After 30 years of living in a budgetary straitjacket that squeezed infrastructure spending down into a $104 billion deficit, Labour’s Finance and Infrastructure Minister Grant Robertson is finally releasing a few of the shackles so governments of both flavours can start catching up in the longer term.
The bigger question is whether Robertson’s new net public debt ceiling of 30 percent of GDP, which is effectively 30 percentage points higher than that restrictive older one, is enough to both fill the deficit and deal with another 30 years of population growth in a way that improves housing affordability and reduces climate emissions.
By taking Crown assets like the NZ Super Fund, and liabilities like the debt held by Kainga Ora, Grant has managed to leverage our debt ceiling up.
By simply allowing our debt ceiling to grow, Grant manages to continue Government spending without raising taxes while keeping the rainy day money at the ready.
And that is what most commentators are missing.
Robertson is one of the most cautious Minister’s of Finance Labour have ever had, who is always shooting left wing ideas to stop populist left economics from ever spooking Treasury.
His pact with the Wellington Bureaucracy is that he is the trusted pair of hands who won’t ever allow neoliberalism to be challenged beyond the most broad of measurements (the well being budget).
Labour have been stung by the simple fact that their Covid response to date has enriched the wealthiest NZers by $1Trillion and this represents the largest transfer of wealth in NZs history. The pittance Labour have given to the poor while pricing homeownership out of entire generations of Kiwis is causing electoral stresses. Labour have plummeted in the Polls because the poor have lost faith in Jacinda’s transformative neokindness.
The broader she smiles, the more she tilts her head to one side and nods empathetically, the more they feel betrayed as the costs of living crisis swallows their hopes for a better tomorrow up whole.
Grant looks like he’s loosening up the purse strings but has zero intention of spending that purse and this is what should be making everyone nervous.
Grant is prepping a higher debt ceiling because he is smart enough to see the looming dangers on the horizon.
Putin is just starting.
The recession in America and Europe is just beginning.
China is becoming more unstable by the passing week.
Geopolitical crisis + economic meltdown + catastrophic climate change = looming meltdown.
Grant is raising the debt ceiling not to spend more, he is raising it because he knows what’s coming next.
When a politicians as cautious as Grant is opening the cheque book, we should all be very concerned.
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Original Source: https://thedailyblog.co.nz/2022/05/03/cautious-grant-commits-to-largest-debt-ceiling-in-nz-political-history-and-no-one-notices-why/