Published in The New Zealand Herald (Auckland), 22 October 2026
Elections are supposed to be the moment when the main parties offer voters a choice between grand plans and rival visions. Indeed, that is the whole idea of democracy: to be able to choose between different paths, especially on long-term spending and taxes.
Well, apparently not in this election. National’s and Labour’s fiscal plans are so alike that one wonders whether the same research department drafted both. On health, for example, the biggest item in both, National promises an extra $15.4 billion over four years and Labour $15.5 billion.
In a state that spends close to $200 billion a year, such differences are a rounding error. Both parties also keep the same limit on new spending in each Budget, and both promise a return to surplus in 2028/29.
You would not guess this from the campaign. It has been fought over pay equity, a fuel tax freeze, foreign aid and a KiwiSaver payment for every newborn. And yes, Labour’s capital gains tax is a real point of difference for the tax system. But Labour would use it to pay for much the same health spending that National promises without any new tax.
All these individual policies matter, but they are trifles compared to the cost of an ageing population.
Treasury’s long-term outlook has net debt reaching 200% of GDP by 2065 if nothing changes, driven mainly by the rising cost of pensions and health care for an older population.
Holding debt steady through tax alone would mean lifting the average tax on wages and salaries from 21% to 32%.
Both Labour and New Zealand First flatly refuse to touch the pension age. Meanwhile, National’s long-standing policy would not start lifting it to 67 until 2044, and its leaders now say even that needs a political consensus nobody can find. By then, children starting school next year will have left university.
Act is the only party proposing to raise the age soon, to 67 by 2035, saving close to $2 billion a year, by its own estimate.
For voters, this election looks close to a simulation of democratic choice. Whichever big party leads the next government, the package is much the same and nobody touches the long-term bill.
Now, there is something to be said for at least having a consensus on aiming for surpluses when, say, America runs trillion-dollar deficits and much of Europe is also drowning in debt. However, in our case, our ambition to achieve a surplus only runs to the end of this decade and stops there. We all know that the real costs of demographic change will only come from the 2030s onwards.
Still, even those four years until then are not as good as they might look in the fiscal projections.
The surplus Treasury forecasts for 2028/29 is so thin that ANZ’s economists say a fairly small downgrade to the economic outlook could wipe it out.
Fiscal plans also have a habit of drifting, as my colleague Bryce Wilkinson shows in a forthcoming report. In 2018, Treasury expected government spending to be 28% of GDP by 2024. It turned out to be 33%, and net debt ended up more than twice as high as planned.
Yes, Covid happened. But Covid does not explain why so much of the extra spending stayed long after the pandemic.
As Wilkinson points out, any government can call its plan responsible by promising tight spending limits for the years after it expects to leave office. Treasury can hardly contradict this when the Minister of Finance is its only “customer”.
To counter all this and inject a sense of independent realism, a different way of monitoring our fiscal development would be needed. And indeed, in a previous job, I helped come up with one such mechanism.
In April 2007, when I worked for a London think tank, I organised a breakfast for George Osborne, then Britain’s shadow chancellor, and a group of economists from the City of London. The talk soon turned to Treasury forecasts and how little anyone trusted them.
Afterwards, together with two fellow economists, I wrote up a proposal for an independent budget committee. To our great delight, Osborne liked the idea and three years later, as Chancellor, set up the Office for Budget Responsibility (OBR), Britain’s independent budget watchdog.
The OBR has not made all British politicians virtuous. But when Liz Truss announced unfunded tax cuts in 2022 without an OBR forecast, bond markets turned on her government within days. Liz Truss did not survive this politically.
Sadly, New Zealand has nothing like such an independent fiscal watchdog. Last year, Nicola Willis took a plan for a small unit to cost policy promises to Cabinet, but Act and New Zealand First blocked it.
National now promises an independent costings unit by the 2029 election. Australia’s Parliamentary Budget Office has been costing party promises since 2012.
Admittedly, parties would try to game such a unit, for example by arguing over which version of their policy gets costed so that the numbers look better. But the alternative is what happens at every election. Each side finds a fiscal hole in the other’s plan, and each insists its own numbers were checked “independently”.
The Dutch found a way around this problem long ago. Since 1986, their Central Planning Bureau, a government agency known for its independence, has costed party manifestos before elections. It takes each party’s whole package rather than single promises, so nobody can choose the most flattering version of one policy. And it measures every party with the same yardstick, including what each would leave for future generations to pay.
Taking part is voluntary, and not everyone does. Geert Wilders’ populist Party for Freedom stays out, and so do the Socialists, who call the bureau’s models neoliberal. But 10 parties, including all the traditional parties of government, had their manifestos costed before last year’s election.
Of course, even such a watchdog would not solve the ageing problem. That would require a later pension age, better spending and faster growth.
But what a watchdog could do is tell voters, before they vote, what each party’s promises would cost over the next 40 years.
In this election, unfortunately, nobody is telling them.
