18 Feb 2024
Treasury’s pre-election economic forecasts show that six years of Labour’s economic mismanagement has taken a toll on New Zealand, with forecasts showing a sustained economic slowdown, high inflation and high interest rates, National Leader Christopher Luxon says.
“Treasury’s latest forecasts show the economy isn’t working for Kiwis. The economic slowdown is expected to last for another 18 months, as interest rates stay high for longer in an attempt to combat persistently high inflation driven by Labour’s addiction to spending.
“Government spending is up by $6.5 billion over the coming years, the return to surplus has been delayed for the third time and Government debt has blown out by $13 billion, soaring above $100 billion next year.
“As Treasury says, ‘households and businesses are expected to remain under pressure’.
“New Zealanders deserve better. Wages have been growing slower than inflation, the fortnightly cost of a $500,000 mortgage has increased by $750 in the last two years, and food prices have been increasing at rates not seen since the 1980s.
“Sadly, there’s more pain to come with Treasury now forecasting:
- the economic slowdown to persist through to the end of 2024,
- inflation to stay above target levels until the end of 2024,
- interest rates to stay higher for longer in an attempt to combat inflation,
- a delay in the return to surplus to 2027 - meaning seven straight years of deficits, and
- debt servicing costs rising to $11 billion per year.
“These figures assume Labour will stick to their proposed spending limits – something they have never done. In the 2020 PREFU, spending was expected to be $116 billion this year. But Finance Minister Grant Robertson’s excessive spending has lifted this to $139 billion – a $23 billion blow-out. Indeed, Treasury even includes a scenario in their forecasts where the Government does not stick to their Budget allowances.
“Overall, it all equates to Labour spending over $1 billion more per week than when they took office in 2017.
“The economic outlook is a distinctly New Zealand problem. New Zealand is the only country in the Asia-Pacific region in recession and the IMF is forecasting that New Zealand’s economic growth prospects next year are among the very worst in the world. In contrast, Australia’s books are in surplus.
“As a result of our economic conditions, too many of our people are looking at opportunities overseas, with nearly 40,000 Kiwis permanently leaving the country in the last year.
“It is clear that Labour is out of ideas and has no plan to turn things around. New Zealand can do so much better.
“This election is an opportunity for change and a chance to get the economy working for all New Zealanders. National has a plan to do exactly that.
“National’s plan to rebuild the economy includes:
- stopping wasteful spending and getting the books back in order,
- delivering tax relief to encourage hard work and ease the cost of living crisis,
- cutting red tape to make it easier to invest and grow,
- building infrastructure for growth like roads and public transport,
- growing skills to expand our workforce,
- driving technology and innovation, and
- being open to the world by supporting trade and investment.
“National will rebuild the economy because that is how we lift wages, grow jobs and help Kiwis get ahead. A strong economy is how we end the cost of living crisis and get mortgage rates under control. It is also how we afford the quality public services we all rely on and deserve.
“New Zealanders now have a clear choice this election – a strong stable National-led Government with a plan to rebuild the economy. Or three more years of a high taxing, high spending Labour-led Government with no plan to address the economic issues facing New Zealanders.”