Budgetary restraint is a lucky legacy
Leave aside that the nurses have won a pay offer twice the size of the one their union initially recommended they accept.
Leave aside the fact that the $2.3 billion price of four new maritime surveillance planes is capital spending spread over a decade.
The fact is that no state spending decision is as binary as saying, ‘‘Pay for nurses versus a small but functioning air force – we can’t have both.’’ The Cabinet wrestles constantly with a far wider range of competing spending priorities than that.
Showing his stripes this week as a briefly serving Bolger-era former finance minister, Acting Prime Minister Winston Peters gave a fascinating insight into the role that NZ First appears to be playing in stiffening the Government’s spine against calls for an immediate relaxation of the Budget Responsibility Rules.
‘‘It’s not the debt,’’ said Peters. ‘‘It’s what you do with it. If your debt is for consumption, then you’ve got a problem. If it’s for production, for the growth of the economy . . . then maybe it’s a very sound answer. So any increased debt from here of that nature would have to be not for consumption but for production and increased wealth creation.’’
That’s not to say the rules can never be relaxed. New Zealand’s net Crown debt is already among the lowest in the OECD.
It is a political rather than an economic decision whether to stick with that target.
Doing so reflects a hard journey of 30-plus years to achieve public finances that give the country choices it did not have in the 1980s and 1990s. It reflects the breathing room required by a country highly exposed to global trade tensions and the potential for catastrophic natural disasters.
Said Peters: ‘‘It may be that [when] we’ve had three years to get on top of things, you may be right [that the rules can be relaxed]. But for the time being, I think it’s premature to make that stance.’’