While new National leader Todd Muller has promised not to raise taxes or cut benefits if his party wins the upcoming election, an economist is warning he might have little choice but to.
"National will not increase the taxes New Zealanders pay," Muller said in a speech on Sunday, which groups like the Taxpayers' Union saw as not just a promise not to introduce new taxes, but to also move tax brackets so as incomes rise, workers aren't paying a bigger share of their incomes to the Government.
But with New Zealand facing debt levels unseen since the late 1980s thanks to COVID-19, economist Cameron Bagrie says some tough decisions are going to have to be made.
"Forget about tax cuts - we're going to be talking about tax hikes in 2021 to pay for it all," he told The AM Show on Monday.
Hikes may not come in income tax, he said, because that would be obvious to anyone who earns a wage or salary.
"Road user charges look like they'll be going up... they're going to try to sneak everything through the door," said Bagrie.
"There's money going out the door, debt is piling up pretty fast - what does that mean for the next generation? Our kids are going to face paying down those numbers. How are we going to do it? Well, you increase taxes, you sell assets, you go tighter in expenditure."
Muller said in his speech "nor will we ever cut benefits, and we will continue to increase New Zealand's investment in hospitals, schools and the welfare safety net".
Treasury is borrowing more in a single year than it ever has before - $60 billion, three times bigger than its previous record.
"We're borrowing a bit more than we absolutely think we need on the forecast, just to account for that greater uncertainty," head of funding strategy and engagement at the New Zealand Debt Management Office Kim Martin told Newshub in May.
Bagrie said it's good to keep spending up during a recession, but if there are tax cuts in the future - which National is likely to offer at some point - that spending will have to drop.
"The one that worries me is, are we really prepared to crunch the construction sector four to five years out? We're telling the sector to gear up for a big spending boom in regard to infrastructure stuff, but then we're assuming it's going to go from feast to famine from 2024/2025? Not credible."
Muller said National can fix the economy without raising taxes or cutting welfare because "because economic management is in our National DNA".
Labour said it would not raise taxes in its first term, and is yet to reveal its plans if it wins a second.
