Labour wants to fix the economy. Do its own rules stand in the way?

Labour says the economy isn’t working for ordinary people. But its new fiscal rules could leave a future Labour government with little room to do anything about it.

Last month, Labour released its new fiscal strategy: a set of high-level rules it says will govern how it taxes, spends and borrows if it wins the election in November.

According to Labour finance spokesperson Barbara Edmonds, these rules show that Labour “will be responsible with taxpayers’ money, balancing the books and bringing down debt, while giving New Zealand the capacity to invest in its future”.

Much of the media coverage of the rules, however, has focused on contrasting them with National’s fiscal approach, finding in them evidence that – yes – a Labour government will tax and spend more than the coalition government.

But that reaction may be missing the wood for the trees.

Far from signalling a lavish approach to spending, Labour’s fiscal rules could in fact impose tight constraints on a future Labour-led government, limiting its ability to rebuild public services, invest in infrastructure and confront New Zealand’s mounting economic and social crises.

So what do Labour’s new fiscal rules actually mean? And can Labour make the economy work for ordinary people while sticking to them?

This week on In Brief, Ollie Neas talks to journalist Bernard Hickey, editor of The Kākā, about Labour’s approach to the economy, the long shadow of the Public Finance Act, and what is needed to break free of the iron cage of neoliberal orthodoxy.

Watch the full conversation below and subscribe to Public Interest for more discussions making sense of politics and power in Aotearoa.

This episode was edited by Jeremy Leveridge.