The New Zealand Labour Administration will present a “no frills” 2023-24 budget on Thursday to avert inflation.
Prime Minister Chris Hipkins has slashed costly programs and pledged to revert to “bread and butter issues” since taking office.
New Zealanders expect us to address their main concerns. Hipkins noted at his monthly Monday press briefing that the budget shows that.
Two major weather disasters at the start of the year cost NZ$9 billion and NZ$14.5 billion. The government will likely pay half that bill.
More than NZ$1 billion has been set aside for rebuilding after the cyclone, and the government has promised NZ$748 million to boost defense staff pay and some necessary equipment upgrades at a time when security is becoming more of a concern.
However, Finance Minister Grant Robertson knows that increasing government spending at a time when the Reserve Bank of New Zealand (RBNZ) has aggressively raised interest rates could increase inflation.
Robertson claims NZ$4 billion in savings funded the extra money. However, Treasury’s latest data show that tax take for the nine months to March 2023 was 2.7% below anticipated, making it doubtful that the government would achieve its targeted surplus in 2024-25.
As data shows the economy is weaker than projected, economists expect Treasury to cut December economic predictions.
ASB Bank senior economist Mark Smith said marginally worse fiscal balances and the need to reconstruct after the weather catastrophes result in a larger public debt deterioration than December 2022 predictions and higher bond tender issuance.
Smith noted that the budget packages would be more targeted and fiscally responsible.
Comment Template