Opinion - As the debate over public spending, debt and tax heats up, the finance minister's announcement of new fiscal rules is an astute attempt to re-set the terms of that discussion.
But, by the same token, it reflects his party's long-running weakness on economic issues.
Grant Robertson's new rules come in two parts. The first concerns so-called operational spending on services and things that are used or consumed in the moment, like benefits, nurses' salaries and public transport subsidies.
Robertson has pledged that, once the Covid-19 recovery is complete and the "new normal" sets in, his government will run surpluses (on this operational expenditure) of 0-2 percent of GDP (the country's annual income). For these day-to-day services, the government will need to bring in more revenue - which generally means more tax - if it wants to spend significantly more.
The second rule concerns so-called capital spending on infrastructure like hospitals, railways and school buildings.
This spending doesn't count towards the 0-2 percent limit because it isn't operational or "current" expenditure: It's for the long term. It will be covered instead by a new rule on borrowing, which is that public debt should in normal times be no more than 30 percent of GDP.
As befits a fairly orthodox party, much of this is orthodox economics. If you are spending money on current services, Robertson would argue, you should fund it out of current revenue. Otherwise, you are asking future citizens to pay for things they won't directly use, the governmental equivalent of paying your power bills using the credit card.
If, in contrast, you're building things that will last decades, it is entirely reasonable to ask future generations to stump up part of the cost. This the government does by borrowing the money now and repaying it later. To do otherwise would be to unreasonably ask current citizens to pay the full cost of something that will directly benefit future generations.
The separation between operational and capital spending isn't perfect: Paying benefits, for instance, is arguably a long-term investment in the nation's human infrastructure. But it's a largely useful distinction.
The most immediately significant of the two rules is the one that concerns borrowing. Robertson argues that New Zealand has long used a measure of debt that is out of line with international practice. It overlooked assets like our contributions to the Super Fund, which stores money away for paying state pensions, while ignoring the borrowing by arm's-length state agencies - Kainga Ora and others - that was sneakily used to keep debt "off the books".
The new debt measure, by incorporating both those assets and debts, is more accurate. It also significantly lowers the estimate of New Zealand's borrowing, from roughly 40 percent of GDP to 20 percent.
On top of that, the government has removed the previous target of getting debt down to 20 percent under the old measure, and will instead allow debt to float up towards a ceiling of 30 percent of GDP under the new measure (equivalent to 50 percent of GDP under the old one).
This theoretically gives the government another $90 billion or so for infrastructure investment. National may claim this is accounting voodoo, but the change in measure seems sensible. Ministers are unlikely, moreover, to suddenly launch a borrowing binge.
It's not a question of cash: there simply isn't the workforce or the pre-approved pipeline for a whole new raft of projects, beyond what's already in prospect.
More significant is Robertson's attempt to loosen long-term constraints on government and change the debate about debt. His announcement is a significant advance on the Budget Responsibility Rules that Labour and the Greens devised in opposition, which sought to permanently constrain the size of government within very narrow bounds.
Successive governments' targets for slashing debt, meanwhile, have effectively come at the expense of our infrastructure spending, leaving us with crumbling hospitals and inadequate railways.
In contrast, a debt ceiling, which borrowing can float up towards - rather than a low target that must be hit - may help Robertson frame the debt conversation differently, and allow greater long-term spending.
Robertson's announcement has its failings. Even a 30 percent debt ceiling would see our government borrowing capped at less than half British or American debt levels. We may be more economically vulnerable than they are, but this still seems unnecessarily low. Why, moreover, focus on public borrowing, when it is dwarfed by our terrifying rates of mortgage-driven private debt?
Robertson's announcement, by bowing to conservative New Zealand fears about public debt, reflects Labour's long-term inability to set the terms of economic debate. Moreover, his requirement for continual surpluses in good years, though apparently innocuous, accidentally highlights another weakness.
The need for surpluses will, as above, prevent major new programmes unless more taxes can be levied - and this government has consistently shown itself unwilling or unable to tackle anti-tax opinion.
Robertson may be pushing back against conservative orthodoxy, but his party remains firmly in its grip.
Max Rashbrooke is the author of Too Much Money: How Wealth Disparities are Unbalancing Aotearoa New Zealand (BWB, November 2021) and is a senior associate, at the Institute for Governance and Policy Studies.