Labour spending more? You must be dreaming

Anyone who thinks the Budget will be a chance for Labour to loosen its self imposed spending shackles clearly hasn’t been paying attention. Labour spent years in the wilderness after the global financial crisis gave it a ‘‘decade of deficits’’ as its legacy.

Hence Grant Robertson and Jacinda Ardern’s huge risk aversion to debt.

Debt is Labour’s achilles heel and the reason for Finance Minister Grant Robertson’s strict budget responsibility rules governing the level of debt.

Crafted on the campaign trail, those rules include an expectation of a government surplus every year unless there is ‘‘a significant natural event or a major economic shock or crisis’’.

Others promise a fair and balanced progressive tax system that promotes the long-term sustainability and productivity of the economy; holding government spending at around 30 per cent of GDP; and prioritising investments that enhance the long-term wellbeing of New Zealanders, like the Super Fund.

But the mother of them all was Labour’s promise to reduce the level of net core crown debt to 20 per cent of GDP within five years of taking office.

As often noted, many Governments would kill for debt around that level.

Even the all-important ratings agencies have suggested they would be relaxed about a slight loosening of those targets.

Labour announced its budget responsibility rules during the election campaign because it couldn’t shake off the tax and spend label that National had managed to hang around its neck over the last decade.

But it has given Labour little room to move after announcing flagship policies in its first hundred days, including its big move on child poverty – the $5.5 billion families package – and fulfilling its promise of free tertiary education.

There have been calls for Robertson to loosen the shackles as Labour faces built up pressure in health and education and elsewhere.

But it’s a honey trap.

If Labour answers those calls it will play right into the hands of its critics.

Which is why Robertson and Prime Minister Jacinda Ardern have spent weeks managing down expectations that after a decade of National, Labour will loosen the purse strings.

The Labour grassroots might chafe that Ardern and Robertson are not moving as fast as they would like in other areas of social spending.

But Labour can afford to park their expectations. Its first budget is all about playing to the wider masses to show it can be trusted with the chequebook.

Its focus will be on need in core areas like health and education while other promises are phased in over time.

Years ago, former Labour finance minister Sir Michael Cullen was enraged by a Dominion Post headline screaming ‘‘Is that it?’’, the day after he delivered his 2005 budget.

His budget was delivered amid a golden era of bulging surplus.

That particular golden goose was killed by the global financial crisis and the Canterbury earthquakes, and left in its wake an aversion to New Zealand living beyond its means.

Which is why Ardern and Robertson would consider their first budget a job well done if the headlines are revived asking ‘‘Is that it?’’.

Its first budget is all about playing to the wider masses to show it can be trusted with the chequebook.