luxon refused to do and paying women properly".
The plan also puts a price on Labour's student loan policy. Its list of capital commitments includes $420m for the "initial" student loan write-off, the ODT reported. Published coverage of the fiscal plan does not explain the difference.
Labour's other capital commitments, as listed by the ODT, are:
- $200m for the New Zealand Future Fund
- $200m for hospitals
- $400m for schools
- $2.9b for Kāinga Ora housing over four years
- $7m for solar spending under the Ratepayer Assistance Scheme
Labour said those commitments fit comfortably within $12b of future capital allowances.
On day-to-day spending, the ODT reported, finance spokesperson Barbara Edmonds said Labour would keep the $2.4b operating allowance the coalition set in Budget 2026. Labour said new investment "must fit within these allowances, alongside cost pressures and other priorities", according to the ODT. Labour says it has almost $10.5b of future operating allowances unallocated.
According to the Herald's analysis, Labour's plan matches the coalition's spending track, adding only the revenue from its new capital gains tax, its repeal of the Investment Boost tax credit for businesses and its reversal of the excise cut on heated tobacco products. The Herald also reported that public sector cuts scheduled for the next four years will mostly not go ahead, saving Labour about $1.9b.
The ODT reported Edmonds as saying Labour would return the books to surplus in 2028/29 and bring net debt below 20 percent of GDP "over time". The Herald said Labour's path back to surplus is the same as the one the coalition announced in the Pre-election Economic and Fiscal Update.
The Herald found two further gaps.
Labour matches the coalition's health cost-pressure funding of $1.4b to $1.55b a year over the next Parliament, but gives no figure for 2030/31. That means Labour would need to take another $1.55b or more out of its $10.5b headroom for that year.
Labour also hasn't costed its three-year freeze on fuel taxes. The freeze would be paid for by cutting spending from the National Land Transport Fund. That fund includes money given to local councils to build and maintain their roads.
In the Herald, National's finance spokesperson Nicola Willis called the plan "a fraud". "This is the least credible fiscal plan released by a major party in living memory," she said. RNZ reported that Willis accused Labour of lying to the country and claimed an $8.5b hole in its policy. National said the shortfall would have to be made up with more borrowing and higher taxes.
The Herald also quoted Willis saying that if the rest of the pay equity money came from cost-pressure funding, it "would mean taking almost every dollar of unallocated funding for the next four Budgets, which means nothing more for schools, police, prisons, defence and other frontline social services."
National leader Christopher Luxon said on Monday that "there's a real hole" in the plan, RNZ reported. "No one understands economics over there," he said.
Hipkins pointed to the coalition's own record in comments reported by the ODT. "171,000 New Zealanders are unemployed, growth is weaker and debt has continued to rise," he said. "They have cut jobs and services, and New Zealanders have been left to pay the price."