Grant Robertson. Photo: RNZ / Angus Dreaver
The opposition's plans for the economy would result in deep cuts to services, the Finance Minister says.
Grant Robertson says the government has shown it can take a tighter fiscal approach while still maintaining the services New Zealanders want, such as more spending on health and education.
Other parties might make different choices but they would have serious consequences, he said.
He was responding to Treasury's release of its Pre-election Economic and Fiscal Update on Tuesday, which gained mixed reactions.
Labour hailed the accounts as showing the economy was turning the corner, with no recession, wages ahead of inflation, and more people in jobs.
National painted the numbers as dire, with a return to surplus delayed and government debt surging.
Labour had made a number of large spending promises during its election campaign and the party would need to explain how they would be paid for in light of "exploding debt", finance spokesperson Nicola Willis said.
However, Robertson responded New Zealanders needed to ask themselves if they wanted basic services such as health and education funded properly.
Labour believed these were important and was balancing that against taking a careful fiscal approach.
The international rating agencies were also "comfortable" with that approach as it affected debt, he said.
"People could make other choices but those choices have consequences for the services New Zealanders rely on and they'll mean very deep cuts in public services."
Robertson said the economy was tightening but the government had to react to the pressures that arose such as the spell of adverse weather that hit parts of the North Island earlier this year.
Now it would be necessary to return to "a more sustainable fiscal position" and the government had moved in that direction by announcing $4 billion in spending cuts last month.
"The circumstances we're facing now, that we do, after a big level of expenditure to support New Zealanders through Covid, have to move to a more sustainable fiscal position and we've already shown our willingness to do that by the savings we've made."
"There are choices I absolutely acknowledge at the margins" - Finance Minister Grant Robertson
He pointed out that with higher interest rates, the government's borrowing costs were higher.
As well, 79 percent of the new funding in the 2023-2024 Budget was for cost pressures that covered things like paying nurses, teachers and the police.
"There are some parties who would say well, you can trade that off, what we've sought here is a balance. Our level of debt remains historically low compared to other countries around the world and we're continuing to provide the public services that people need.
"There are choices I absolutely acknowledge at the margins there but they are choices that would have significant impacts on New Zealanders. We're facing a balanced approach here."
Asked if he accepted responsibility for interest rates remaining higher for longer, with more money going into the system (known as the fiscal impulse) and possibly stoking inflation, Robertson responded that the Reserve Bank had said in recent monetary statements that they have a degree of comfort with the fiscal position.
Any level of government spending could be inflationary.
"Inflation gets down to the 1 to 3 percent band that the Reserve Bank targets by the end of next year so we believe we are doing our bit to put downward pressure on inflation."