NZ posts $14 billion budget deficit, no path to surplus

[Pelican Press 0]

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NZ posts $14 billion budget deficit, no path to surplus

In her second budget, Finance Minister Nicola Willis has posted a $14.7 billion deficit, even as she banks more than $5 billion in savings.

There’s no clear path back to surplus, with four future smaller deficits in the forward estimates.

And there’s no change to the government’s debt trajectory, which is tipped to peak in 2027 at 46.5 per cent of GDP – just as it was forecast in 2024.

The government has also badged this set of books as “the growth budget”, but Treasury has downgraded growth forecasts.

That’s mainly due to lower-than-expected economic activity offshore – including the US-started trade war – which is critical to New Zealand’s export-oriented economy.

Unemployment, currently at five per cent, is expected to peak at 5.4 per cent in the next year, while there is relief in sight for homeowners after backsliding house prices, which Treasury sees jumping by an average six per cent a year in the forward estimates.

MAJOR CHANGES

Women-dominated workforces to miss out on $2.9b in foregone pay equity claimsInvestment Boost $1.7b tax break to instantly write off capital investmentsEmployee and employer superannuation contributions to rise from three to four per cent – but government payments halved, saving $580m

BUDGET TIDBITS

Young people ineligible for unemployment benefits until age 20, saving $84mFunding to Reserve Bank cut by $36mCo-investment in natural gas fields worth $50mRadio NZ’s budget to be cut by $4.6m – equivalent to seven per centTax evaders to be targeted by $35m worth of compliance chasersA major redevelopment of Nelson hospital, a new emergency department in WellingtonExpansion of Christchurch Men’s prison by 240 bedsEmergency housing funding reduced by $200mFood banks get another year’s support of $15mYear-long medicine prescriptions, costing $23mPredator Free 2050 initiative targeting pest mammals axed, saving $2.6mClimate finance to drop by $150m this yearSmaller payments to new mothers of $50m

(All figures in annual terms and in NZ dollars, $A1 = $NZ1.09)

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