The forecasts will give an indication of Treasury’s confidence in the new Government’s ability to return the books to surplus. Labour managed to scrape a forecast surplus in 2027. The new Government will be hoping it can manage this too.
Recent economic data has been noisy. Tax receipts are coming in higher than forecast, which is good news for the Government, but recent GDP statistics show the overall economy is much weaker than previously thought, which will have a negative impact on the books.
Prime Minister Christopher Luxon has called the scrapped Let’s Get Wellington Moving transport plan an “expensive flop”.
Speaking to Tim Dower on Newstalk ZB this morning, Luxon said around $160m was paid out to consultants over the project but he believed it had only delivered one set of traffic lights.
A new agreement between the Government and Wellington’s local and regional councils was a “very pragmatic, very good outcome”, he said.
”I think we’ve got to be really straight up in this country when things aren’t working, when things aren’t delivering results, we should call time on it and then reset it.”
He said the project had been “bogged down” in consultation.
Asked about the direction of the upcoming mini-budget, Luxon said it had become clearer in the past few weeks that the economy was under “major strain” and he suspected it would deteriorate further - pointing to the Cook Strait mega-ferries project which is being wound down due to a cost blowout, and the Auditor General’s report on infrastructure funds being poorly spent.
He said he suspected it would take years of financial discipline to restore the economy to good shape.Luxon also said New Zealand’s net migration numbers needed to fall as they were not sustainable - although he still wanted skilled migrants being attracted to the country.
Labour is gearing up to fight for its economic record. Leader Chris Hipkins tried to get the new Government to commit to returning the books to surplus at least as fast as forecast under Labour, and to keep unemployment low, making both pledges a centrepiece of his first speech to the new Parliament.
Hipkins said his first pledge for the new Parliament was to “not let this incoming Government rewrite history”.
“They have inherited a set of Government books that are on track to getting back into surplus. They have inherited an inflationary track that will mean by this time next year, inflation will be back to the 1 to 3 per cent target range,” he said.
For its part, the Government is busy clearing the decks. Willis wielded the axe earlier last week, declining a funding top-up for the $3b Interislander replacement project.
Her colleagues Simeon Brown and Chris Bishop repeated this trick on Sunday, killing the $7.4b Let’s Get Wellington Moving Transport plan, and pledging to get on with building a new Mt. Victoria tunnel for cars - setting the new Government on a collision course with Green MPs Tamatha Paul and Julie Anne Genter, whose electorates are on either side of the new tunnel, and who staunchly oppose the carbon-heavy lilt of the new plan.
Genter accused the new Government of being “more interested in putting projects through the shredder than it is in developing a vision for the future of our towns and cities”, and pledged to “organise and push the Government into making the right decisions for the future of the city”.
But Bishop said that Wellingtonians were “sick of all the backwards and forwards on the second Mt Vic tunnel” and defended the decision to cut local government out of the picture and get on with the construction as a central government tunnel.
Last week, the first proper sitting week since the election, saw a frenetic binge of repeals pass through all stages: the Reserve Bank’s dual mandate, Fair Pay Agreements, and the Clean Car Discount were all gone in just three days - in each case returning to the 2017 status quo, as if the Labour Government had never been.
This week the bonfire will continue, with 90-day trials set to be extended to all businesses. As a result of changes made under Labour, only small businesses of fewer than 20 employees can make use of 90-day trial periods.
The biggest job is the repeal of the two laws that Labour passed to replace the Resource Management Act (RMA): the Natural and Build Environments Act, and the Spatial Planning Act.
The Government has said it will revert back to the old RMA once these bills are repealed, and until it comes up with a permanent replacement.
The repeal will pit Bishop, now Minister for RMA reform, against Labour’s Rachel Brooking, a second-term MP, who steps into the portfolio after former Environment Minister David Parker stepped away from it in Labour’s most recent reshuffle.
Brooking was on the working group that helped devise both laws, and sat through select committee hearings on both when she was a backbencher last term.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
