On the Campaign, September 12: What you missed on the election campaign today

Labour's Chris Hipkins and National's Christopher Luxon will have to be careful with their spending, based on the latest government books.

The next government faces some tough economic decisions if they want to get the country’s books back in the black.

Treasury delivered the Pre-election Economic Fiscal Update (Prefu) today, which showed that no recession is forecast and surplus is possible by 2027. However, the country faces ongoing deficits to get to those surpluses, with more borrowing and increased debt forecast.

The estimates for those surpluses are also based on what the current Government has already promised to spend in the forecast period, not on any election promises that would come into effect after the next government takes office.

Speaking to Georgina Campbell for On the Campaign, the Herald’s election podcast, NZ Herald Wellington business editor Jenee Tibshraeny explained this update does not leave the parties in a good position.

“Basically, these forecasts show they don’t have much money to play with. There isn’t much in the kitty.”

She said the forecasts show that if the economy grows and there aren’t any surprises, then even though the forecast isn’t great, we can get to that surplus a year later than originally planned.

“The issue that I’m a bit worried [about] is if things don’t go to plan. If the global economic environment isn’t as good, or if the next government comes in and decides it wants to spend more money, or if we’re faced with another cyclone or anything like that, the books are going to be in a significantly worse state.”

Tibshraeny said “there are no free lunches here”, and the next government, whether led by Labour or National, will have to make some trade-offs to deliver their promises.

Also on this episode, the Herald’s Adam Pearse details a surprise appearance from the Taxpayers’ Union and their debt clock at a placard event with National’s Christopher Luxon this morning.

Listen to the full episode of On the Campaign above for the full rundown of today’s big election stories.

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