New Zealand to reduce debt, gov't spending as budget priorities

The New Zealand government plans to reduce debt and government spending as a proportion of the overall economy, and get back to surplus as part of its budget priorities announced yesterday.

The budget will deliver urgently-needed tax relief to hard-working New Zealanders while putting the government's finances back on a sustainable track, Finance Minister Nicola Willis said at the release of the Budget Policy Statement outlining the government's budget goals.

The main priorities for Budget 2024 are to deliver meaningful tax reductions to provide cost of living relief to New Zealanders

who have seen no change in personal income tax rates and thresholds since 2010, Willis said.

Priorities also include identifying enduring savings across government departments and agencies, improving public services by focusing new spending on priority areas including health, education, and law and order, keeping tight control of government spending while funding a limited number of high-priority government policy commitments and urgent cost pressures, she said.

"Tax reductions will be funded within the operating allowance through a mixture of savings, reprioritisation and additional revenue sources," Willis said, adding that funding tax relief in this way means the government will not have to borrow extra to provide tax relief.

Currently, inflation is pushing low and medium-income workers into higher tax brackets, meaning they are paying more tax, she said, adding that the Budget Policy Statement charts a responsible, moderate course correction for New Zealand. The forecast scenario suggests that New Zealand's economic outlook has deteriorated and that economic activity has been weaker than previously thought, the finance minister noted.