HYEFU: Government books to stay deep in deficit until 2029

[king1]

Anyone care to guess what " Treasury unwinding overly optimistic assumptions" really means - sounds like bollocks to me... 

and for the first time EVER they have chosen not to blame the previous government?

Finance Minister Nicola Willis said the forecasts showed the economic downturn started sooner and was deeper than had been previously thought

She said the worsening of the financial backdrop was not a result of government decisions.
"It has been driven largely by Treasury unwinding overly optimistic assumptions about the state of the economy."

https://www.rnz.co.nz/news/national/5369...until-2029

[harm_less]

It sounds to me like. 'We don't really know how this economic stuff works but trust us on this and we hope to make things better in a few years.'

[harm_less]

The situation is well described by Craig Renney on Bluesky:

" The Minister of Finance and the Treasury released its Half Year Economic and Fiscal Update today, and with it – its ‘plan’ for the Budget in 2025 in the Budget Policy Statement. The indicators show very clearly that it’s not working for anyone. 

From a fiscal perspective, the government books are deeper in the red. In Treasury language they say “All key fiscal indicators are expected to be weaker across all years compared to the Budget Update”. That means more debt and OBEGAL doesn’t come back into surplus 

From an economic perspective, its even worse. The data shows that the economy is growing more slowly than forecast just six months ago. Next year GDP was forecast to grow 1.7% at Budget. Now its 0.5%. GDP is forecast to be $20bn lower by 2028. GDP per capita falls 0.6% this year. 

Unemployment is higher in every year of the forecast, rising to a peak of 5.4%. There will be 20,000 more people on jobseekers support by 2026. The Treasury states that it is one of the biggest reasons why spending continues to grow in the future - yet there is no plan to help 

Net migration basically halves next year from 58,000 to 29,000, which to date had been one of our biggest drivers of growth. Even house prices are forecast to fall by 0.1% this year, so house price growth will no longer drive consumption in New Zealand. 

The government's solution to its problems is to double down. Next year the government has $700m to pay for everything new outside of health. That’s nowhere near enough. The BPS shows that the plan is “savings will need to found, beyond those identified in the previous Budget”. 

That is why the government states that “with a small number of exceptions, government departments should expect to receive no additional funding in the Budget”. New real-terms cuts all round – building on the real-terms cuts already delivered last year. 

Despite falling inflation and falling interest rates the Treasury states “business investment is forecast to continue falling into next year, contracting by 3.2% in the June 2025 year”. Businesses are not keen to invest when there is little hope of growth. 

Other countries around the world are seeing growth, yet New Zealand is not. That lack of growth in turn delivers poorer fiscal outcomes, and less public investment. That in turn requires bigger cuts to balance the books. Round and round we go. "

If only Nicky No Boats had that depth of economic understanding!

[Lilith7]

They give the strong impression that they do not have a clue what they're doing & do not give a toss what damage they do just as long as they can stay in power.
Much like small children who won't give the ball back to give anyone else a turn...

[Olive]

They give the strong impression that they do not have a clue what they're doing & do not give a toss what damage they do just as long as they can stay in power.
Much like small children who won't give the ball back to give anyone else a turn...

The coalition is just looking for another scapegoat.   Blaming it all on Labour's life-saving pandemic financial assistance to businesses has reached its limit, so now Nicola is trying to blame it on Treasury, which was until recently her best friend. and partner in crime.

[Lilith7]

They give the strong impression that they do not have a clue what they're doing & do not give a toss what damage they do just as long as they can stay in power.
Much like small children who won't give the ball back to give anyone else a turn...

The coalition is just looking for another scapegoat.   Blaming it all on Labour's life-saving pandemic financial assistance to businesses has reached its limit, so now Nicola is trying to blame it on Treasury, which was until recently her best friend. and partner in crime.

Indeed. I know that it's traditional for every new govt to blame the previous govt for everything which goes wrong during their first 12-18 months in power, but they're pushing things a bit now.
The damage may take years to repair. I just wish that all our politicians could put aside their differences & work together to get things right, but that seems unlikely.

[zqwerty]

$380 Aldi grocery shop brings New Zealand dad to tears after move to Australia: ‘Unbelievable'

https://nz.finance.yahoo.com/news/380-al...10260.html

[Lilith7]

$380 Aldi grocery shop brings New Zealand dad to tears after move to Australia: ‘Unbelievable'

https://nz.finance.yahoo.com/news/380-al...10260.html

Good grief...

[alpha111]

"As long as my rich mates are doing well,
the rest of you can go to hell" Nicola Willis. Well that's how she behaves!
Actually Aldi is good for other things than groceries; I have brought things back to NZ in my luggage

[Lilith7]

"As long as my rich mates are doing well,
the rest of you can go to hell" Nicola Willis. Well that's how she behaves!
Actually Aldi is good for other things than groceries; I have brought things back to NZ in my luggage

That does sum it up rather well!

I was listening to Bryan Bruce talking to econoomist Susan St John earlier discussing this govt, & they were talking in a similar vein.


They really don't seem to care about child health, or poverty, or the crime rate which will rise rapidly if they continue down the same road. 

Whether that's through stupidty or callousness is anyone's guess.

[Praktica]

The latest GDP figures adjusted those for 2023 up, so we were not in recession under Labour, and those for 2024 down, showing that it's this shower of dunderheads in charge now that has put us down the gurgler.