Pressure’s really mounting on the government to come up with a plan on what it’s going to do in the event of the economy slowing.

You’re seeing a lot of commentary on this at the moment, because the Reserve Bank is really running out of options.

There’s only so low it can take the Official Cash Rate. It’s now at 1.5 per cent, the RBNZ is expected to cut it to 1.2 per cent. on Wednesday.

That’s the lowest it will ever have been, and it might even go lower: KiwiBank is now predicting that it will go as low as 0.7 per cent next, possibly even lower than that

At some point, lowering the OCR stops working. Yes, there’s a fair bit of stimulus in a 25 basis point cut when the OCR is still at two per cent. But the closer it gets to zero, the less impact it has. 

Which is when we start looking at the Government.

What’s it going to do? Because it is at some point going to have to step in and help the Reserve Bank out.

The most obvious thing to do is revert to standard Keynesian economics - which is to start spending government money big time, start big projects like road, rail and infrastructure. 

It makes sense.These things need to be built anyway, so you may as well build them when you’ve got spare workers and when you’ve got cheap money, and money has never been cheaper.

But, and there are two big buts here, to be able to step in the government must do two things. 

One: it must start consenting and planning processes for those projects now. Those projects must be ready to go if things go pear shaped. We can’t be waiting five years for permission to build.

Two: It must review its debt targets. It must free up cash for major infrastructure projects.

Grant Robertson would never be forgiven if he kept to his self-imposed debt targets and said 'look how good we are with money' while Kiwis fell into unemployment and the country into recession.

The point of the debt target was to demonstrate fiscal responsibility, but if they are so restrictive that they end up making this economic downturn worse than it needs to be, they’ll demonstrate the opposite of what they’re supposed to, which is that this government can’t manage the economy.