- Hon Nicola Willis
Today's pre-election update forecasts healthy economic growth and a distinct improvement in the government's books, Finance Minister Nicola Willis says.
"I'm pleased that New Zealanders' hard work, resilience and adaptability through tough economic times is bearing fruit.
"Today's numbers show that the deficit in the year ending July this year was $3.4 billion smaller than forecast in the Budget in May, reflecting stronger economic momentum.
Treasury's forecasts also show:
- significantly smaller deficits this year and next year
- bigger surpluses in the following years
- less debt
- lower debt servicing costs
- the economy growing at an average of 2.6 per cent
- 220,000 more jobs being created; and
- wages rising faster than prices.
"The positive outlook reflects hard work by households and businesses, backed by a government focused on restoring fiscal discipline and driving economic growth.
"The upgraded forecast is driven to a large extent by actual improved performance. Businesses have been doing better than anticipated, which feeds into the government's bottom line through increased tax revenue.
"Treasury's Pre-election Economic and Fiscal Update shows the operating balance deficit shrinking from the $11.4 billion forecast at the Budget to $6.8 billion this financial year and to less than $1 billion next year.
"Over the following three years the surplus is forecast to grow from $4 billion to almost $12 billion.
"Debt is forecast to start declining as a proportion of the economy in 2028/29 and to fall in dollar terms in 2030/31. That will be the first such fall since 2017/18.
"The improved forecast means the Government will borrow $15 billion less over the next four years through reduced bond issuance. This is on top of the $6 billion reduction in forecast borrowings at the Budget and means borrowing costs will be lower.
"That is welcome news. The amount New Zealand spends servicing our debt each year is significant, equivalent to the cost of building more than four Dunedin Hospitals every single year.
"Ultimately, this frees up more money for the things New Zealanders care about and ensures we are in a stronger position to weather the next global conflict or major weather event.
"The same applies to households and businesses. Wages rising faster than prices means Kiwis will have more of their own money in the bank and more choices about how to use it, whether that's taking the kids on holiday, saving for a house deposit, or investing more in their business or KiwiSaver.
"A stronger fiscal position cannot be taken for granted and treated as a green light to open the chequebook, because Kiwis know from bitter experience that things can always change and global instability is not going away.
"There is still a lot of work to do to turn the forecasts into reality and there are clear risks to the forecasts from ongoing instability in the Middle East. That is why we need to stay the course.
"The pre-election forecasts are based on the work done to restore fiscal discipline to government spending and an ongoing commitment by our government to maintaining that discipline.
"The last government's irresponsible spending, combined with the Reserve Bank's over-stimulus of the economy, caused unnecessary hardship that many Kiwis are still feeling the effects of.
"The lesson of the past 10 years is that governments must manage the public's money as carefully as people manage their own finances.
"The pre-election update confirms that is what this government has been doing.
"Our plan to prioritise responsible economic management, underpinned by careful spending and a consistent focus on growing the economy, is working. Now is the time to stick with the plan and secure a stronger financial future for every New Zealander."
