Wednesday, 18 February 2015

Let's talk about debt, baby

Chris Hipkins asks:
Did you know the National government have quadrupled the level of govt debt that was forecast when they took office in 2008?
Nope, because it's not true. This is a familiar theme. Last year Chris claimed the government had run up a debt "bigger than Muldoon". That statement was only true if you ignore the debt to GDP ratio and just look at how big the number is. Which no actual economist would do.

This time he seems to have mixed up forecasts from 2008 and 2014. This is how things looked at the 2008 PREFU before Labour was voted out of office (Gross Sovereign Issued Debt):

The Government's Gross Debt to GDP was forecast to hit 35% of GDP by 2013, around NZ$51 billion.

The actual result (from PREFU 2014) for 2013 was $77.9 billion gross debt, and gross debt to GDP percentage slightly above 26%. But certainly not quadruple what Treasury forecast.

UPDATE: sorry, wrong comparison in the initial post.