Acting Prime Minister Winston Peters has suggested there may be room for the Government to loosen its fiscal responsibility rules before the next election.
This puts him on the same side as Greens co-leader James Shaw, who has made similar comments.
Speaking to media at his weekly post-cabinet press conference, Peters said it would be premature to make changes to the Budget Responsibility Rules now.
But he says there may be scope “three years down the track, when we have had three years to get on top of things.”
The rules were committed to by the Coalition Government and include reducing Core Crown debt to 20% of GDP by 2022 and keeping core Crown spending at roughly 30% of GDP.
The rules were designed to help New Zealand get through “rainy days” and to help the Government respond to an economic shock.
According to the policy, the Government can review the rules during its first term in office.
In April, Shaw said “given what we know now” – regarding the massive underspend on infrastructure – the Government might want to review the rules later in its term, ahead of another three years in Government.
Peters says any increased debt in the future should be used for “production and the growth of the economy and to build new industries.”
Recently, the Government’s rules have come under intense scrutiny.
BERL chief economist Ganesh Nana tells Interest.co.nz there is no “economic rationale” for the rules.
“I see them purely as a political animal, put in place for political purposes,” Nana says, adding that the rules were created to make Labour and the Greens look like more credible fiscal managers.
“There is no economic rationale to bringing debt down to 20% of GDP or 25% or any other particular number.
“Similarly, there is no economic rationale behind any particular number of spending as a proportion of GDP.”
He is not the only one to criticise the figures.
ANZ’s chief economist Sharon Zollner called the 20% debt target “arbitrary.” Independent economists Shamubeel Eaqub and Cameron Bagrie have labelled the rules a “fiscal straightjacket.”
Other groups, such as the Salvation Army and Auckland Action Against Poverty, have also expressed opposition to the rules.
Meanwhile, the Taxpayers’ Union has commented the Government for upholding the rules.