KEY POINTS:
Michael Cullen described his last Budget in May as the rainy day budget, when years of fiscal prudence paid off.
Today's update of the economic and fiscal outlook from the Treasury makes it clear the rainy day has turned into a monsoon.
The onset of a global recession, whose length and depth at this stage can only be guessed at, has taken its inevitable toll on the numbers: Feeble growth, rising unemployment and fiscal deficits for as far ahead as the forecasters care to estimate.
In the context on unrelieved stream of bad economic news none of that is surprising.
Nor is the Government's commitment to put all its weight on the fiscal accelerator.
What is arresting about the outlook released today is how bad the projected track for government debt over the longer terms has become.
Relative to the size of the economy gross Government debt is expected to climb from below 20 per cent now to nigh on 60 per cent by 2023. That would take it back to the sort of levels prevailing in the early 1990s and undo a decade and a half of fiscal surpluses.
Those surpluses, which have come to seem normal, have seen gross public debt fall, measured against GDP, and leave the debt servicing cost the taxpayer has to bear roughly steady.
On today's numbers we have passed through an historic turning point.
Finance Minister Bill English made it clear the projected outlook of steeply rising debt, absent a policy response, was not going to be allowed to happen.
We will have to wait for his first Budget to learn what the Government plans to do about it.
It would take two things, neither of them easy.
One is to improve the quality of government spending on a permanent basis, he said, adding swiftly that this was not the time to slash and burn.
The other is to get the economy growing faster than the 2.5 per cent a year the Treasury reckons its trend growth rate is.
This is a tall order.
But it gives us a measuring stick by which to assess Government policy measures from here on: What will they do to lift productivity?
Failure on that front will just load on to the shoulders of future taxpayers an ever-heavier interest burden, on top of the higher pension and health costs the ageing population already implies.
