There are “hard calls” ahead as the country recovers from Cyclone Gabrielle and the other extreme weather events of 2023, Finance Minister Grant Robertson warned this morning.
In a scene-setting speech to the Auckland business community ahead of the Budget next week, Robertson said these hard calls had been made by the Government in the immediate aftermath of the cyclone, but difficult decisions would increasingly be made by the private sector too.
“Hard calls are going to need to be made by central government, by local government, commercial businesses, communities, banks and insurance companies that will require a partnership for making decisions and for how we finance those decisions,” Robertson said.
He said Prime Minister Chris Hipkins had said the Government would “pay the Government’s share of response and recovery costs through the Government’s annual allowances we set ourselves each year to control spending”
“This has required prioritisation and tough decisions during the Budget 2023 process,” Robertson said, citing Thursday’s announcement that the Government had found $4b worth of savings from existing spending,
The cost of the cyclone could come to between $9 billion and $14.5b, according to Treasury’s most recent estimates. With climate change making such weather more frequent, Robertson and the Government will make the case for resilient public finances and fiscal sustainability - like returning to surplus.
It is widely expected that with a weakening economy putting pressure on revenue, Treasury’s most up-to-date forecasts, which will be published at the Budget, will delay the surplus beyond 2025, the year Treasury believed the books would return to black when it last updated its forecasts in December.
The speech cast forward to Budget announcements coming this weekend in Hawke’s Bay, when the Government intends to announce most of the Budget initiatives to do with cyclone recovery in advance of the Budget itself, which will be delivered next Thursday.
This weekend’s announcement is being billed as a Budget unto itself and includes spending for all affected regions, not just Hawke’s Bay.
Robertson said the Budget would look at resilient infrastructure.
“Budget 2023 will also invest so that we can plan ahead. To be more secure in the face of whatever the world might throw at us next, while growing a higher-wage, low-emissions economy. This will include skills, research and innovation, and infrastructure,” Robertson said.
“Infrastructure investment will be critical both to the rebuild from recent extreme weather events, and to our future economic growth and security. We will build on the tens of billions of dollars we have invested in recent years.
“New Zealand has an extraordinary infrastructure deficit. Treasury’s Investment Statement last year estimated the cost of addressing the deficit and stopping it getting worse at $210 billion over the next thirty years,” Robertson said.
He said the infrastructure the Government builds “needs to be resilient to the ever more obvious impacts of climate change”.