Spending limits for next Budget to be revealed by Finance Minister Nicola Willis

Finance Minister Nicola Willis will reveal the date of the Budget and the Budget Policy Statement on Monday, when she appears before Parliament’s Finance and Expenditure Committee for a grilling on her Mini-Budget.

It is getting late in the year for a Budget Policy Statement (BPS). These are usually released with the Half-Year Economic and Fiscal Update in December the year prior to the Budget. By convention, they set out the Government’s spending parameters and signal the priorities for that year’s Budget.

The Budget tends to be delivered at the end of a sitting block in May, meaning May 30 is probably the best guess for this year.

Willis’ office confirmed the BPS would include these spending limits, known as the operating and capital allowances, which refer to the new money available for spending on day-to-day operational matters or capital investment, respectively.

In all but one year, former Finance Minister Grant Robertson published his BPS in December, In 2021, following the election the year prior, the BPS was published on February 9.

After being published, the BPS is examined by the Finance and Expenditure Committee in the new year, which uses it as an opportunity to hear from the economically interested, and to grill the Finance Minister and Treasury Secretary.

Robertson told the Herald he could accept the new Government taking its time as it got its feet under the desk, but the BPS existed for important “transparency reasons” and it was getting “late in the day” for the Government to produce one.

He said the reason for the documents go back to the lack of transparency under the Muldoon Government.

“It’s part of the Budget cycle.

“If you go back to 1989 [when the Public Finance Act was passed] this is about how we make sure that there is a process to Budgeting,” he said.

Willis’ confirmation the BPS will include the Government’s operating and capital allowances means the public will get to see how serious the new Government is about sticking to National’s fiscal plan. Robertson himself trimmed the level of new forecast spending back in August. National proposed cutting this back even further.

The current operating allowances are $3.5 billion for Budget 2024, $3.25b for Budget 2025 and $3b for Budget 2026.

In its Briefing to Willis as the incoming Finance Minister (BIM), Treasury said these allowances should be “broadly sufficient to meet critical cost pressures that are not already funded”.

National’s pre-election fiscal plan pledged to cut these allowances by a cumulative $3.3b over the forecast period, which would put pressure on funding those critical cost pressures.

The Budget Policy Statement is usually when the Finance Minister puts another year’s worth of capital funding into their multi-year capital allowance, signalling how much money the Government has to deliver on its capital investment promises.

The Hyefu did not include any additional year’s capital, meaning fiscal trainspotters are nervously waiting to see how much money the Government will allocate to deliver on its investment promises, and how much influence NZ First and Act have on Willis’ economic management.

The BPS is also when the Government sets out its fiscal goals. The last Government had a surplus and debt goal. In its BIM, Treasury recommended leaving these largely unchanged.

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.