Robertson steps up as a ‘mate’ for the RBNZ

TLDR: The Labour Government is playing up its fiscal conservatism as the political year ends, aiming to show voters and the Reserve Bank it is a ‘mate’ for monetary policy in the great fight to tame inflation.

Treasury staff usher Grant Robertson in to deliver his HYEFU speech. Photo: Lynn Grieveson / The Kākā

But that hairshirt may well be discarded by May’s Budget 2023 if Labour finds itself unable to turn around its popularity, at a time the economy is now forecast to be headed into a recession that:

• terminates 50,000 jobs and pushes unemployment up towards 5% from 3.3% now;

• hammers house prices 20% below their peaks from late last year;

• is happening at the same time is inflation is closer to 6% than 3%; and,

• is happening as median voters roll into new fixed mortgages that cost them hundreds of dollars a month more in interest.

Finance Minister Grant Robertson described his fiscal approach as ‘careful’ and ‘balanced’ a combined 22 times in 49 minutes of news conference.

I include more detail, analysis and juicy charts on the economic and political outlook for paying subscribers below the paywall fold, along with my questions to Robertson about whether limiting the tax take and net debt to 30% of GDP would allow enough infrastructure investment to reverse 30 years of inter-generational wealth transfer from the young to the old. (Short answer: he’s planning to stick to the 30/30 rule and didn’t address the question.)

Elsewhere in our political economy this morning: