Nicola Willis reveals gloomy outlook in budget!
Labour leader Chris Hipkins has reacted to the Finance Minister’s statement, claiming it gives an insight into “what a shambles” the Government is, and calling the announcement “another whopper”.
He said the Government “can’t even answer the most fundamental question, which is how much money they’re going to spend in the Budget”.
He said the fact it hadn’t been specified in the Budget Policy Statement “shows the level of dysfunction” in the coalition Government and he believed the numbers were “unclear” because the Government couldn’t make their numbers add up.
“Tax cuts simply aren’t affordable,” he said.
“Nicola Willis was scathing about the fact that Labour, on occasion, changed the operating allowance between the Budget Policy Statement and when the Budget was delivered. Her way around that is, just to not set one at all.”
Hipkins said that was a combination of “hypocrisy and incompetence”.
He said tax cuts were “absolutely irresponsible” in the current economic climate and said the Government wasn’t being honest about what they would mean.
“It means deeper cuts to New Zealand’s public services, which as the disability community found out last week, actually directly affects people’s day-to-day lives.”
He said it also meant inflation would “stay higher for longer”.
“There’s simply no way they’re going to be able to meet all of the commitments that they put out there without increasing borrowing and without increasing money into the economy.”
Treasury figures gloomy
Treasury’s forecast today paints a bleaker picture than the one released in December.
it now expects GDP over the period 2024-28 to be $42.8 billion lower than forecast, and for government tax revenue to be $13.9 billion lower.

“The Finance Minister today confirmed what households across New Zealand already understand: a tight economy requires tough decisions and financial compromises.
“New Zealanders have responded to rising living costs and mortgage rates in the responsible way – seeking out opportunities for savings on groceries and utilities and skipping some nice-to-haves.
“With the economic weather now hitting home in the Government’s own books, it’s Wellington’s turn to show some discipline. Focusing on maximum value for every dollar spent will ensure we can continue to afford the most important services to New Zealanders, such as health and education.
“ACT’s presence in the coalition means the Government is going further in winding back low-value spending, even if it’s not going as far as ACT would like. We’re working every day to represent the values of those New Zealanders who are paying the bills.”
Willis confirms there will be more funding in the Budget for frontline services – health, education, law, and order -saying they are the priority for new spending.
She took the opportunity to have a go at the previous Labour government. “The legacy of heightened, ill-targeted spending from the previous government requires correction. Any new spending will be targeted, effective and within our means, that is in stark contest to the blow-out we’ve seen in recent years,” she claimed.
But she wouldn’t say where the new sources of revenue were coming from.

“To assist with the preparation of the Budget Policy Statement, the Treasury has produced a forecast scenario. The scenario suggests that the economic outlook has deteriorated since the December Half Year Update and that economic activity has been weaker than previously thought.
“This reinforces the importance of bringing government spending back under control by embedding a culture of responsible spending, restoring fiscal discipline, right sizing the government’s footprint, and improving the efficiency and productivity of spending.
“This will not be achieved in a single Budget. International evidence is that reducing deficits is best done over the course of several years by focusing on structural reforms to expenditure and revenue settings.”
Willis could not confirm, when repeatedly asked, that the tax cuts would be exactly the same as those promised in the election campaign, reports Felix Desmarais, who has been in the government briefing this afternoon.
Willis said the Government was a coalition and National would not break its coalition agreements.
She added: “There is not going to be a surprise extra tax in the Budget.”
Tax cuts and getting the Government’s finances “back on a sustainable track” will be the priorities of the upcoming Budget, due on May 30, Willis says.
She said tax cuts would be funded within the Government’s operating allowance through a combination of “savings, reprioritisation and additional revenue sources”.
Here’s some first details from the documents just released:

•The Finance Minister is giving herself less than $3.5bn new money to spend in the upcoming Budget. $3.5bn was the operating allowance set by the previous government for the year.
•Inflation is looking better than the half-year update from the end of last year which forecasted 4.1% in 2024. It is dropping faster and is now forecast to come down to 3.3% this year and 2.2% in 2025.
National’s Finance Minister Nicola Willis is about to set out how much money the Government says it must play with in this year’s Budget. The announcement is due at 1pm and will be followed by reaction across the political and finance sectors.
The announcement comes against a backdrop of New Zealand officially being back in recession and the three-party Government being accused of not having the funds to meet its election and coalition agreement commitments.

Details of what’s in Willis’ first Budget won’t be revealed today – that happens in a couple of months, on May 30.
-with inputs from 1news.