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New Zealand Budget 2024 – a step in the right direction?: WK Strawbridge Advisors and Accountants

Finance Minster Nicola Willis MP delivered her first budget this afternoon in Wellington. Our team has digested the budget and prepared a blog where we have looked at the impact on interest rates, the state of the economy, tax cuts, removal of first home grants, family boost and working for families increases. Head here to get all the information.

We were highly critical of the additional spending in Budget 2023 in a time of high inflation and were pessimistic of Treasury’s 2023 forecast that NZ would not enter a recession. Treasury were, of course, wrong and NZ is in recession as high interest rates continue to pile the hurt on households and businesses. One can’t help but to look back at the 2022 and 2023 Budgets as a lost opportunity for the former government to show leadership and restraint – and this comment is not with the value of hindsight – we and plenty others were saying it at the time. Ultimately, the government needed to play its part in reigning in inflation and it didn’t, and now New Zealand has entered the very undesirable stagflation club. That is, we are in recession but have high inflation. This is not a place that any economy wants to be in.

Of course, now there is a new government and a new finance minister, Nicola Willis. So, all eyes were on the Finance minister as she delivered her first budget to see if she could be more fiscally responsible than her predecessor. And it seems like a good start. One thing is obvious – this was not a Grant Robertson budget. A key theme for Budget 2024 is disciplined spending within the government/public service.

Budget 2024 has plenty of new spending on the usual big-ticket items like health, education, and police. However, much of the new spending is coming from cutting costs elsewhere, especially spending reprioritisations and spending discipline within the public service. The government is still borrowing and the forecast return to surplus has been delayed.

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