Prime Minister Christopher Luxon has defended his Government’s progress on improving economic growth, and has been pressed about whether it is still committed to returning the books to surplus in 2027-28.
Ahead of the Treasury’s half-year fiscal update, Finance Minister Nicola Willis earlier this week appeared to soften her language on the prospect of returning to surplus, saying she was “not going to chase a surplus at all costs”.
Luxon spoke to Q+A’s Jack Tame for a wide-ranging interview this morning. He was questioned about his coalition’s progress one year into the government.
On fiscal expectations, the PM said: “We are committed to getting to surplus, but we’re going to get a revised forecast very shortly.”
He added: “In fairness, I can’t comment on what that forecast will be, given the half-year economic and fiscal update happens just before Christmas.”
At May’s Budget, Willis said the Government was “on track” to deliver a budget surplus by 2027/28, after promising before the election it would meet a surplus in the 2026/27 year.
But the Finance Minister was circumspect about the prospect this week.
Treasury is warning it’s now deeper than the Global Financial Crisis of 2007-08. (Source: 1News)
“I’ve always been clear. I’m not going to chase a surplus at all costs,” she told Newstalk ZB.
“Forecasts move up and down. What I’ve committed to New Zealanders is that we will make sensible, prudent fiscal decisions, to get the books back in balance over time, and we remain on that course.”
Last month, Treasury chief economist Dominick Stephens said the department was revising down its forecasts for the country’s economic growth.
“We depend on the forecasts of growth in the economy. When the economy is smaller there is less revenue and it makes it harder to get to surplus,” Willis responded last week.
“I can’t control Treasury’s forecast assumptions, what I can and will control is our Government’s discretionary spending decisions.”
On the campaign trail, National touted its fiscal policy plan, suggesting it could return a surplus, that was larger than Labour’s, to the Government’s books by the 2026/27 year.
‘In 12 months, we’re supposed to fix that all?’
Speaking to Q+A, Luxon defended his coalition’s progress on fixing what he’s long described as the previous government’s “economic mismanagement”.
“All New Zealanders know it’s been a pretty tough time. We’ve inherited a hell of a mess,” he said. “We still acknowledge we’ve got tough times.
The PM spoke to Q+A’s Jack Tame. (Source: 1News)
“The forecast around economic growth will be a consequence of the decisions we make around spending, inflation and interest rates.”
The PM highlighted the FamilyBoost package and tax cuts as proof his Government made progress in lowering the cost of living.
“We are making sure we’ve got good, disciplined government spending.
“We’re making sure we’ve got inflation now within the band. First time in three and a half years you’ve had three interest rate cuts in 12 months. That’s fantastic. You’ve got rising confidence at annual highs, in the last three years.”
When repeatedly grilled about New Zealand’s slow economic growth, Luxon said: “It’s somewhat naive, to be honest with you, to say, we’ve had six years of economic mismanagement, and in 12 months we’re supposed to fix that all?”
In his interview, the PM was also asked about emissions reduction, investment property tax changes, child poverty targets, and policies affecting Crown-Māori relations.
Q+A with Jack Tame is made with the support of New Zealand On Air
