The Government's debt target of 20 per cent of GDP will be substituted for a target of 15 to 25 per cent of GDP from 2021/22, giving the Government "more capacity", the Finance Minister announced today.
Grant Robertson said that "fiscal intentions in this Budget will signal a shift to a net debt percentage range, rather than a single figure".
"A range gives Governments more capacity to take well-considered actions appropriate to the nation's circumstances.
"It establishes boundaries within which debt is kept to sensible and sustainable levels and where fiscal choices are driven by impact and value."
He said based on advice from Treasury, the Government were looking at it being set at 15 to 25 per cent of GDP.
"This range is consistent with the Public Finance Act’s requirement for fiscal prudence, but takes into account the need for the Government to be flexible so that it can respond to economic conditions."
Mr Roberston said the current 20 per cent target fell "in the middle of the new range that will exist from 2021/22 onwards".
The Prime Minister said the Government had met its budget responsibility rules this year.
The target from 2022 will be a range between 15-20 per cent of GDP, instead of the 20 per cent target.
"We're keeping debt in check, we're running surpluses and overall we’re showing fiscal responsibility whilst also investing in our people," Jacinda Ardern said.
National's Amy Adams described Mr Robertson as throwing "in the towel by scrapping his self-imposed debt target".
"Grant Robertson has been backed into a corner by allowing the economy to slow, over promising and making poor spending choices. Now, instead of a fixed target, Grant Robertson has lifted the debt limit by 5 per cent.
"That loosens the purse strings by tens of billions of dollars."
In his pre-Budget speech today, Mr Robertson said the 15-20 per cent range "is consistent with the Public Finance Act’s requirement for fiscal prudence, but takes into account the need for the Government to be flexible so that it can respond to economic conditions".
Ms Adams said National's debt target would be under 20 per cent.
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