NZCTU Economist Craig Renney said that the governments books were showing the strength needed to support the economy during the predicted post-COVID-19 economic slowdown. Treasury accounts showed that the government had plenty of fiscal space to deal with any challenges – government debt is forecast to be at less than 50% of its limit by 2027. The government returns to surplus in 2025, with taxation and expenditure remaining stable across forecast period.

The books today painted a picture of an economy that was likely to tread water over the next year. GDP was predicted to fall by 0.3% by mid-2024, and the number of people in paid work was predicted to fall by 50,000 – although the numbers claiming unemployment benefit rises by a much smaller number. Inflation has already peaked according to the Treasury, with interest rates due to peak at around 5%. Both business and residential investment remain elevated in the future.

Craig Renney said “inflation is forecast to fall, and the economy is due to slow. With fewer people in work, there is both space and opportunity to make investments that will benefit the economy in the long-run. We should be using the opportunity provided by this set of forecasts to tackle issues such as our infrastructure gap, climate change, productivity, and our housing crisis. This would not only benefit our economy long-term, it would help mitigate any risks that the slowdown is any worse than predicted. It would also help to manage our long-term inflation challenges”.

The NZCTU welcomes the commitment of the government today to the wellbeing objectives, particularly around the need to deliver a just transition, managing the changing future of work, and supporting Māori and Pacific Peoples. To genuinely deliver on these aspirations will require sustained and targeted investment. The accounts provided today should provide a platform for delivering on these investments.

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