Fiscal holes as a political weapon

Are fiscal holes a real issue, or an easy headline?Fiscal holes, a double dip recession and a shrinking economy. How bad are the figures and what do they really mean?Fiscal holes, a double dip recession, inflation untamed, a weak manufacturing sector and a shrinking economy.Figures are starting to emerge that don't paint New Zealand in a flattering light. We're going backwards economically - but are things as bad as they sound? Today on The Detail we look at the terminology of economic gloom and doom, to work out which phrases are real and which are being used as a headline-generating political weapon. Newsroom senior political reporter Marc Daalder says the term 'fiscal hole' is a fiction really."It can kind of mean what you want it to mean. There's no agreed definition of it, there's no economic definition of it, it's not a term that's maybe taught in economics classes. "The fiscal hole concept was first I think introduced by Steven Joyce at the 2017 election when he alleged Labour had a fiscal hole in their plan. Economists checked it, they found there were no errors in there, it would be tight spending in the later years of the term, but that in and of itself does not make a fiscal hole."Then National did appear to have some errors in their 2020 fiscal plan... here came the allegation from Grant Robertson that National had a fiscal hole. "And now it's become a maybe-too-common term to describe any situation where maybe things don't quite add up." It's also a challenge to the government's credibility. "Given that it seems to be effective, I think parties are very happy to weaponise it." Now the weapon that was designed for Labour is being turned against National. "National campaigned on being a safe pair of hands for the economy but also for the government. They were very strenuously insisting throughout the campaign that their tax plan would add up, and that was in the face of basically all of the expert commentary we heard from economists on the left of the political spectrum, on the right of the political spectrum, right in the middle as well, saying 'no, this isn't going to work'."I think the situation we've seen in the months since the election has proven them right."The government has been able to get out of quantifying their foreign buyer tax plan on the basis that the coalition agreement nixed it. "That's a handy excuse for them," Daalder says. "Now they don't need to go and put that to the test, but there are still other elements that are coming in differently to what they promised in the campaign." …Go to this episode on rnz.co.nz for more details