New Zealand’s soft approach to eliminating the budget deficit is proving even less effective than expected following the Treasury’s publishing of the government’s financial statement for the 2023/24 year, which includes the end of the previous Labour government as well as the first nine months of the National/Act/NZ First coalition. The final operating balance before gains and losses was a deficit of $12.9 billion, up $1.1 billion on forecast in the May 2024 budget.
Despite revenue growing faster than expected in 2023/24, $14.3 billion more than the previous year and $2.3 billion more than projected in the 2024 budget, expenses grew even faster: $4.4 billion higher than forecast. Increased expenses include the cancellation of the Interislander ferry replacement at $500 million, the $800 million deficit in Health NZ and a 17 per cent increase in insurance liability for ACC. Finance Minister Nicola Willis called the new figures “sobering”, saying, “We need to tidy them up and we need to impose restraint.” These are weasel words which show the government is not sufficiently committed to eliminating deficit spending and the likelihood of returning to surplus on 2027/28 is increasingly remote.
