The treasurer revealed that he and Finance Minister Katy Gallagher had been working on both the mid-year update and the next budget – due on March 25 – over recent months,signalling the government was ahead with its policy offerings for voters.
“There will be more savings,there will be more restraint,and there will be more announcements,but it remains to be seen whether they all net out,” he said.
“We will do what we’ve always done,which is to try and make room for any new promises and priorities in a budget which is already tight and under substantial pressure.”
Opposition Leader Peter Dutton this week called for lower spending and blamed the government’s outlays for adding to pressure on inflation.
Asked if he would cut spending if he becomes prime minister,Dutton said he would make announcements closer to the election,although the Coalition has already signalled deep cuts in the federal public service.
Shadow treasurer Angus Taylor said spending should not grow faster than the economy.
“It’s not austerity,but it is restraint in the growth of spending that matters so much,” he said,without naming targets for Coalition cuts in recurrent outlays.
Auckland and the rest of New Zealand are in their deepest recession,outside the pandemic and the global financial crisis,in more than 30 years.Credit:Bloomberg
Chalmers and Gallagher on Wednesday unveiled the mid-year fiscal update,which revealed a $22.1 billion increase in cumulative deficits over the next four years.
This year’s deficit is expected to be slightly smaller than forecast in May,but at $26.9 billion still a big reversal from the $15.8 billion surplus last year. The deficit for 2025-26 is expected to reach $46.9 billion.
While inflation is tipped to remain around 2.75 per cent,the economy is forecast to expand by 1.75 per cent this year. Over the past 12 months,the economy grew by just 0.8 per cent,with GDP per capita falling for a record seventh consecutive quarter.
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Figures released on Thursday showed New Zealand in a deep recession,contracting by 1 per cent in the September quarter after a 1.1 per cent fall in the June quarter. Government spending cuts proved a major factor in the downturn.
Chalmers said Australia had out-performed almost every nation in the OECD with the economy continuing to grow while other countries had experienced at least one negative quarter of growth this year.
“We’ve been able to keep unemployment very low. We’ve been able to create a million jobs. We’ve been able to get real wages growing again. We’ve been able to see inflation moderate,” Chalmers said.
“The textbook definition of a soft landing is the combination of indicators that we have in our economy.”
Credit:Matt Golding
The nation has created 393,000 jobs this year,with a large majority in the so-called “non-market sector”,including much of the health,public safety and teaching workforces.
Chalmers pointed to a similar employment pattern in the early stages of Tony Abbott’s time as prime minister and argued the lift in non-market jobs was driven by the ageing population and the need for more people to work in the care economy.
“Let’s not be snobby about care economy jobs. Care economy jobs are real jobs and the people that do them deserve to be paid well for them,” he said.