If we are to properly fund new projects like the Waterview Tunnel, we may need to change our attitude to national debt. Photo / Nick Reed
Wow. We are collectively in debt to the tune of $230 trillion.
Not you or me specifically - nor New Zealanders or millennials or baby boomers.
That's the total of how much debt we, humans of Earth, have racked up, according to an International Monetary Fund report released last week.
Whom do we owe? The Martians?
The IMF reported the low interest rate policies since the GFC caused debt to spike to 225 per cent world GDP in 2016. That surpasses the previous record reached in 2009.
New Zealand's share of that global debt is about $500 billion – pretty chunky for such a small nation.
Most of that is privately held - we're mortgaged to our eyeballs. Government debt doesn't look so bad, relatively speaking.
Our core net Crown debt to GDP ratio is about 22 per cent.
The US Federal Government owes nearly $30t – a ratio of more than 80 per cent of GDP.
The UK crown debt is also more than 80 per cent of GDP. Even the allegedly sensible Germans have a ratio above 50 per cent.
In that context New Zealanders seem a cautious bunch.
As finance minister and Prime Minister, Bill English obsessed about public debt.
He borrowed pridently to cover the cost of the Christchurch Earthquakes then went into overdrive paying it down as a percentage of GDP.
English was aiming to get core net crown debt to 20 per cent of GDP by 2020.
I have asked him about his hard line attitude to debt and spending.
He makes a strong case for New Zealand's vulnerability as a small economy with high levels of private debt – one historically vulnerable to geo-political and geological shocks.
He genuinely believes we must be ready for the next shock.
His defensive stance struck a chord with many New Zealanders - particularly those old enough to remember our financial woes in the late 1970s and 1980s.
Distrust of public debt is so ingrained Labour and the Greens felt compelled to sign up to a fiscal responsibility policy that only slightly loosens the focus on debt repayment.
Vagaries of MMP politics aside, it may well have helped get them into power.
The Government is targeting a debt to GDP ratio of 20 per cent within five years of taking office.
But with demands mounting for new spending on infrastructure some economists are starting to wonder why we continue to take such an austere approach.
In a report released on Monday ANZ chief economist Sharon Zollner makes the point there is "nothing sacrosanct about the essentially arbitrary round figure target".
She argues we have been underspending and now need to urgently invest in housing, transport, education and health. She suggests the most fiscally responsible approach would be to further loosen the debt-to-GDP target.
Not doing so would mean using other funding mechanisms that could end up costing taxpayers more in the long run.
Zollner makes a case based on sound financial logic - something that probably disqualifies it from any typical political debate.
Unfortunately New Zealanders still see government borrowing as ideological.
They forget businesspeople like Graeme Hart see debt as a tool for growing wealth.
That's why financiers call it leverage.
Smart investors leverage their capital - like using a crow bar to lift something we can't manage with bare hands.
Hart is almost always in about as much debt as he can get away with.
He uses it on a grand scale to buy relatively safe businesses he trusts will deliver predictable returns over the long term.
The same argument can be made for accelerated infrastructure investment.
As long as the money is spent wisely in areas that will bolster New Zealand's GDP, it makes more sense to borrow than not.
But Hart is a very successful businessman and his investments have paid off.
Many others fail and are sunk by debt because they get their equations wrong or invest poorly.
New Zealanders - particularly on the right of the political spectrum - tend to assume governments are like bad business people, prone to poor investments.
It's not clear to me that this is true.
There was some poor fiscal management for several years under Robert Muldoon's National Government. The country was almost broke by 1984.
But across the scope of our history - and compared to many other countries - New Zealand's track record doesn't look so bad.
It seems like several generations of voters have been scarred by the legacy of the Muldoon years - and the pain of the austerity that followed.
We sweat over small-scale, anecdotal wastes of taxpayer money and forget even Muldoon's once derided Think Big programme paid off over time.
Finance minister Grant Robertson is not going to drop his debt target because it was a key policy promise of the campaign.
It would destroy political capital the coalition can't afford to lose right now.
There are signs the public mood is shifting, though.
Perhaps a few more years of fiscally responsible Government may be enough to see the voting public relax.
An improvement in the private debt position of New Zealanders would help, too.
Next week: Private debt - risk to home owners as interest rates rise
For too long, ‘accident’ has been a blanket term that absolves responsibility.