© Reuters. FILE PHOTO: New Zealand’s finance minister, Grant Robertson, delivers a speech on the “well-being” budget in Wellington, New Zealand, May 30, 2019. REUTERS/Charlotte Greenfield/File Photo
By Lucy Craymer
WELLINGTON (Reuters) – New Zealand is set to deliver what it calls a “no-frills” budget on Thursday as falling tax revenue squeezes coffers and inflation threatens to limit reconstruction efforts due to the cyclone. swirl, limiting stimulus as the Labor government faces elections this year.
Finance Minister Grant Robertson said the budget will focus on financial sustainability as it cuts NZ$4 billion ($2.54 billion) in spending to fund programs seen as core. core and rebuilding infrastructure damaged in floods and tornadoes earlier this year.
“This budget has seen us make tough trade-offs to stick to our balanced approach,” Robertson said in a speech to the Wellington Chamber of Commerce last week. “It’s focused on providing support to people today, while building our nation for the future.”
The budget is the first for Prime Minister Chris Hipkins, who replaced Jacinda Ardern when she stepped down in January after five years in office.
New Zealanders will go to the polls in October in a close election with no party likely to win a majority.
The 2023-24 budget is expected to show the bottom line worsening with the country unlikely to reach a surplus in 2024-25 as forecast in December.
In December, the government forecast a deficit of NZ$3.36 billion for the year ending June 2023, with a surplus of NZ$1.66 billion expected for the year ending June 2023. June 2025.
The government’s forecast on Thursday is also likely to reflect a worsening domestic situation with the economy shrinking 0.6 percent in the fourth quarter of last year.
Money will be set aside to provide relief to social welfare beneficiaries while more than NZ$1 billion has been set aside for post-hurricane reconstruction.
The government has also promised NZ$748 million to increase defense staff salaries and upgrade equipment. Money for climate-friendly initiatives is also expected.
Bank of New Zealand economists say that while the budget will include some stimulus measures, they are unlikely to be substantial.
“Even if the government wants to spend more and cut taxes big, the accounting line will sound the alarm,” they said.
($1 = 1.5763 New Zealand dollars)
(This story has been tweaked to correct wording in paragraph 1)