NZ's finance minister prepares us for ballooning deficits

Politicians are rarely explicit in advance about how they plan to fleece the public; if you want a heads-up then you have to read their tea leaves. New finance minister Grant Robertson has just dribbled out one of these tea stains in the same way that John Key once did, one that shows what he really plans for at least the next three years.

You'll perhaps remember that before being elected in 2008, John Key, aka Smile and Wave, firmly denounced the failure of Labour's policies to contain rising house prices, which he swore once in office to contain. Once in power however, he confided that in fact he really rated this house-price inflation stuff, because it would inflate away the enormous repair bill of the country's leaky homes. (And we've all seen how well that inflation has worked out, haven't we, not least for all those young families trying but failing to get on the first rung of the housing ladder.)

Similarly, you might remember that before being elected in 2016, Grant Robertson and Jacinda Ardern, aka Smile and Waft, decried the National Party's $60 billion deficit, and announced their own ambition for severe fiscal rectitude over their three-year term. Now they're in power, however, Robertson has signalled that this "low level of public debt" (i.e., that same $60 billion) is just a platform for him to really get started.

As sharemarket turmoil in the United States spread around the world, Robertson said in an interview that he had real confidence in New Zealand’s economic fundamentals.
“Essentially the low level of public debt is a really important part of it.”

It's fair to ask here if Robertson is a hypocrite or just a chancer. It's possible of course that he's both, but in any case he's signalling here that he's ready to take "neo-Keynesian" remedies should sharemarket turmoil become something more -- good neo-Keynesians running surpluses in times of robust good health (as Michael Cullen did), and exploding the deficit when economic turmoil erupts in the streets.

So in that sense it's not hypocritical for a good neo-Keynesian to decry a $60 billion deficit at one point in time (when everything is coming up roses), and some time later (when things are not) to suggest that figure represents a "low level of public debt." It's not hypocritical but, when coupled with Winston's post-coalition announcement that we face economic turmoil in the very near future, it definitely suggests we should look forward to many, many years of red ink ahead -- which means many, many years of good money being sucked away into piss-poor projects and monument building.

Don't say I didn't warn you now.

[Pic from Vicki Richards]
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