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2.3 What about building up other assets in preparation for a rainy day?

If you are going to make the argument that in the bad times - such as when a big earthquake or a recession hits - the Crown should borrow money to stimulate or support the economy, then logically, in the good times, you've got to prepare for another rainy day.

Reducing debt is not the only thing that governments can do to build buffers and prepare for a rainy day. Just as households may have separate saving accounts for different things, or income protection insurance to guard against accidents or a health scare, governments also do similar things. The different options for preparing for a rainy day are sometimes referred to as different "jam jars" into which the government can choose to save.

One example of a government jam jar is the National Disaster Fund (NDF), which is financed by New Zealanders' insurance EQC levies. The fund was used up in the aftermath of the Canterbury earthquakes in helping reimburse home and business-owners for damages. There are now questions about how quickly the fund should be rebuilt, and what priority rebuilding it should have, compared to other uses of Crown revenue. In the meantime, in the NDF's absence, the low debt buffer becomes particularly important for helping to cope with the next natural disaster.

The New Zealand Superannuation Fund (NZSF) is another jam jar on the Crown's balance sheet. Where the NDF provides insurance against a risk we cannot predict (earthquakes), the NZSF is designed to help society prepare for the known future expense associated with demographic ageing. As the population ages there will be an increase in government spending on New Zealand Superannuation entitlements.

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