Finance Minister Nicola Willis emphasizes the importance of lifting productivity in realizing New Zealand's full potential.
The Half Year Economic and Fiscal Update shows the Crown's financial position has deteriorated over six years, but the economy is expected to reach a turning point. Inflation is under control, interest rates are being reduced, and household spending and business activity are forecast to increase. The economy is predicted to grow 0.5% this year and 3.3% next year.
However, the Crown's financial position has further deteriorated, with core tax revenue expected to be $13 billion lower over four years, delaying the government's return to surplus by a year. Finance Minister Nicola Willis attributes this deterioration to Treasury unwinding overly optimistic assumptions about the economy, rather than government decisions. Despite this, she stresses that restoring discipline to public spending and driving economic growth are crucial.
To address New Zealand's long-term productivity challenges, the Budget Policy Statement sets four priorities for 2025: lifting economic growth through productivity measures, implementing a social investment approach, controlling government spending, and developing sustainable infrastructure investments. Progress has already been made in these areas, with refocused education, streamlined consenting processes, reduced bureaucracy, and an established agency driving social investment.
The government aims to unlock New Zealand's potential by boosting productivity and realizing its economic growth forecast. With the Budget 2025 release pending, further details on the government's plans are expected to be revealed.