Steven Joyce stands by fiscal hole despite $5.5 billion Government surplus

Steven Joyce is standing by his claim of a fiscal hole in Labour's budget, despite this week's revelation that the Government is flush with cash.

Ahead of the 2017 election, then-Finance Minister Joyce alleged Labour had made an error in its costings, leaving a gaping $11.7 billion hole in its planned spending.

"Labour either have their budget allowances wrong, or they've simply left out billions and billions of dollars of government spending in future years from their plan," he said at the time.

Labour staunchly denied they had a fiscal hole, and the theory was debunked by economists - but National never retracted the allegation.

More than a year on from the election, it's been revealed the Labour-led Government is sitting on a surplus of $5.5 billion - $2.4 billion more than forecast.

But Mr Joyce is still standing by his initial claim.

In response to the surplus announcement, The NZ Herald's Rod Emmerson published a cheeky cartoon showing Mr Joyce's fiscal hole claim being shredded like the self-destructing Banksy artwork.

In a tweet, Mr Joyce said the cartoon was "v cute but probably a tad early".

"This surplus is largely from our last budget - give it two or three years and get back to me".

A National Party spokesperson told Newshub Mr Joyce wouldn't elaborate further on what he meant, but that he is "on record as standing by the claim".

However economist Shamubeel Eaqub - who was among those to rubbish the initial allegations last year - says it's well past time for National to give it up.

"Joyce needs to keep digging this hole," he told Newshub.

"There are so many moving parts. The tax revenue has been very different from projections (generally better). Spending has been restrained, as per BRR (Budget Responsibility Rules). Debt looks fine."

He concedes the Government will have to grapple with how to spend its surplus amidst demands for increased pay for nurses, teachers and other public sector employees.

"Of course there are lots of demands for higher pay…which still have to be managed just like any government.