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A $41 billion reason for why the Government needs to stop avoiding debate over its spending by dismissing the topic as supposedly niche

A $41 billion reason for why the Government needs to stop avoiding debate over its spending by dismissing the topic as supposedly niche

By Jenée Tibshraeny

Some financial markets traders were left confused last week when it was reported in the media that a bill had been passed to empower the Government to spend up to $41 billion “over and above” its annual budget.

Parliament on Wednesday night passed an Imprest Supply Bill, giving it the authority to spend up to, but not necessarily, $41 billion on unforeseen expenses by June 30, 2022.

As it turned out, not all of the $41 billion was “over and above” what has been accounted for in Budget 2021.

In fact, around $15 billion could be funding already accounted for.

Finance Minister Grant Robertson's office explained: "It is not the case that the Government intends to spend $41 billion more than set out in the Budget, as much of this amount is funding shifted between appropriation, or already accounted for in the Budget, or unlikely to be utilised."

The distinction is important. It affects the level of borrowing the Government may need to do. The amount of spending the Government signals it’s prepared to do could also affect inflation and therefore the way the Reserve Bank sets interest rates.  

Unclear communication

Why then did the media, including, get it wrong?

Robertson’s office initially provided the wrong information. on Wednesday night asked whether the $41 billion was “above” what was budgeted for. On Thursday morning it responded, yes. wrote a story accordingly.

Later on Thursday afternoon, Robertson’s office got in touch to say not all of the $41 billion was actually above what was budgeted for. corrected the story - something we take seriously and rarely need to do.

By this point, ANZ senior economist Miles Workman had been fielding calls (mostly off the back of another media report published on Wednesday night) from traders seeking clarity around this $41 billion.

Kiwibank chief economist Jarrod Kerr said there was some head-scratching among traders, who raised the issue with him too.

Again, there is a material difference between the Government potentially sourcing up to $41 billion for new expenditure, versus it using some money from underspends and contingencies already accounted for in the Budget.

Workman explained: “Not all of this ($41 billion) can be considered potential new spending over and above that included in the Treasury’s medium-term Budget forecasts.

“For example, some essentially frees up the Government to spend funds that are probably already baked into the outlook, but not necessarily allocated to this fiscal year, and some represents fiscally neutral adjustments.

“At a minimum, it looks like the pot of potential new spending in here could be closer to half that amount.

“It’s important to note that this Bill merely gives the Government the option to spend more. It’s not a guarantee that it actually will.”

Robertson’s office should’ve issued a press release explaining exactly that.

An event worthy of a press release

Imprest supply bills are technical and effectively deal with the plumbing that sits behind public finances.

These bills are routinely passed every year without fuss. But they don’t usually give governments war chests worth up to $41 billion.

The Government being empowered to potentially (but not necessarily) spend this much is worthy of it proactively explaining what’s happening - if not for the sake of transparency, then for the sake of providing clarity around a confusing technical issue.

If the Government can issue press releases for a few million dollars of expenditure, it can do the same for a pot of $41 billion.

A mitigating factor is that what the Government actually commits to spending, how that compares to its tax take, and what that means in terms of how much debt it needs to issue, are more salient issues. 

While Workman sent out a note to his ANZ stakeholders on the Imprest Supply Bill, it wasn’t front of mind for Kerr. Nor was it something ASB chief economist Nick Tuffley was particularly interested in.

Nothing to see here…

Robertson’s office hasn’t sought to set the record straight with other media over their characterisations of the $41 billion.

The irony is, clarifying that much of the $41 billion has already been accounted for actually makes the Government look better and the situation less alarming.

Presumably Robertson’s staff figured there wouldn’t be too many people concerned about how much of the $41 billion is specifically over and above what was budgeted for.

What’s more, they might not want to draw more attention to the fact the Government is giving itself the ability to spend a whole lot more. Labour remains sensitive about being seen to be more frivolous with money than National.

Robertson was at pains to clarify in Parliament that the $41 billion was not a target and only 36% of what was made available to him last year via imprest supply was actually used.

National’s Finance Spokesperson Michael Woodhouse used the passing of the Imprest Supply Bill to question the quality of expenditure done since the onset of Covid-19 and the process followed to expedite this expenditure.

However, even Woodhouse in a press release said the $41 billion was “over and above” Budget 2021.

Public finance isn't niche

Yes, the issue is complex and seemingly dry. But it’s the Government’s responsibility to accurately, if not proactively, explain what it's doing.

There’s an argument the economy needs more targeted government spending and less monetary stimulus.

But if the public is to trust the Government to carry on spending up large to support struggling households and businesses, it needs to go above and beyond on the transparency front.

Public finances - what we pay in tax and receive in state services - should never be dismissed as too niche for public debate, especially not in this war-like environment.

The finer details 

For those interested in exactly how the $41 billion is comprised, below is a table and explanation provided by Robertson's office. 

"The line on ‘technical changes at baseline updates’ are essentially fiscally neutral adjustments between one appropriation and another, and are not net increases to the level of government spending.

"The line in Imprest Supply relating to tagged contingencies or between budget contingencies are in included in the BEFU 2021, under unallocated operating contingencies (p. 107)."

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This govt has a quantity mindset on its expenditure. The more the merrier. No thought has been given to the quality of that expenditure at all. And to be fair, not much thought has gone into the quantity side either. I'd love to see a breakdown of what's been spent since 1 April 2020 til now, & all to bring a nation to its knees.

I see a recent report (by TV3) on the govts covid handling is out and lambasting those in charge. Repeated poor decision-making throughout the process is just one of the points it makes. The PM then gagged her ministers from commenting on the said report. I wonder why?


In nigh on four years in power, cannot recall one single example of this government accepting the blame for anything. Unlikely to start now either. Still been that way mostly ever since David Lange’s cup of tea moment.


That's what they think is the way to success & being in power.

What ever wrong happen just shrug off & never take responsibility of mistake, they are accepting to be morally corrupt rather than accepting the mistake.

If there is something good happen, than of course put it on hoardings.


 I'd love to see a breakdown of what's been spent since 1 April 2020 til now, & all to bring a nation to its knees.

You act like it was the government's doing, and not a global pandemic, for which we're one of the best countries in the world to be living in.


It would be better to be living in a free and affordable country instead of a horrifically expensive prison island.


If only somebody would ask him if his degree in political studies has helped him notice any "inequality taking hold in our recovery" yet.


.... luckily the flock of 5 million are mostly asleep , oblivious to the appalling ineptness of this government , dutifully obeying the head shepherd , Ardern .... and , luckily that the media still adore her , Robbo & Saint Ashley .... and lastly luckily , that the Gnats have a garrulous unelectable leader in Collins ... 


Remind me next time to tell our bank that the financial details are a bit 'niche' when they ask for statements or declarations regarding our financial position so they can extend our facilities so we can make it through the next lockdown.

Wonder how I'll get on. 


One recalls Rahm Emanuel: 'you never want to let a serious crisis go to waste...'

Full clip here.


The irony is, clarifying that much of the $41 billion has already been accounted for actually makes the Government look better and the situation less alarming.


This cracked me up.


NZ's covid strategy is to Lock the boarders and hide under the bed.

Its expensive to maintain the same lifestyle without working.

What did anyone expect ?


Repaying $100 billion of government debt will be a major problem for NZ.  There appears to be no plan for how this will be paid back. There has been little discussion about when this will be paid back.  

Media should be holding the government to account for how they plan to repay the debt & by when.

NZ has about 2.8 million people in employment.

Stats NZ reports that household savings were $700 million for the year ending Jun 2020.  If all household savings were used each year to pay back the debt it would take about 140 years to pay it back.

This rough analysis excludes interest rates, inflation & different future savings rates but indicates what the scale of the problem is.

‘Then we have private debt which has ballooned out of control.  How is that going to be paid back & how are people going to save up for a house when all their savings will be used paying off government debt.