Green Party Co-leader James Shaw says 'given what we know now' the Government will be wanting to review its Budget Responsibility Rules before the next election

Green Party Co-leader James Shaw says 'given what we know now' the Government will be wanting to review its Budget Responsibility Rules before the next election

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.”

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What a surprise. Fiscal responsibility is yet another type of responsibility anathema to the left. Venezuela here we come!!


"Oh it's hard." says James. "But don't worry, we can soak the battlers for more, or borrow their tomorrows away."

gerund or present participle: backpedalling

move the pedals of a bicycle backwards (formerly to brake).
reverse one's previous action or opinion.
"Boyd quickly back-pedalled when asked to explain her suggestion"
synonyms: change one's mind, change one's opinion, go into reverse, do an about-face, do a U-turn, row back, shift one's ground, sing a different song, have second thoughts, reconsider, climb down; More
do an about-turn
"although agreeing at first to the peace plan, they soon began to back-pedal"
renege on, back down on, go back on, back out of, fail to honour, withdraw, backtrack on, row back on, take back, abandon, default on
"the president back-pedalled on his promises to tax foreign companies heavily"
move hastily backwards.
"Cook forced the goalkeeper to back-pedal and push a shot over the bar"

Underfund - verb

provide with insufficient funding

"important public services are seriously underfunded"

Are the "important public services are seriously underfunded"? I have yet to see much evidence of that. The Middlemore Hospital issues are a tens of millions of problem not billions. We spend more on health every year and yet it is always underfunded according to the left. Give me a number - how much?

So we will either see increase in taxes (the good news it won't be new tax) or increase in borrowing but it won't be like when National borrowed during the worse financial crises in generations this is sensible borrowing. Good grief.

Current health defecit -

Police defecit -

Have a look around, the details are there if you look. That is what happens if you lower taxes, sell assets and still try balance the budget. Something has to give.,

Here is my issue when people say "underfunded": it means you have a target in mind or very specific outcomes to achieve. Just focusing on health what would those outcomes be? It can't just be spending more. For healthcare we could double or triple the budget and still want more. So, like everyone else in the world we cut our cloth according to our means. The health system as it currently stands, which is overall very good, is what we can afford. We can argue about the edges, but fundamentally around what we spend now is what most voters are prepared to pay. I am sure Labour will spend more but not so much to radically alter the system. I would be more interested in something that changes our system completely.

Not sure you can have "x" hospitals and "y" beds in a particular location, and achieve adequate service for the populace of the area, as at a particular moment in time, then close the purse strings, and import 400,000 migrants. At some time shortly afterwards you will then be considered underfunded as to the enlarged population, and certainly underfunded as to the original cohort as they have aged

Maybe you need to budget for all that

Its strange how the definition of what we "can afford" seems to vary by the societal proximity of those on the waiting list. When its a bunch of fat lazy slobs from downcountry we seem to be able to afford very little, when its your poker buddy suddenly the govt are tight arses. We can afford a lot better than what we currently have, and if taxes need to go up a few dollars a week then so be it.

You state that "it won't be new tax," but the tax working group is considering a wealth tax. Do you believe Labour and the Greens will not bring this tax in, and if so why?

Sorry I was being a bit disingenuous regarding "not a new tax" - just like the PM stating that an increase in tax isn't new.

oh dear...the pig is out of the tunnel. Another important election promise is likely unachieveble, the debt to GDP ratio. The reason of course being so much underspend by National. Hard to believe.

He's felt the pressure to pivot left after Davidson's ascent.

This man is joining the losing choir,

" we had a look under the hood" ...... when? now?
“But given what we now know, later in the term we might want to review that.”

The combination of Liars, Noobs, and Tree huggers are controlling the economy ,GDP, and our future dept !-

What a disaster !!... what a shambles !!

I’m feeling for you Eco Bird. Due to work restructuring it looks like I’m back off overseas to Asia so I’ll need to change my name to Expat. I’m not being replaced so the tax burden will have to be redistributed. So many from the Left here have said that they are happy to pay more, so here’s their chance.

all the best in Asia... Expat

Thanks, it’s a bit unexpected but you have to go where the work is. Been there done that before. At least I got my 5 years back in NZ to qualify for super. That will make Rick happy ;)

Haha - nicely done. Keep those sometime-socialist feet of yours wet.

Are you off to HK again?

I'm hoping for Singapore (Asia Lite) although there's a lot of things to think about re taxes as I don't want to sell the home and I'm not sure there is an option to keep it that doesn't lead to double tax risks. It may be better to take a cheque now that we are early in the tax year. I could change my moniker to "Retired-Righty" and post from the Cafe on Kohi while waving to the wage slaves on the bus.

Singapore would be nice - although missing the cooler months HK has, huh. Great for weekend sojourns elsewhere. My family member in HK just recently made the move across to Singapore, so we may head up for a visit sometime soon.

Bit hard to hug trees if they aren’t planting any.

Plenty of wilding pines in need of a bit of love.

Here we go. More politicians making false promises. These crooks need to start to be made accountable for making pledges they can’t keep.

What an utter shambles this coalition has turned out to be .............. they dont seem to be able to agree on anything.

I dont suppose we could have expected anything more from this hotchpotch of delusional dysfunctional and deadbeat individuals who have cobbled together something that looks more like a tea party in an old age home than a functioning Government

I would have thought that Jacinda would better quit labour and join the Greens as a co leader, then they can both revive their old comaradhood together and run the party of joy, smiles, and "Fun" with few "legalized" puffs.

Will it be surprising to wake up one day to the news that Jacinda has resigned? .. Not at all ...

it will be a matter of time till she discovers that she is really lightweight and running a social youth or student group is very different from running a country ... PR skills and niceties are not enough to run a country. She is nothing like Helen Clark no matter how diehard she claims to be...

Looking forward to June / July to see what happens !!

We could be spending more on this massive infrastructure deficit that we’ve got if we said we are prepared to raise more revenue
“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

A massive hole....didn't someone in the National party mention this during the campaign and got hammered for it, now the greens are admitting a hole and that we need to raise increase taxes or make new ones up.

It seems the debate is whether that hole was (as Joyce claimed and no economists agreed with) in Labour's budget, or whether it's a hole that has been uncovered in National's description of the current state of things.

I recall Ardern noting during the debates (paraphrased) "If there's an $11bn hole in our budget, it exists in National's budget too" (because Labour's budget was built off of National's reported numbers).

As a general rule we can expect Nat-fans to agree with Joyce and disagree with the economists, and Labour-fans to agree with Ardern, citing the rotten state of Middlemore as a representative example of wider under-investment and problems.

They discovered some mould in a hospital building. Bingo. We can now justify in accusing national of underfunding health and education, despite health and education continuously increasingly funded.
Now the first yr free uni and pay rise for some voters can be justified. No more back peddling, we are on track to wreck.

I guess if you wanted to downplay exactly what has been revealed in Middlemore Hospital, you could say that. You failed to mention the sewage problem alongside the mould one.

In all fairness, the last place you’d hope to find mould in is a hospital. Maybe it’s like renting in New Zealand, the lazy patients should have opened the windows daily to air the wards out.

The CoL is clearly softening everyone up for an abandonment of fiscal responsibility.

We even had failed UK Labour (now NZ Labour cheerleader), Bryan Gould, telling us in the Herald this morning that maybe budget deficits are not really that bad.

All right you public debt hyperventilators.... repeat after me econ 101: "a government is NOT a household".

If public debt in NZ goes to say 30% of GDP the effect on sovereign credit ratings, bond sales and interest rates would most likely be negligible. However, it would most likely boost aggregate demand, growth and reduce private sector debt. As well as fixing up our ailing public services.

Nigeria has very low public debt. Doesn't mean it's a better economy to live and work in than NZ. The public debt ratio is just an accounting number, and if you want to get radical and say Rheinhart and Rogoff were totally wrong, you might say that it is irrelevant and good growth and living standards can occur in the presence of very high public debt levels - the world post WW2 and Japan.

The best thing we can leave our grandchildren is a thriving economy. Zero public debt means nothing if we've starved and deprived them in the process.

Ps: Lots of mainstream, eminent economists such as Krugman, Summers and Blanchard and the IMF are talking about the need to use fiscal policy in this age of relative stagnation. Monetary policy won't help much. Some fiscal expansion is required to get the real economy going. It's not a radical socialist idea. The "government austerity creates growth" idea has been conclusively disproven by the natural experiment conducted in the Eurozone and UK post GFC. Austerity didn't create thriving economies - it created stagnation and populist political regression.

You might be correct, but I think you are missing the point here.

Ardern, Robertson et al made a political commitment in order to get into office, but it now looks like they may be preparing to renege on that commitment.

Moreover, the last Gov't was often criticised for having been bequeathed low debt levels then allowing them to rise.

What's more important - a thriving economy or a silly political commitment?

Check out Michael Reddelll on all this.

People will vote them back in if they say their pay packets increasing and their public services working well. A nice graph contrasting US or UK and NZ debt levels would illustrate nicely how low NZ's is.

But I agree, Labour shot themselves in foot with moaning on about rising public debt post gfc and earthquake. Very short-sighted and unprincipled. I said so at the time - a self-defeating strategy for the Left.