Mike's Minute: Why the PREFU is important

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Why did Ruth Richardson create the PREFU and how did it change election finance?

Mike Hosking 0:00

We've got Ruth Richardson to thank for today, if you didn't realise it. She was the architect of the Fiscal Responsibility Act of nineteen ninety four, what today will be called the Prefu. If you don't remember it, it heralded a change in approach that seemed to me at the time as significant, if not profound. Elections were crapshoots, it was a different Time. If you think most people's understanding of basic economics today is limited, nineteen ninety-four was the Wild West. Many years before, you may remember Muldoon had talked about the voter not knowing a budget deficit. If they tripped over it in the street, he was right, of course. But by nineteen ninety-four, I'm not overly sure it was a lot different.

Mike Hosking 0:32

So the idea was we could at least see what shape we were in if we were interested, and whether the ensuing promises made any sense.

How does the PREFU assess the government’s economic record before an election?

Mike Hosking 0:40

And here we are over thirty. thirty years later, and the pre foo has a critical role for both major parties today. For national, it's a report card, a credibility check, it's the very thing almost the singular thing I think this election, it's being fought on. Have they done enough economically to convince us they need another term?

Can Labour fund its $18 billion in election promises?

Mike Hosking 0:58

And for Labour, equally critical. There is a fortune in promises, eighteen billion in counting, including the seemingly gargantuan and magical Pay equity promise worth it worth at least twelve of those billions. Wait for the previous we've been told.

What does the PREFU reveal about the economy and the limits of government spending?

Mike Hosking 1:11

Wait for the pre foo, as if whatever is revealed today will answer any doubters. I doubt it will, of course, I think Labour today to some degree will be badly exposed. It'll be a contest today between the state of the place and therefore the government's economic credentials, and the state of the place, and therefore the cold hard truth, there isn't eighteen billion dollars just lying around looking to be spent.

How do debt, growth, and the fiscal outlook shape the 2026 election?

Mike Hosking 1:31

But most importantly, thanks to Ruth Richardson is the fact it will all be there. The fiscal journey of the past three years, the fiscal clips, the debt, the cuts, the promises, the payments, the delivery, the growth or lack of it, the outlook. They say every election has never before been as important as the current one, and they say it's always about the economy. Both are true, and I feel never more true than twenty twenty six. For more from the Mike Asking Breakfast, listen live to News Talks Ed B from 6 a.m. weekdays or follow the podcast on iHeartRadio.

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Chapters

5 chapters

1 Why did Ruth Richardson create the PREFU and how did it change election finance? 0:00–0:40 2 How does the PREFU assess the government’s economic record before an election? 0:40–0:58 3 Can Labour fund its $18 billion in election promises? 0:58–1:11 4 What does the PREFU reveal about the economy and the limits of government spending? 1:11–1:31 5 How do debt, growth, and the fiscal outlook shape the 2026 election? 1:31–2:02

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Mike Hosking 2 min

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Topics in this episode

iHeartRadio 1 Labour Party 3 News Talk ZB 1 government 1 The Mike Hosking Breakfast 1 National Party 1 Robert Muldoon 2 Ruth Richardson 3 Fiscal Responsibility Act 1994 1

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Recorded28 Sep 2026

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Show notes

We have Ruth Richardson to thank for today. She was the architect of the Fiscal Responsibility Act 1994, what today is called the PREFU – the Pre-Election Economic and Fiscal Update. If you don’t remember it, it heralded a change in approach that seemed to me at the time as significant, if not profound. Elections were crap shoots. It was a different time. If you think most people's understanding of basic economics is limited, 1994 was a Wild West. Many years before, Muldoon had talked about the voter not knowing a budget deficit if they tripped over it in the street. He was right, as well as arrogant. By 1994 I'm not overly sure it was a lot different. So the idea was we could at least see what shape we were in and whether the ensuing promises made any sense. Here we are over 30 years later and the PREFU has a critical role for both major parties today. For National it's a report card, a credibility check. It's the very thing (almost the singular thing) that this election is being fought on – have they done enough economically to convince us they need another term? For Labour it's equally critical. There's a fortune in promises, in fact $18 billion worth, including the seemingly gargantuan and magical pay equity promise worth at least 12 of those billions. "Wait for the PREFU," we have been told, as if whatever is revealed today will answer any doubters. I doubt it will. I think Labour today, to some degree, will be badly exposed. It will be a contest today between the state of the place, and therefore the Government's economic credentials, and the "state of the place" and therefore the cold, hard truth there isn't $18 billion just lying around looking to be spent. But most importantly, thanks to Ruth Richardson, is the fact that it will all be there. The fiscal journey of the past three years, the fiscal cliffs, the debt, the cuts, the promises, the payments, the delivery, the growth, (or lack of it) and the outlook. They say every election has never before been as important as the current one and they say it's always about the economy. Both are true, and I feel never more true than 2026. See omnystudio.com/listener for privacy information.

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