Your Daily Ten@10 - 2026/027

This is edition 2026/027 of the Ten@10 newsletter.

Hi all,

This is the Ten@10, where I collate and summarise ten news items you generally won't see in the mainstream media.

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Labour inherits surpluses and gives deficits, National inherits deficits and gives surpluses

Liam Hehir

• 💰 Fiscal History Trends : Over time, there's a clear pattern in New Zealand politics: National typically inherits a deficit, tightens spending, and eventually leaves office with a surplus. Labour, on the other hand, often inherits a surplus, expands public services, and leaves office with a deficit.
• 🏛️ National's Approach : National governments focus on fiscal restraint, reducing spending, and managing deficits, even in tough economic times. This approach helps build a surplus over time.
• 💼 Labour's Approach : Labour governments increase public spending baselines, often defending this as necessary investment in services. However, without matching revenue, this leads to unsustainable fiscal positions in the long run.
• 🔄 Political Cycle : After National’s fiscal discipline creates surpluses, Labour typically inherits them and expands services, leading to fiscal strain and a downturn when the economy falters.
• 📉 Muldoon Exception : The 1984 handover was an outlier where National, under Muldoon, handed Labour a deficit due to high spending, price controls, and economic intervention, more in line with left-wing policies.
• ⚖️ Shocks and Political Choices : Shocks like the GFC or COVID don't erase the political choices made. The key is whether a government keeps fiscal discipline during recovery or builds permanent programs based on optimistic revenue assumptions.
• 📊 Data Consistency : Over the past 50 years, seven out of eight handovers show National leaving behind a healthier fiscal position, with Labour leaving weaker fiscal positions, reinforcing the pattern.
• 🤔 Implications : The consistent pattern highlights differing political instincts: National prioritizes fiscal sustainability to weather shocks, while Labour tends to focus on expanding services, which can lead to unsustainable fiscal policies.

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