Green Party Co-leader James Shaw says “given what we know now” the Government might want to review its Budget Responsibility Rules later in its term, ahead of another three years in Government.
Shaw, whose party has a confidence and supply agreement with Labour, also says there is an extra $4 billion the Government could spend on fixing some of the recently identified issues in the public sector without breaching those rules.
In Opposition, both he and now Finance Minister Grant Robertson pledged to keep Government spending at roughly 30% of GDP and to get net Crown debt down to 20% of GDP by 2021/22.
Speaking on his way from the House on Tuesday, Shaw said there “is a debate to be had around the debt target.”
“We settled on that 20% over a slightly longer time period as a bit of a judgment call.
“But given what we now know, later in the term we might want to review that.”
On Monday, Prime Minister Jacinda Ardern said as a result of the National-led Government’s underfunding of key public services, next month’s budget will focus on fixing those issues – she called it a “rebuilding budget.”
Opposition Leader Simon Bridges has dismissed her comments as “pure, manufactured spin.”
Despite the need for more funding in sectors like health and education, Robertson has made it clear the Government intends to stick to its Budget Responsibility Rules.
But Shaw points out it has always been the intention to review these during the first term in office.
“It would be silly to have a set of rules that lasted through all times, based on a set of economic conditions that change over time,” he says.
He adds that now the Government has had a closer look at the numbers – “we will be wanting to review them closer to the election time.”
A different view of revenue and spending from Labour
Meanwhile, he says the Government has a “significant amount more capacity for additional spending” even within the rules.
He points out that, according to numbers in the half-yearly economic and fiscal update (HYEFY), the Government spending is roughly 28.5% of GDP – 1.5% (roughly $4 billion) under the 30% imposed limit.
He is calling on Labour to use that extra headroom to fix the issues it has identified.
“We could be spending more on this massive infrastructure deficit that we’ve got if we said we are prepared to raise more revenue.
“I know we have the Tax Working Group and it’s a good thing.
“But clearly what we’re seeing now we’re in Government is there is just a massive hole that needs to be covered and I think the Labour Party should have left a bit more room to move in terms of additional revenue to cover that gap.”