Orr ought to back prudence

the state builds a port, it bids for labour, capital and resources that private industry would have otherwise used.

In theory, if the economy is in a recession then there are people and capital sitting about just waiting to build ports. This isn’t true in reality but it isn’t even true in theory when we have full employment, as we do now.

So it might be true that we need new infrastructure. An 18lane Harbour Bridge would be nice, but it comes at the cost of whatever the private sector would have provided. There isn’t a free lunch.

The appeal of low interest rates is obvious. Why not run up the credit card when the cost of servicing the debt is so low?

After all, if you can roll the debt over forever then all you need to pay is one or two percent, basically the cost of inflation.

The United States, Japan and much of southern Europe have done this; running massive deficits which have proved painless while money was cheap.

Now, however, they are pinned to the economic floor because if their central banks try and increase interest rates their central governments will have to ratchet taxes, slash spending, or default by way of inflation, in order to meet the cost of servicing their debt.

By keeping our debt level low we gift to future central bankers the headroom to raise interest rates when necessary without threatening the solvency of the Crown’s budget.

To date we have been fortunate to have a Finance Minister in Grant Robertson who has demonstrated competence and courage by sticking to his fiscal guns.

Adrian Orr holds a unique position of statutory independence, which allows him to ignore fickle political winds. He should be using his bully pulpit to support Robertson’s fiscal prudence, not undermine

it.