Robertson’s cautious approach should reassure business
Who’d be a finance minister? Do your job poorly and the country goes broke. Do it too well and you’ll be accused of being a Grinch.
After delivering a solid set of crown accounts yesterday Grant Robertson faced calls from the Right to give his surpluses back by way of tax cuts. And from the Left to spend more on social services.
He has held the line though, offering up no new allowances for Government spending in the Half Yearly Economic and Fiscal Update (HYEFU).
Amid the ongoing policy battles this Government faces with business groups, Robertson’s fiscal caution remains — solid reassurance that the economy is in safe hands.
Debt reduction is running slightly ahead of the Government’s own self-imposed track.
The Half-Year Update shows net core Crown debt falling from 20.9 per cent of GDP in 2018/19 and as low as 17.4 per cent of GDP in 2022/23.
In a week where we have heard fresh warnings from the International Monetary Fund about clouds gathering over the global economy, the prudent approach is heartening.
Even within his own party Robertson must face almost daily pressure to spend more.
There’s no shortage of deserving causes. There never is.
He did hint that there may be headroom for new spending in the 2019 Budget if economic conditions hold.
But broadly, as ASB chief economist Nick Tuffley put it: “The Government has kept its fiscal powder dry.” The approach will give the Government choices as it moves ahead with a more holistic fiscal policy. Five focus areas for the 2019 “well-being Budget” were unveiled yesterday, putting climate change, mental health, child poverty, Ma¯ ori and Pacific income equality and digital change to the fore.
The cautious fiscal approach is also good politics — firmly embedded in the national psyche, it is so popular with the public that it has become bi-partisan outlook.
As Robertson’s predecessors argued, it ensures that social programmes are sustainable and that New Zealand is able to cope with external shocks — be they natural disasters or financial crises.
If you took Treasury’s rosy forecasts at face value it would be easy to make the case that Robertson is being too conservative.
But looking about at the world in late 2018 it would seem foolhardy to assume that the next five years will be economic plain sailing.