Show us the (maths behind the) money!

An RNZ presenter interrogated a National Party spokesperson on the widespread criticism – ridicule even – from independent economists about the party’s predictions of huge revenue gains from a new tax on the purchase of expensive New Zealand properties by rich foreigners.

The journalist pressed unsuccessfully for the release of the calculations behind the claims, so they could be properly assessed. Eventually, the spokesperson said: “What you are really asking is for us to release our spreadsheets. No political party will release their spreadsheets on their election promises, and we are not going to be the first to do so.”

At this point, I turned off the radio in disgust at this blatantly bilious statement.

When I had calmed down, I thought about the implications of this revelation. It seems there is a cosy cartel among our political parties: don’t ask to see our spreadsheets and we won’t ask to see yours. This is ridiculous.

I’m sure I’m not the only one feeling this election campaign is particularly rife with possibly reckless promises to spend, spend our own tax money on programmes and policies targeted to lure the vote of some group or another among the electorate. Seek and ye shall find a little present with your name on it, in one or more of the parties’ election goody bags.

Of course you could always vote for the party who you think will do the best job of governing Aotearoa NZ in the general public interest, and I hope that really is how most of us will vote.

But making this decision is being made harder by the confusing mess of unvalidated election promises tossed out in the manifestos. I am not worried that the party I vote for will not carry out their promises – I am worried that they will, and that these policies will turn out to be expensive flops.

So what could be done to prevent this happening next time? I have two suggestions. First, all political parties should be required to publicly document the data and reasoning behind their promises, at the time they make their public announcements. If they have properly modelled the proposal with a spreadsheet, then they could and should show it to us. If it is just back-of-the-envelope stuff – or wishful thinking – we need to know.

Second, an ad hoc commission of university-grade economists should be charged with running the numbers on the party promises and releasing their findings. This small team of high-quality economists would check the workings to establish whether the proposers have done their sums correctly. We call that ‘replication’. Can we duplicate the claims made by the party on the basis of the information provided?

If they had done the maths well enough, the economists would then dig in to the substance of the proposal: does it make economic sense? This is seldom a simple matter. It needs experienced judgment on the plausibility of the intended and unintended consequences of the scheme.

For example, will those high-net-worth foreigners really turn up in our property market in the numbers predicted by the National Party? Will the cost-of-living relief from the Labour Party’s elimination of GST on fresh fruit and vegetables, so widely panned by economists, be severely weakened by the admin costs and incentives for distortions generated by such a narrowly targeted tax relief?

Perhaps the answers to these two cases are so obvious that further analysis is not needed, but there are many election promises that demand public access to their supporting data, if there is any, and expert economic analysis of that data. This could include, for example, the Green’s proposal to divert dividends from state-owned energy companies into ‘clean energy’ investments, Act’s pledge to increase the prison population by 30 percent, and TOP’s Universal Basic Income plan.

Where would the university-grade economists be found? In the universities, of course, temporarily seconded for, say, six months to the ad hoc commission. At the risk of sounding elitist, the high-level research skills required to process these evaluations simply are not available elsewhere: not in government departments, not in the big international accounting firms, not in the private sector consultancies.

But wouldn’t even these Big Brains be unable to cope with the flood of hopeful party promises and pledges? Well, that’s the good bit. With the certain prospect of authoritative and independent public scrutiny, the political parties simply wouldn’t come up with so many dodgy schemes as they do now.

There’d be fewer but better election promises, and therefore better information and less hot air for our voting decisions. It would be nice to turn on the radio and listen to a constructive conversation with an aspirant politician, not a stone-walling session.