Plans for big petrol-tax hikes but $5 billion of cuts to state-highway upgrades are the latest sign Grant Robertson's numbers don't add up.
Steven Joyce was first to warn of trouble ahead but suggesting some type of $11.7b accounting error obscured his genuine point that Robertson had simply decided against making provision for spending increases outside a narrow range of promises.
In less than six months, the government has burned through most of its provisions for new operating and capital spending. On a five-year basis, there has been $5b for Shane Jones' provincial growth fund, $5.5b for welfare, $2.6b for first-year students, $2b for KiwiBuild, $3.3b for the New Zealand Superannuation Fund, plus a few hundred million for other bibs and bobs. Reversing National's tax cuts will save only $8.4b over five years.
The government now finds itself struggling to meet the demands of nurses, teachers and other key Labour constituencies for pay rises, let alone make the significant new investments in health, law and order, and transport and other infrastructure that the median voters who switched from National to Labour expect.
Labour's ideological aversion to private-public partnerships in health, education and corrections makes things even tougher. There clearly needs to be a brand-new hospital in South Auckland after the scandal at Middlemore yet the government has ruled out sharing such costs and risks with the private sector.
Robertson's latest attempt to bridge the fiscal gap has created yet another political debacle where provincial New Zealand is being told to pay higher taxes in exchange for inferior roads.
The deal is not much better for Aucklanders, who face a 22c per litre petrol tax hike in exchange for projects like the tram down Dominion Road.
The government's fiscal problem is rapidly turning into a political one.
The heart of the problem is Robertson's so-called "anchor" of fiscal discipline: his promise to reduce government debt to 20 per cent of GDP by 2022. This was designed as a political ploy to compete with Joyce's commitment to reach 20 per cent by 2020 and then push on with debt repayment to reach just 10-15 per cent by 2025.
Robertson has convinced himself that sticking to his commitment is essential to maintain the confidence of the business community and financial markets.
He remembers the Winter of Discontent of 2000 and is determined to avoid at all costs investors and business becoming actively hostile to the new regime.
But this just shows Robertson's naivety about the business and finance communities and woeful ignorance of what drives confidence in either.
At a net 22 per cent of GDP, New Zealand's debt is already low compared with the rest of the world. If carefully signalled and communicated by Robertson and his Treasury officials, it is implausible that a further extension of the 20 per cent debt target to, say, 2025, would provoke a materially adverse reaction from the business community or financial markets, especially if emphasis was placed on investments in infrastructure and human capital.
Moreover, the business and financial communities well understand and accept that the fundamental difference between Labour and National governments — at least theoretically — is that the former believes in bigger government than the latter.
Already beset by political mismanagement, weak prime ministerial leadership and ethical scandals, the government may fear the process of gently walking back Robertson's overly staunch fiscal parameters.
But what is the alternative?
A winter of discontent involving teachers, nurses and motorists would surely be more damaging to the government than the business community's revolt 18 years ago.
One option is to hope fiscal outcomes continue to outperform forecasts, like this week's government financial statements for the eight months to the end of February which delivered a surplus $494 million higher than expected just a month ago. But that is a big bet to place when Jacinda Ardern's re-election is at stake.
The better course is for Robertson and Ardern to more confidently own Labour's commitment to higher spending and begin the process of gently stretching out the debt reduction target.
If they manage that process well, there will be not the slightest blip in either the dollar, the NZX or investor or business confidence, but a necessary protection of Labour's ratings in the polls.