National's fiscal plan is not credible.
It would give them about a centimetre's worth of fiscal headroom in the next two Budgets, at a time when flexibility and optionality should be prized.
This criticism, by the way, has nothing to do with the $4 billion error in calculating how much they could save by suspending contributions to the New Zealand Superannuation Fund. That affects financing the capital budget over the next 10 years.
Rather, it relates to the operational budget — the lion's share of government spending — over the coming parliamentary term.
National's operational initiatives, also known as deficit-widening commitments, total $14b over the forecast period — the four years to June 2024.
Most of that, $8.2b, is tax cuts, especially the $4.7b cost of temporarily raising the income tax thresholds for 16 months from December 1 this year. We have to take them at their word that they will be willing to deliver what will feel like a tax increase in April 2022.
The rest of the revenue sacrifice relates largely to more generous treatment of business investment in plant and machinery, but there is also the indexation of income tax thresholds in 2023, and two landlord-friendly moves: winding back the bright-line test to two years and repealing the ring-fencing of losses on residential property.
The balance of the $14b is $5.8b of spending increases. But $4b of that, divided between the current fiscal year and next year, is simply labelled "Covid-19 contingency".
It is desirable, of course, to have some money in the kitty to deal with impacts of the pandemic, even if it is less than a tenth of what it has already cost taxpayers.
But it leaves only $1.8b — altogether, over four years — of increased spending earmarked for health, education, economic development, the environment, law and order, social development and the new border protection agency they plan to establish.
So it is an increase, but not much of an increase.
To calibrate the scale, the Pre-Election Economic and Fiscal Update (Prefu) forecasts the Government's operating spending to be $457b over the same four years. That includes $26b of forecast new operating spending.
Turning to the other side of the ledger, where would the $14b to cover those commitments come from?
Well, $9.5b would come from the Covid-19 Response and Recovery Fund which Parliament has already appropriated but not all of which has been spent.
And then there is a cumulative $9.9b of operating allowances for the next three fiscal years.
That is $4.7b, or nearly one-third, less than the operating allowances included in May's Budget and incorporated in the Prefu forecasts.
Operating allowances are central to the Budget process. Essentially, they represent the unallocated pot of new money available to top up existing baselines to cope with cost pressures and to fund new initiatives.
It is what ministers compete for in each Budget round, like so many hungry pigeons fighting over a discarded hamburger bun.
May's Budget earmarked an operating allowance of $2.4b for Budget 2021 (which would carry through to the following years) and again for Budget 2022, rising to $2.6b for Budget 2023.
National would cut that to $1.5b next year, and $1.8b for the subsequent years.
So we have $19.4b of funding (from the Covid fund and operating allowances) of which $14b is already committed, leaving $5.4b still available. But when we look at how that is apportioned over the coming three years, there is only $800 million of new money available for the 2021/22 year and even less, $700m, the year after, leaving $3.9b for 2023 (an election year).
It is not a lot of wriggle room in times of peril and pestilence.
It is what "disciplined" stewardship of the public purse would mean: a lot of hard-pressed officials and lobby groups arguing for more money and being told "sorry, no can do".
In any case, policy decisions are not the only influence on the fiscal bottom line. There are also the "automatic stabilisers" to bear in mind.
That is the inevitability during recessions that tax revenue suffers and the number of people needing income support increases. The size of those effects can only be estimated.
The Treasury forecasts that over the next four years the tax take will be $360b — give or take $6b, depending on which of four possible economic scenarios proves closest to the mark.
Whoever is in power over the next three years, the Government will be running fiscal deficits. So all the billions of dollars in the foregoing will be borrowed.
But it is nonsense to claim, as politicians are wont to do, that it all has to be repaid, you know. The Government is not a like household.
In fact it is almost unheard of for the dollar stock of government debt to be reduced. As bonds mature they are replaced by issuing new ones. Government debt is essentially eternal.
Instead, fiscal prudence is generally defined as seeing debt fall relative to the size of the economy, or the tax base, which has to service it.
It is the interest cost that matters and that depends, of course, not only on the level of debt but also on the relevant interest rates.
On that score Prefu has a cheerful tale to tell. Finance costs — the core Crown's interest bill — over the past six years have averaged $3.5b a year.
But that is forecast to fall to $2b for the current year, $1.4b next year, $1.7b the year after and $2.4b in 2023/24. In other words, lower interest rates dominate the increase in the stock of debt, at least for the next four years.
The Treasury projects interest rates to rise. It assumes that the average interest rate on 10-year bonds will rise from 0.7 per cent this year to 1.8 per cent by 2024 and keep rising to 3.6 per cent by 2034.
On those projections the interest bill would be $12b by 2034. But relative to the size of the economy, that would be 2.1 per cent of nominal GDP or twice what it was last year.
Such projections are highly conditional, however, and not only on a set of assumptions the fiscal strategy model makes about the economy, like population growth and productivity growth. They also assume no further shocks to the economy — we should be so lucky — and no policy changes (for 14 years!).
Such projections should not therefore be brandished at us, as Opposition politicians are wont to do, as if they were Holy Writ.