Leaked document shows Greens discussing scrapping spending limit policy

Author
Jason Walls, NZ Herald,
Publish Date
Thu, 14 Nov 2019, 7:19PM
Minister of Climate Change James Shaw co-wrote the Budget Responsibility Rules with Finance Minister Grant Robertson before the 2017 election. 9Photo / Marty Melville)
Minister of Climate Change James Shaw co-wrote the Budget Responsibility Rules with Finance Minister Grant Robertson before the 2017 election. 9Photo / Marty Melville)

Leaked document shows Greens discussing scrapping spending limit policy

Author
Jason Walls, NZ Herald,
Publish Date
Thu, 14 Nov 2019, 7:19PM

A leaked Greens discussion document reveals the party is gearing up to ditch its support of the self-imposed Government spending and borrowing rules, labelling them "arbitrary".

The Herald has obtained a copy of a fiscal policy consultation document, sent out to members discussing a review of the Greens' fiscal policy.

Within that review is a commitment to scrap the party's support of some of the Budget Responsibility Rules (BRRs) – co-written by Greens co-leader James Shaw and Finance Minister Grant Robertson before the 2017 election.

Some of the rules have been highly controversial to Greens members, as they put a limit on spending and borrowing.

One member, who did not wish to be named, told the Herald that the urgent climate work that needs to be done is "incompatible" with the BRRs, which have been used as an excuse to not properly fund ambitious projects.

The BRRs, which were adopted by the Government after it was sworn in back in 2017, mean the Government's debt as a proportion of GDP is not allowed to exceed 20 per cent.

They also mean Government spending has to stay below 30 per cent of GDP.

But, according to the discussion document, the Greens don't want anything to do with those rules.

"The Green Party opposes fiscal strategy which includes arbitrary point targets for Government debt and Government expenditure," it said.

"Such targets are only relevant where they are based on evidence and clearly derived from the purpose of fiscal policy set out above."

It said the Government's current approach to fiscal management "embeds neoliberalism in both legislation and in the way the national accounts are prepared".

The BRRs were only meant to be in place for the first term the Government was in power.

Both Labour and the Greens said they would reassess the rules before the next election.

Earlier this year, Robertson said the Labour Party was in the process of reviewing all its policies before the 2020 election and the BRRs would "absolutely" be a part of that.

Economist Shambeel Eaqub has called the rules a fiscal straitjacket, arguing that the Government should be borrowing more at a time when interest rates are so low.

In the first two years of this Government's tenure, it's stuck to the rules.

Debt has hovered around 20 per cent of GDP and spending has stayed a few per cent below the 30 per cent limit.

But in May, Robertson gave the Government more wiggle room, announcing it was shifting its debt target from a single figure to a percentage range.

He explained the Government is looking at a range of around 15 to 25 per cent of the GDP.

 

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