Minister of Housing Phil Twyford says the Government has no plans to impose a limit for Crown entity borrowing as there is no “logical reason” for one to be in place.
National’s Finance Spokeswoman Amy Adams says this is Twyford pulling the rug out from under Finance Minister Grant Robertson as it “flies in the face” of the Budget Responsibility Rules.
Figures from May’s Budget show Crown entity debt is forecast to rise from 0.5% of GDP to 2.2% by 2021/22 – or $6.5 billion.
This is spread across Government agencies such as NZ Transport Agency and Housing NZ and through more debt taken on in the form of Public Private Partnership projects.
But this is not included in the Government’s main borrowing figures as it is “outside the definition of net core Crown debt,” according to the Treasury.
This means Crown entity debt does not fall within the scope of the Government’s Budget Responsibility Rules of getting net core Crown debt to 20% of GDP by 2022.
Net Core Crown debt is currently 20.1% of GDP – $57.5 billion.
Asked on Friday if the Government had a limit for the amount Crown entities could borrow, Twyford said there does not need to be a limit.
“There is no policy or logical reason as to why there needs to be a limit,” he says.
“We need finance for new infrastructure that doesn’t rely on politicians and bureaucrats writing cheques but allows the market to respond to demand and that’s what we’re talking about.”
But Adams says this is a “myopic way of looking at the core balance sheet debt.”
“If what Twyford is saying is right, he is effectively pulling the rug out from under Robertson’s statement about Budget responsibility and saying, he doesn’t care how much is borrowed.”
She says this “obviously flies in the face” of everything Robertson has said for many months in terms of keeping net core Crown debt down.
“Robertson has made a big song and dance about giving himself this self-imposed cap. If he has been seeking to avoid that by putting it in other parts of the balance sheet, that’s a very tricky way of approaching his own self-imposed rules.”
27 Comments
How can it be outside the definition of borrowing if it is a crown entity doing the borrowing?
Definition of whether it is a government borrowing should be who is the ultimate owner of the entity doing the borrowing?
If it is the government then it is government borrowing, playing with words and definitions reflects a modus operandi that is best undertaken in the shadows as opposed in full sunlight.
Better to openly say that the budget responsibility rules need to be breached for the following reasons than to do introduce a blurring of the facts and have this appear in a few years time as a smelly mess.
Did we not learn anything from the SOE fiasco created by Solid Energy. Admittedly not a Crown Entity but as in this case, but is there really any difference?
So borrowing is now irrelevant if its a public good.
Given that NZ runs a deficit i.e. we borrow more than we earn, therefore any funds in excess of those already allocated have to be borrowed. These funds need to be borrowed from somewhere.
If irrelevant why did the new government campaign on not increasing the public debt? They thought it was relevant and now Phil T wants to keep the borrowings off the goverments books.
Sounds like the household who has one partner borrowing to gamble without telling the other partner, since the other party isn't aware of it its not counted when they sit down to prepare their financial position. I think it should be on the books.
PT obviously thinks that voters are stupid. His comment: “We need finance for new infrastructure that doesn’t rely on politicians and bureaucrats writing cheques but allows the market to respond to demand and that’s what we’re talking about” - this beggars belief. Since when is the "market" going to pay for all the infrastructure? That'll be taxpayers and he can fudge it whichever way he likes. The "market" will only fund infrastructure if there is a degree of ownership and an acceptable return on capital. This flies in the face of what the govt will accept, so pretending otherwise is just a joke.
No reason... perhaps that Housing NZ and NZTA are borrowing at rates above what Core Crown debt is being issued. That's the real crime here... not only are they fiddling the borrowing to get it under Core Crown limits but it is actually costing taxpayers.
What should happen is the Crown borrows and then lends to NZTA and Housing NZ at the same rate... but of course, that doesn't meet the objectives of Grant 'Cook the Books' Robertson. Its the sort of stuff that would have Winnie hopping made when in opposition... guess he is muzzled now.
Yes I know, and they are being done as we speak ...... the irony is that with or without these noobs in power, the houses built now were planned and started building as the CoL took over and claimed some of them as KB ...being those in Northcote, Papakura and Manuka .
My point is the 23000 state and community houses planned are going to be built in the next 10 years anyway .. long after these noobs are brushed away in 2020
But , as you know, only losers like to claim credits attributed to others so to cover their own shortcomings .... and that precisely is what pissing many honest NZers off !
Phil Twyford is someone who will sacrifice a whole nation's future to please his ow ego for a very short time. A dangerous man, regardless of his political leaning or views. He does not see any problem to borrow with no limits (and no plans for how the burrowing will be repaid) as long as he can say that he has has constructed his houses. One can say the same about Winston Peters.
Sure, my comment on PT does not mean a cheer for John Key. It is sad that when it comes to politicians and parties I can only think about who is worse than the other (often concluding that they are equally bad) and almost never who is better that the other. Is it not?
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