Scaremongering about government debt has been one of the more tedious features of the election campaign that is now drawing mercifully to its end.
For people mindful of what sort of legacy we are leaving, there are plenty of things to worry about.
Young lives blighted by shameful levels of poverty and inequality, for one thing.
All sorts of infrastructure deficits, for another.
Then there are the distortions in the tax system which contribute to absurdly high house prices on the one hand and productivity-stunting capital shallowness in the business sector on the other.
And climate change. In the long run it doesn't matter what else we get right if we keep getting that one wrong.
But the projected level of government debt and its ratio to gross domestic product does not belong on that list.
New Zealand's government debt is low by rich country standards.
Data from the Bank for International Settlements show that on the eve of the pandemic, gross government debt — measured against the size of the economy — was only 29 per cent of the level for advanced economies as a group.
It is household debt we should be worried about: at 95 per cent of GDP, New Zealand's was conspicuously higher than the advanced economy average of 72 per cent.
For future taxpayers it is the size of the interest bill they have to meet — core Crown finance costs, in the jargon — that matters.
And that depends not only on the level of debt but also on the interest rates applying to it.
Net government debt is forecast to increase by $140 billion from pre-Covid levels to around $200b by the 2023/24 fiscal year.
At 55 per cent of GDP, that might look alarmingly high, particularly to people who remember that on the eve of the Global Financial Crisis net debt was at an historic low of just 5 per cent of GDP. That was helpfully low when the Crown's balance sheet had to take the strain not only of the GFC recession, but the Canterbury earthquakes as well.
Even so, serious fiscal belt-tightening was subsequently imposed to bend the net debt curve back down to 19 per cent by June last year.
But back in 2008, interest rates were way higher than they are now. Ten-year bond yields were around 7 per cent, or 10 times their current levels. Even with the much lower level of debt, the core Crown finance cost was $2.5b or 1.4 per cent of GDP.
In the current fiscal year, by contrast, net debt is expected to rise to 28 per cent of GDP but the taxpayers' interest bill is forecast to be $2b or just 0.7 per cent of GDP.
That reflects a couple of things. There has been a long trend decline, not only here but globally, in the neutral interest rate, the rate which balances desire to invest with willingness to save.
But on top of that the Reserve Bank, like its international counterparts, has taken to intervening on a large scale in the secondary bond market, with a view to tugging interest rates lower still, not only, or even mainly, for the Government but for borrowers generally.
By the end of September it had bought $41b of government stock through its large-scale asset purchase programme en route to a self-imposed limit of $100b. That limit would represent about two-thirds of the cumulative forecast increase in government debt over the five years to June 2024.
Quantitative easing does not magic away the debt but it relocates it. The Reserve Bank is buying up government bonds with new money it has created for the purpose. That new money shows up as an increase in the settlement cash balances which trading banks have in their accounts at the central bank, on which it pays interest at the official cash rate, currently just 0.25 per cent and potentially headed negative next year.
From the standpoint of the core Crown as a whole, which includes the Reserve Bank, the effect is an interest rate swap. It swaps a liability to pay a fixed rate of interest for a fixed period to private sector holders of its bonds like pension funds, to an obligation to pay a variable interest rate to a different set of custodians of people's savings, the banks. It is not a free lunch but for the time being a pretty cheap lunch.
For the time being. Fiscal scaremongers are liable to argue that interest rates will eventually rise. They point to the Treasury's projections for the 10 years beyond the end of the forecast period, out until 2034.
Those projections, spongy as they inevitably are, have the 10-year bond rate gradually rising to 3.6 per cent by 2034, which would still be less than it was six years ago, and the interest bill rising to 2.2 per cent of GDP, compared with an average of 1.3 per cent over the past six years.
Another way of calibrating the scale of the increase is this: in fiscal 2019 the core Crown finance cost was 1.2 per cent of GDP. It is projected to rise to 1.6 per cent in 2030.
But over the same period, the International Monetary Fund estimates that New Zealand's public health spending will increase by — not to, by — 1.6 per cent of GDP and New Zealand Superannuation by 1.5 per cent of GDP.
Those effects of an ageing population clearly dwarf the impact of mounting Covid-related deficits and debt.
Yet we have heard next to nothing from the major parties about superannuation, apart from National's plan to fund half its capital spending programme, mainly targeted on motorways, by ceasing contributions to the New Zealand Superannuation Fund.
Super is not a can we are kicking down the road. It is more like a keg.