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Government's Mini-budget Fronts The Serious Challenges Ahead

 “Treasury’s updated fiscal and economic forecasts released today confirm that this government faces serious fiscal challenges”, said Dr Bryce Wilkinson, Senior Fellow at The New Zealand Initiative.

“The Minister of Finance’s “mini-budget” statement shows she fully ‘gets it’.”

“Taxpayers and the recipients of government spending cannot all expect to avoid the burden of those challenges”.

The contrast in the fiscal position this government faces and the one the outgoing Labour government faced when it first assumed power in late 2017 is dramatic. Two statistics illustrate this.

  • In December 2017, Treasury forecast, using its OBEGAL measure, cumulative fiscal surpluses in the five years to June 2022 of $26 billion. Today’s update forecast a cumulative fiscal deficit of $36 billion in the five years to June 2027.
  • In December 2017, Treasury forecast that government would need to raise a mere $7 billion over five years to fund the portion of its core Crown capital spending that could not be funded from operating surpluses. This National-led government faces a five-year funding requirement of $63 billion.

“Those stark facts are silent as to blame and circumstance”, continued Dr Wilkinson. “Today’s message is that taxpayers and recipients of government spending should not expect much joy from government spending and taxation decisions for many years.”

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