It was only a few short weeks ago that Bill English was saying he wasn't going to be spooked by a little bit of red ink in the Government's accounts.
The Treasury's pre-election fiscal update bleeds so much of the red stuff that the document looks like the aftermath of Dracula running amok in the blood bank.
The numbers in this horror story are truly awful. It is goodbye to operating surpluses for close to a decade. The forecasts for the separate cash deficit figure nearly double to $6-7 billion for the foreseeable future. Growth slumps. Unemployment jumps. These numbers will almost certainly get worse. The Treasury's forecasts were done before last week's maelstrom on Wall Street.
It certainly wasn't a pretty sight, and we face some tough years that will require strong financial management, and a willingness to make hard decisions. But Armstrong notes that Cullen went easy on National:
But Michael Cullen did not lay into National yesterday - and for good reason. The update's forecasts have obliterated previous boundaries of the tax argument.
Having slammed National for setting a debt-to-GDP target of 22 per cent, Cullen's position has been undercut by the current debt ratio being forecast to balloon from 17 per cent to 24 per cent of GDP over the next four years.
If National's tax cuts are reckless, so, by Cullen's previous definitions, are Labour's.
Cullen admitted as much by saying that had he known in advance what was going to happen he would have been more cautious about cutting taxes. However, he is refusing to withdraw the second and third phases of Labour's tax package.
That gives National carte blanche to go with its more generous package, which it says will be no more expensive than Labour's because the extra cost will be funded by transparent savings in government spending.
The bickering over tax has long made up for the lack of argument over wider economic policy. Yesterday changed everything. The election is no longer about tax. It is about which party can best convince the voters its policies will shorten the length and depth of that recession.
Keeping Stock concurs. Michael Cullen has steered the NZ economy through many years of good times, but seems totally spooked by what now faces him. The economy seems to be in a similar state to that inherited by National in 1990, except that thanks to the Fiscal Responsibility Act they know about it in advance, not once the power-shift has occurred. If National can come up with a bold and innovative plan to revitalise the economy, the election is theirs for the taking - even though it would possibly be a good election to lose! But the thought of Labour trying to manage the current situation is too much for thgis blogger to bear!!