Labour says New Zealand's financial foundations are strong in response to criticism that former Finance Minister Steven Joyce could turn out to be right about the Government's fiscal hole.

Joyce faced almost no support from economists during the election campaign last year when he said Labour's promises would leave an $11.7 billion fiscal hole.

However, in an column in today's Herald, independent economist Cameron Bagrie said Joyce was going to be proved right.

"There is a fiscal hole and a softening economy is making it wider," Bagrie said.

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"I don't like the term fiscal hole. Good policy should dominate over strict debt targets and economic cycles come and go which are often beyond government control. But the Labour-led Government's fiscal hole is looking deeper by the day - and bigger than the $11.7 billion of additional borrowing that Joyce identified," he said.

Finance Minister Grant Robertson has responded this afternoon and said:

"Every Government faces the potential that economic forecasts change, affected by a range of factors including international events. That is why, as we said in Budget 2018, we will run sustainable surpluses every year. This has not changed."

"We agree with Mr Bagrie that the Government books are in a very good position to help the economy handle any impact from the US-China trade war. This is because we're running a surplus and paying down debt. We understand that New Zealanders want us to continue to do that.

Robertson said that the country "had great conditions in which to grow the economy".

"We are actively working with business on the issues they tell us matter most to them – productivity and access to skilled workers. That is the reality our on-the-ground interaction with businesses. Business can also take certainty from the Reserve Bank's statement today. They say it's a good time for business to invest," he said.

The New Zealand dollar fell by half a US cent after the Reserve Bank today kept its official cash rate (OCR) steady at 1.75 per cent, where the bank expects it to remain until 2020.

Westpac senior markets strategist Imre Speizer said the currency had dropped on the back of the bank's more moderate view of economic growth.

Former finance Minister and retired National MP Steven Joyce. Photo / NZME
Former finance Minister and retired National MP Steven Joyce. Photo / NZME