The first glimmers of the new Government’s economic policies began to appear yesterday with the Reserve Bank’s reaction to the policies and then the former Finance Minister, Steven Joyce, challenging his replacement, Grant Robertson, during Question Time in Parliament.

But buried within the Bank’s Monetary Policy  Statement were some serious questions about the direction the Government is going in.

Most notably it cast doubt on the effects of the proposal to build 10,000 new houses a year — the so-called Kiwibuild programme..

“Our working assumption is that the programme gradually scales up over time to a pace of 10,000 houses per year by the end of the projection horizon,” says the report.

“ Given existing pressure on resources in the construction sector, the aggregate boost to construction activity from this policy will depend on how resources are allocated to public and private sector activities. 

“The Government intends to introduce a ‘KiwiBuild visa’ to support the supply of labour to high-need construction related trades.

“While accompanying policy initiatives may alleviate capacity constraints to some extent, our working assumption is that around half of the proposed increase will be offset by a reduction in private sector activity. “

In other words, the Banks the Government will end up adding only a net 5000 houses to the total stock each year rather than the 10,000 it is claiming.

The Bank is also trying to work out how much the new Government plans to increase expenditure by.

The former Finance Minister, Steven Joyce, also took this question up at the new Parliament’s first Question Time yesterday.

Joyce returned to Labour’s Fiscal Plan in which e famously claimed during the election campaign to have found a  $10 billion fiscal hole.

“Can the finance Minister then confirm that he doesn’t look at all stand by the numbers he presented in the Labour Party’s fiscal plan prior to the election?” asked Joyce.

“I have been absolutely clear that the commitment that we have made is that Government expenditure as a percentage of GDP will remain in line with the long-run historical trend,’ said Robertson which was a slight variation on the precise numbers included in the plan.

“Members on the other side of the House well know that we will now be looking at new revenue forecasts and, indeed, new growth forecasts.

“They will determine the exact numbers that are presented. “

The Fiscal plan actually projects Labour to have only very slightly surpluses  smaller than National through to June 2018.

But the Reserve Bank yesterday said nominal government consumption is assumed to be around 3 percent (or around 0.5 percent of GDP) higher than projected in the August Statement.

“While the effects of tax changes announced in Budget 2017 have been removed from our projections, household consumption is supported by the Government’s Families Package.

“Taking together the effects of increased government consumption and changes to transfers and allowances, our working assumption is that household consumption is not substantially affected by higher government spending.”

Joyce is a bit premature in wanting to debate this now — much will depend on the half-yearly Fiscal and Economic Update due next month.

There has been speculation that this could be accompanied by a mini-Budget.

Whether it does or not it is likely to have the impact of a Budget as it attempts to answer the question of how much Labour will spend — and what that will do to the surpluses.