Fiscal policy

Reality obviously has not caught up with this Government yet. New Zealand is facing an economic crisis, but the Government is having none of it.

To keep international investors’ trust, we must remain squeaky clean in our fundamental economic institutions. If we are not, New Zealand will come out of the Covid-19 crisis as a broken economy and a failed state.

It must indeed be tempting to binge on infrastructure spending as Berlin can now borrow for 30 years at a negative interest rate of 0.11 percent. But should the Germans do so?

The Treasury should clarify the relationship between its Living Standards Framework and mainstream cost benefit analysis.

The only hole we have in fiscal plans is independent scrutiny of Government’s and the parties’ numbers.

As New Zealand is looking ahead to a series of budget surpluses, it becomes imperative for the government to have an answer to those reflexes. And it has to be an attractive answer to stop the fiscal dogs from salivating.

Bill English has delivered a solid, unspectacular and sober budget. And there is nothing wrong with that. Unless you are a gallery journalist.

If there is one art Prime Minister John Key’s New Zealand government has mastered, it is expectation management. So for its eighth budget, delivered yesterday, expectations were low. Hence nobody was disappointed when Minister of Finance Bill English delivered it.