Finance Minister Nicola Willis announced her mini-Budget today.
Here's the main points from the announcement:
- A slowing economy means the Government’s books are in worse shape than expected pre-election
- As high migration holds the economy up, slowing spending and lower business revenue means the Government’s tax take is reducing
- The Government is expected to scrape in a surplus in 2026/27 – just – at a "wafer thin" $100m. That’s lower than predicted
- Unemployment is expected to peak at 5.25% in 2025
- Inflation is expected to be back in the 2% range in 2025
- Economic growth is expected to remain slow for some time
- High migration is helping the housing market ― after a 9.1% fall this year, house prices are forecast to rise by 5.3% in 2024.
The Government says it has found $7.47 billion in savings over four years by stopping work that was underway, in tax changes and by redirecting funds that were allocated for climate initiatives.
Stop work instructions (savings over four years):
- Reversing the previous Labour government’s planned 20-hours early childhood education initiative extension to two-year-olds ($1.18 billion)
- Exiting Let’s Get Wellington Moving ($525m)
- Stopping Labour’s work on resource management reforms ($302m)
- Ending Labour’s policy of half-price public transport fares for under 25s ($265m)
Tax and income changes
- Remove the commercial buildings depreciation ($2.31b)
- Indexation of main benefits to CPI inflation numbers ($676m)
- Return the Brightline property ownership test to two years ($180m)
Climate “dividend”
- Return uncommitted funding from the Climate Emergency Response Fund (CERF) ($900m)
- Return funding from the Government Investment in Decarbonising Industry (GIDI) Fund ($647m)
- Return uncommitted CERF funding from the National Land Transport Fund ($500m).
In a statement, Willis said: "Our Government is committed to getting the books back in order and effectively managing taxpayers’ money. We have found billions of dollars’ worth of savings within weeks of being elected, and we intend to continue this savings-drive to deliver a better deal for all New Zealanders."
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