Govt’s spending plan falls due
The likely winners and losers of a review of government spending on projects will be revealed in two weeks.
‘‘I have directed all ministers to assess their budgets against the new Government’s priorities,’’ Finance Minister Grant Robertson told an Auckland business audience yesterday.
‘‘If programmes are found that do not match these priorities then ministers should consider whether this funding can be re-invested in new, higherpriority areas which match our strategy. This work is already under way and will contribute to Budget 2018 planning.’’
He did not identify any specific sectors or portfolios.
Robertson said the fiscal costs of the Government’s 100-day plan were also being finalised and would be released, alongside the budget policy statement (BPS), when the Government opened its books on December 14 for the half-yearly economic and fiscal update (HYEFU).
One of the core elements of the 100-day plan is the reversal of National’s tax cuts, Robertson said, adding this will provide $8 billion of fiscal headroom over the forecast period.
In a speech designed to reassure the business community but to also show that the new Government will do things differently, Robertson noted the range of economic growth forecasts that had been made since the election.
‘‘Some are more pessimistic than others, with both the Reserve Bank and the OECD Economic Outlook more optimistic than some of the bank economists,’’ he said.
Broadly, economists agree growth will soften over the next three years as the housing market remains flat and as net migration tapers off slightly, he said.
Stronger growth is then expected through 2019-20, supported by government policies such as increasing R&D tax credits, increased wages and export growth, Robertson said.
Robertson said if that meant slightly lower growth for a year ‘‘while the transition to a productive economy’’ occurred then that would be a price worth paying.
‘‘As one economist put it, we will be passing on the baton of growth … We will need to reprioritise and seek out programmes that are good value for money.’’