Fiscal Discipline Must Underpin Recovery

The days of using Covid as cover for profligate spending must end, National’s Finance spokesperson Michael Woodhouse says.

The Government has cynically used funding allocated by Parliament for the Covid-19 Response to fund items that can’t by any measure be considered Covid-related. So far at least $12 billion of spend from that fund could have been avoided if the Government had heeded National’s cautions to use Covid-19 response funding only for Covid response measures.

Back in Business, National’s plan to save livelihoods and unleash the economy contains plans to reduce the economic impact of future public health measures, better targeting support to businesses suffering as a consequence of lockdowns, and eliminating wasteful spending.

National is calling on the Government to adopt the following fiscal responsibility rules:

1.     Reconfirm a commitment to the 15–25% range for debt-to-GDP, and be clear about how and when this is likely to be achieved (subject to the normal caveats). This is, after all, what the law requires.

2.     Ensure Covid-19 response funding is used only for direct Covid response measures.

3.     Commit to no use of in-between Budget processes to implement non-Covid spending initiatives.

4.     Guarantee greater transparency and timeliness of spending reports outside of the Budget.

5.     Bank any unexpected gains in tax revenue or reduced expenditures to the operating balance, so debt is reduced faster.

Greater fiscal discipline and lower debt will also significantly ease the current high rate of inflation which is hurting families through higher food, fuel and housing costs.

We owe it to our children and grandchildren to keep the debt legacy this generation leaves them as low as possible. Only the fiscal discipline being proposed by National will do that, and I am calling on the Government to adopt these measures.

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