Treasury’s Half Year Economic and Fiscal Update, published in December, predicted the Government wouldn’t balance its books until the year ending June 2030, a year later than had been predicted in the 2025 Budget.
Treasury’s December update predicted a $945 million deficit in the year to June 2029, excluding ACC debt. In last year’s Budget, forecasts suggested a $1.9 billion surplus could be achieved in that year.
Luxon’s comments suggest the Government was on track to return to a surplus in 2029, but that position had been revised.
In a statement to the Herald, Willis said Treasury had advised her of an “improvement in the operating balance track” when officials presented Willis with a preliminary fiscal forecast.
“That forecast was based on data that did not reflect the impact of the conflict in the Middle East,” she said.
“The updated forecast will be released when the Budget is presented on May 28.”
Willis, who yesterday released projections for GDP growth, inflation and unemployment according to scenarios of three different average oil prices, indicated a cautious approach leading into next month’s Budget.
“I am very conscious that many New Zealanders would like to see us splashing the cash right now, and I would love to ease the pressure that many people are feeling.
“We simply can’t do that responsibly as a country right now because we cannot just keep spending more and borrowing more, as some have suggested.”
Adam Pearse is the deputy political editor and part of the NZ Herald’s press gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.
