So, a record deficit huh? The scene is being painted for a chop-chop Budget, but is our public debt really that bad? Let's take a look at our history...

So, in two days time Bill English will announce that we have the largest deficit EVER by a New Zealand government. All round the world folk have seen stories of how our deficit will be $15-17 billion. Cue wailing and gnashing of teeth.

Certainly, no-one will want to sit back and admire such a deficit. Both National and Labour are inclined to lead the breast-beating, for opposite political reasons. National wants to justify cuts to government spending, Labour wants to damn the government for its economic mismanagement.

So the message has been that our economy is in dire straits and drastic action (cuts or a change of government, depending on who's spinning) is required.

But is it really that bad? We've got our biggest population ever and we've just been through – or we're arguably still at the tail end of – one of the largest economic crises the world has known. So you'd expect the government to have spent more.

To get a sense of how this really compares, you have to look at comparable measures. So I've been trying to get my head around our government debt as a percentage of GDP and per head of population.

The latter has been hard to find up-to-date figures for. The Stats table I found peters out in the mid-1990s. But it found that public debt per head of population peaked around the war years, and again in 1987. In those days it was as high as $19,000 each, in Year 2000 dollars and remained quite high in 1993, at $15,000. (In the 1960s and 70s it was mostly around the $9,000-$11,000 mark).

If anyone can dig up the 2000s, I'd like to see them!

But the most common relative measure is public debt as a percentage of GDP.

Now, we all know that our total debt has gone north in the past generation. See this chap for some rather useful graphs. But to risk labouring the point, that's because houses are so much more expensive (meaning bigger mortgages) and we've all got addicted to buying more and more stuff, regardless of whether we've saved for it or not. That's what's caught the eye of the credit ratings agencies and prompted the 'OMG we're like Greece' Cassandras.

Thing is, we're not. Like Greece, that is. The government debt has never been a problem; indeed it hit historic lows under Michael Cullen. We bottomed out in 2008 with a public debt that was just 20% of GDP. (There are several sources for this, each slightly different. But here are the OECD figures as one example).

It's fascinating to look waaaay back at just how much debt New Zealand government's have been willing to carry in the past. We tipped over the 100% mark for the first time in 1884, and amazingly, we stayed at least in hock to the tune of 95% of our GDP until 1951. Yep, 1951.

Comparisons have been made between this recent recession and the Great Depression. Well, our government debt in 1933 hit its all-time high as a percentage of GDP: 248%. Now that's serious debt!

In the wealthy 1960s, our debt as a percentage of GDP was still mostly over 60%. It didn't dip under 40% until 1997. When Labour took over in 1999 it was 35%. Even as public spending grew, public debt went down to 20%, as mentioned, in 2008, but has jumped back up in 2009 to 27% and in 2010 to 31%.

So yes, it has climbed again. But that borrowing has kept the economy ticking over, which is what a responsible government with a low debt should do in tough times. It has stimulated a flat economy and carried the private sector.

Don't forget, it's not just the recession and the earthquakes government money has had to carry us through in recent years. Around $8 billion was wiped out of the economy when the finance companies fell over, and then there are all the leaky homes and billions more lost there.

Given that list of misery, anyone arguing against increased government spending deserves a spanking.

I've always been mighty relieved that this government went against any free-market instincts in Cabinet and committed to stimulus. It deserves applause for that spending. The concern comes when you look at how they did it.

As I've written before, much of the supposed National-led government stimulus was in fact started under Labour; that which wasn't was essentially some roads and the extra tax cuts. And those tax cuts were just about the most scatter-gun, favour-the-rich form of stimulus any government could have chosen.

My worry now is that the government seems to be signalling that its stimulus days are over. John Key's pre-Budget speech left the impression that the government's heavy lifting is done and it now reckons it's time to stop spending and let the private sector take over. The PM repeatedly mocked Cullen's stewardship during the 2000s and praised the growth and economic management of the 1990s.

We can all remember the unemployment, wage stagnation and cuts to public services that passed for "growth" in the '90s, not to mention the lack of savings and higher public debt. And I'm not yet convinced that the economy is healthy enough to take the strain. It seems risky to me to whip the crutches away so soon.

So excuse me for being a little wary.

And remember, when all the red and blue Cassandras start bleating about the government's record deficit, take a deep breath and remember your history. It could be worse, and it has been.

*With apologies to Andrew for stealing his schtick and using a song title as a headline