Labour’s finance spokeswoman Barbara Edmonds has taken down a graph that incorrectly stated the Ardern-Hipkins Government reduced New Zealand’s debt levels by about $31 billion in its second term. 

In nominal terms, the graph appeared to show the Ardern-Hipkins Labour Government repaid debt faster than any Government since 1972 — an extraordinary feat in the midst of a pandemic. 

In fact, depending on what measure you use, Labour’s second term saw a rapid increase in borrowing thanks to the pandemic, reducing the tax take and increasing expenses. Debt increased by $72b or $36b by two of the most common recent metrics. 

A deleted Facebook post purporting to show Labour reducing debt in its second term. Photo / Facebook 

Finance Minister Nicola Wills described the incident as “either a case of extraordinary fiscal ignorance or wilful deception. Either way, it does not look good for Barbara Edmonds”. 

“Government debt did not go down in Labour’s last term and to claim it did in a misleading graph is disgraceful,” she said. 

After Labour was alerted to the error by the Herald, Edmonds replaced the graph with a more accurate one. Editing her Facebook post, Edmonds said, “[w]e’ve changed the chart to use the Treasury graph (with our crisis inserts)”, but did not say that the original graph was inaccurate or misleading. 

Edmonds told the Herald that Willis was “so desperate to distract from her mismanagement of the economy she’s going after a social media post that has since been corrected”. 

“After a week where she has delivered record debt, increasing unemployment, and now the deepest recession since 1991, this is what she wants to focus on? 

“Kiwis expect more from the Minister of Finance. She should be focused on getting New Zealand out of this recession and getting people into jobs. She has her priorities wrong.” 

The graph was posted in response to the publication of Treasury’s Hyefu forecasts, which showed a significant worsening in the Government’s fiscal position with large deficits forecast out to the rest of the decade and debt forecast to peak at about 46.1% of GDP or $228b. 

Labour seized on Willis’ decision to drop the main indicator that shows whether the Government is running a surplus or a deficit, Obegal, for a new measure, Obegalx, which removes ACC, which has the effect of making the deficits look smaller. 

Labour ran ads accusing Willis of “cooking the books”. 

Text accompanying Edmonds’ post said that “[n]o amount of spin can cover this”. 

“The numbers don’t lie. The Government’s decisions are actively making our economy worse. It’s time they take responsibility for their choices and stop blaming others.” 

In a twist of fiscal irony. The error in Edmonds’ chart is a result of Labour’s own book-cooking in Government. 

In 2022, then-Finance Minister Grant Robertson changed the Government’s main debt indicator from net core Crown debt to something called net debt. The difference between the two indicators was that the old indicator did not include the assets of the Super Fund, which has the effect of making debt look larger, and the new indicator did include the Super Fund, making net debt look smaller. 

The argument for the old indicator was that the fund should be excluded because the Government was unlikely to sell the fund if it got into a fiscal pickle, the argument for the new indicator, which was backed by Treasury, was that it was more comparable with other countries’ debt metrics. 

Edmonds’ graph was created by a Labour supporter and not the party itself and was a popular meme during the earlier part the Sixth Labour Government because it showed, using a line in Labour red, the rapid reduction in debt under the Clark Government followed by, in a line of National blue, the rapid increase in debt under the Key Government, prompted by the Global Financial Crisis and the Christchurch Earthquakes. 

The original chart used net core Crown debt. Someone appears to have updated the chart to add the years 2020 to 2023, but instead of using net core Crown debt, they switched to net debt, which has the effect of suggesting Labour borrowed vast amounts of money in 2017-2020 and then repaid most of it in 2020-2023. 

The chart purports to show the “net debt” figure, although net debt figures have not been calculated as far back as 1972, when the chart begins. The current debt indicator has figures stretching back to 1992. 

Edmonds’ new graph uses a net core Crown debt indicator. It expresses debt as a percentage of GDP, which tends to be preferred when looking at debt over a long period of time. It no longer makes a distinction between National and Labour Governments, which is no longer as flattering to Labour as it was before 2020. If colours were used, the chart would still flatter Labour Finance Minister Michael Cullen — but it would also show the finance minister who really bent the debt curve was National’s Ruth Richardson, under whom the debt ratio peaked, before beginning to fall. 

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.