Labour is accusing the National Party of failing its own fiscal test following the release of Treasury’s Pre-election Economic and Fiscal Update, putting economic management firmly back into the election campaign.
Labour finance spokesperson Barbara Edmonds says the PREFU shows National has failed to meet key fiscal measures it previously set for itself, including its ambitions around government spending and debt. The comments are part of Labour’s political response to the latest Treasury forecasts.
The PREFU showed an improved short-term outlook for the Government’s books, including a smaller forecast deficit and a stronger return to surplus than predicted at the May Budget. However, much of the improvement comes from higher forecast tax revenue, partly associated with higher and more persistent inflation.
Labour argues the numbers need to be considered alongside pressure on households, unemployment and the cost of living, while National has pointed to the improved deficit and debt forecasts as evidence the Crown accounts are moving in the right direction.
The competing interpretations of the PREFU are shaping up as a major economic dividing line ahead of the 7 November election, as parties prepare to put their spending, tax and economic plans before voters.
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