Mike Hosking: Red alert - Labour Government in danger of plunging into deficit

COMMENT: Already the doubts over what Grant Robertson was telling us last Friday are spreading.

If you missed it last week, what I was trying to explain to him (and he wasn't accepting) is that he is running his books dangerously close to the margin, that the forecasts are optimistic, and that it would take next to nothing for them to be out - and his $1.3 billion surplus would be gone.

His defence was that the Treasury are good at forecasting. No, they are not.

By the end of the week, as he presented his numbers and arguments at the business breakfasts to the economists, they were saying exactly what we are. His forecasts are optimistic, if not delusional.

If you want proof, this is how marginal it all is. The Budget has $168 million for the gun buyback scheme, the gun lobby think it'll be closer to a billion. Robertson says if they're right, they'll cover it.

My question is with what? If it's a billion, they have under-budgeted by $850 million. The surplus at $1.3 billion, minus $850 million, is less than half a billion. And in terms of the size of the economy it's literally pocket change.

If they've misread this, and the growth forecasts prove to be wrong, you are now running in the red. And that, as we said on Friday is unconscionable. It is inexcusable.

Counter-balancing the economically literate who are raising these concerns, are the fruit loops on the other side of the equation who saw what the Government did Budget wise, as woefully lacking.

The Ganesh Nanas of this world wanted more. They were astounded that the $1.3b surplus, that he called a "rainy day fund," was not being spent and then some, given we have so many so called "social crises". And in their view, that is what we all need to watch out for.

For these people who don't get basic economics, there is literally no end to the problems they have, the holes they want to fill, the money they want to spend. They would spend and borrow us into bankruptcy, literally.

Now, fortunately Labour aren't insane. But they are fiscally loose, and the numbers now prove it.

That then brings us to the politics of it all. Do most New Zealanders or voters care about deficits or surpluses? Do they care about being in the red? Do they join the dots between a government's books, economic growth, the tax take, jobs, and their stability? If they don't, then Labour might get away with this.

But if they do, which is my bet, and they do because since Roger Douglas in 1984, we have woken up to simple economics, the value of efficiency, common sense, not to mention success, and we like it.

So if that's the case and Robertson and Co are leading us into an election in the red for the first time in years then they're getting rightfully punished.