In his last budget ahead of what is set to be a close-run election in October, finance minister Grant Robertson announced billions towards rebuilding infrastructure following severe weather events at the start of the year and some new initiatives to help those struggling with increased costs.
“We can’t go on with the high levels of spending we’ve seen in previous budgets because it’s not fiscally sustainable,” he said.
Even so the government’s accounts are looking worse than they did last December. The country is projected to record a NZ$6.96 billion deficit for the year to June 2023 versus previous expectations for a deficit of NZ$3.63 billion, and will not return to surplus until 2025-26, a year later than previously forecast.
The government raised its bond program with gross issuance up NZ$20 billion in the four years to June 2027 to NZ$128 billion.
Treasury sees inflation slowing to 3.3% by mid-2024, down from the current blistering 6.7% pace.
Much of the worsening in the accounts is due to falling tax revenue as the country’s economy slows.
Adding to the pressure on finances were two significant weather events at the start of the year that caused an estimated NZ$9 billion and NZ$14.5 billion in damage. The government announced a NZ$6 billion infrastructure fund, which would help with rebuild costs and fund new more resilient infrastructure over the longer term.
“There is not a lot of discretionary spending in this budget,” Robertson added. (Reporting by Lucy Craymer Editing by Shri Navaratnam)
