HNZ borrowing highlights Government’s fiscal policy failings
The Government recently ignored advice from Treasury urging Housing New Zealand to borrow centrally to build new state
homes, to avoid the high interests rates and additional risk incurred from borrowing elsewhere. The Government’s
decision to allow Housing New Zealand to independently borrow billions of dollars, so it can avoid higher levels of
Crown debt and therefore stick to its self-imposed Budget Responsibility Rules, highlights that its fiscal policies are
less about managing resources responsibly but instead creating a false appearance of responsible management.
Auckland Action Against Poverty is calling on the Government to scrap its Budget Responsibility Rules, properly fund the
building of the tens of thousands of state homes needed, and repair the current stock in dire need of maintenance.
“The government is so concerned with pandering to big business and the media to try and manufacture a reputation of
fiscal prudence, that it’s not even fulfilling its most basic duties of funding vital public services. There is nothing
stopping the government from doing this. It has the ability”, said Ricardo Menendez March, Auckland Action Against
Poverty Coordinator.
“The Government plans to build 6,400 state homes over the next four years, with this funding coming primarily from $2.9b
Housing New Zealand was enabled to borrow independently, instead of through regular Government borrowing, despite the
Treasury's advice. About $234m of new money was allocated to the crown agency. If the Government had taken on that debt
centrally, core Crown debt would’ve likely to hit the arbitrary Budget Responsibility Rules’ ceiling of 20% of GDP.
“The government is proving to everyone that its self imposed fiscal straight jacket is purely political and not based on
sound economics. It is forcing public services to borrow from more expensive sources when Treasury have spelled out that
this will make no difference to the economic reputation of the country, as the government still backs the agency
financially.
“The Budget Responsibility Rules are preventing the Government from being able to adequately house our homeless
community, and properly invest in the current state housing stock. The growing levels of inequality and infrastructure
deficit require the Government to change their restrictive fiscal approach. If the Labour led Government is serious
about addressing poverty in New Zealand, it will have to scrap the Budget Responsibility Rules."
ENDS