National's debt reduction target "the least ambitious it could possibly be," says Infometrics chief economist

Infometrics chief economist Brad Olsen has criticised National's debt reduction target of below 40 percent of GDP as the minimum the party could set, noting that National had previously talked about returning debt to 20 percent of GDP. RNZ

National's proposed budget responsibility rules, released ahead of the election campaign, commit to returning to surplus in 2028/29, reducing debt below 40 percent of GDP, and lowering government spending towards 30 percent of GDP over time. RNZ

Olsen said the spending target was "about right," but the debt threshold fell short given New Zealand's structural fiscal vulnerabilities. He argued Aotearoa needed lower debt levels than comparable countries because it is a small island nation with fewer taxpayers, reliant on trading partners, and at greater risk of natural disasters. RNZ

Christopher Luxon said the rules were about resilience: if the government's books were not in order, the country was vulnerable to economic shocks. RNZ

The current government's own debt target, set out in Treasury's New Zealand Government Securities Overview for 2026/27, is to put net core Crown debt on a downward trajectory towards 40 percent of GDP, then maintain it between 20 and 40 percent of GDP thereafter. Treasury National's proposed threshold sits at the upper bound of that existing range.

Labour finance spokesperson Barbara Edmonds said her party "did what was necessary to buffer the economic shock" and that National's rules would continue the government's current fiscal strategy. RNZ

ACT Party leader David Seymour said National could only achieve its budget goals with ACT's help. RNZ

Luxon separately took aim at NZ First's plan to buy back the Bank of New Zealand, saying it would mean $30 billion of additional borrowing "that the country does not have." RNZ

The fiscal backdrop against which these rules are being pitched remains difficult. The Treasury's Budget Policy Statement 2026, released on 16 December 2025, stated New Zealand is in a challenging fiscal position. Treasury The Budget Economic and Fiscal Update 2026 showed the New Zealand Government Bond programme decreased by $6.0 billion over the forecast period compared with the Half Year Update. Treasury Reuters reported the government forecast a budget deficit of NZ$15.06 billion for the fiscal year ending 30 June 2026, narrower than a previously forecast deficit of NZ$16.93 billion. Reuters

The longer-term picture is starker. The OECD's 2026 Economic Survey for New Zealand said ageing is putting increasing upward pressure on the fiscal deficit and that, without reforms, public debt will rise unsustainably towards 200 percent of GDP. OECD

Ahead of the 2026 Budget, The Conversation reported that National had not achieved two of its three big fiscal policy promises from the previous election. The Conversation

The gap between National's earlier 20 percent of GDP ambition and the current 40 percent threshold is the core of Olsen's critique. The government's existing debt target already contemplates a 20 to 40 percent band; National's rules essentially commit to reaching the top of that band and no further. For a party framing its fiscal rules as a discipline mechanism, the target reads more as a floor than a ceiling. Olsen's structural argument, that New Zealand's revenue base and exposure to shocks warrant lower debt than larger economies, gives the criticism weight beyond partisan point-scoring.

Edmonds' line that National's rules "continue the government's current fiscal strategy" is difficult to contest on the numbers. The surplus timeline, the debt band, and the spending-to-GDP anchor all track closely with what Treasury has already set out. The political contest, then, is less about the substance of the fiscal parameters and more about credibility and delivery, particularly given the reported gap between National's previous-election promises and outcomes. Seymour's intervention signals that any coalition negotiations around fiscal targets are likely to be contested from the right, with ACT positioning itself as the party that would push harder on spending reduction. Luxon's $30 billion BNZ attack on NZ First, meanwhile, previews the fault lines within a potential centre-right bloc on the size and role of the state.

The OECD's projection of debt rising towards 200 percent of GDP without reform puts the 40 percent threshold in sharp relief. If that projection holds, a target that merely holds debt at the top of a 20 to 40 percent band may prove insufficient against the fiscal pressure of an ageing population. National's rules may be politically defensible, but the question Olsen raises is whether they are economically adequate for the structural challenges Treasury and the OECD have both identified.