Lifting the productive capacity of the economy is the key to realising New Zealand’s potential, Finance Minister Nicola Willis says.
“The Half Year Economic and Fiscal Update released today shows the Crown’s financial position has deteriorated over the past six years, but the economy has reached a turning point.
“Inflation is back under control, the Reserve Bank has begun reducing interest rates, and household spending and business activity is expected to lift.
“After bottoming out in the September quarter, the economy is forecast to grow 0.5 per cent this financial year and 3.3 per cent in the following year.
“Relative to the Budget, however, there has been a further deterioration in the Crown’s financial position.
“Core Crown tax revenue is forecast to be $13 billion lower over the four-year forecast period, delaying our intended return to surplus under the new operating balance measure by a year.
“The deterioration in the Crown’s financial position is not a consequence of decisions made by this Government. It has been driven largely by Treasury unwinding overly optimistic assumptions about the state of the economy.
“However, the revisions reinforce the importance of the measures the Government has taken to restore discipline to public spending and drive greater economic growth.
“To deliver public services, provide opportunities for the young and avoid burdening future generations with excessive debt, government needs to do more than just think about how to spend the public’s money. It needs to grow New Zealand’s earnings potential.
“Therefore, the Budget Policy Statement released today sets four priorities for Budget 2025. They are:
Lifting economic growth through measures to address New Zealand’s long-term productivity challenges.
- Implementing a social investment approach to drive better results from the Government’s investment in social services and thereby improve life outcomes for people with high needs.
- Keeping tight control of government spending while funding a limited number of high priority Government policy commitments and cost pressures that cannot be met from reprioritisation; and.
- Developing a sustainable pipeline of long-term infrastructure investments.
“Progress has already been made in all these areas. The Government has refocused the education system on the core skills of reading, writing and mathematics, fast track legislation has been introduced to speed the consenting of major projects, bureaucratic red tape is being reduced, a new agency has been established to drive social investment, government spending has been brought back under control and, an infrastructure pipeline is being developed.
“We’ll have more to say in the Budget, but today’s release of the latest economic and fiscal data highlights both the scale of the challenge and the extent of the opportunity New Zealand faces.
“The Government will realise that opportunity by unlocking New Zealand’s and New Zealanders’ potential.”