New Zealand Labour Party

Update on our economy

Today the Coalition Government released the 2019 Budget Policy Statement (BPS), outlining the priorities for Budget 2019. The Treasury also released its Half Year Economic and Fiscal Update with its latest set of forecasts for the New Zealand economy.

The BPS is our first action in developing the Wellbeing Budget. It outlines how we have changed the traditional Budget process to put wellbeing outcomes at the heart of what we do.

NZ's first Wellbeing Budget Infographic

The Budget Policy Statement:

Using the Treasury’s Living Standards Framework (LSF), evidence from sector-based experts and the Government’s Science Advisors, and with collaboration among public sector agencies and Ministers, we have identified five priorities for the Wellbeing Budget:

  • Creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy
  • Supporting a thriving nation in the digital age through innovation, social and economic opportunities
  • Lifting Māori and Pacific incomes, skills and opportunities
  • Reducing child poverty and improving child wellbeing, including addressing family violence
  • Supporting mental wellbeing for all New Zealanders, with a special focus on under 24-year-olds.

These priorities will operate as a filter for new Budget bids. All Ministers and departments have collective responsibility for delivering these outcomes.

We are using these priorities to guide spending decisions is about improving the wellbeing of current and future New Zealanders.

The priorities represent areas in which the best opportunities exist to make a difference to the wellbeing of New Zealanders.

Strong economic fundamentals and sustainable economic growth remain integral to New Zealand’s success but they are a means to an end, not an end in themselves.

We are widening our Budget focus to look beyond economic growth and include the wellbeing of our people, the health of our environment and the strength of our communities.

The wellbeing approach requires Ministers and agencies to work together on outcomes, breaking down the silos that exist at the moment to deliver better results for New Zealanders. They will be collectively responsible for them all.

Half Year Economic Fiscal Update:

The Treasury’s latest forecasts show the New Zealand economy will continue its momentum over the next few years, underpinned by investment, productivity and wage growth.

The forecasts released today show the Coalition Government’s plan to help transition the economy to more productive, sustainable and inclusive growth is working.

They show:

  • Positive productivity growth after five years of negative growth
  • Wages forecast to increase by over 3.3% per year over the forecast period
  • Business and residential investment growth around 4% per year
  • Export growth around 3% per year, and the terms-of-trade remaining strong
  • Unemployment to stay low around 4% as businesses continue to hire

These factors will drive GDP growth of about 3% per year into 2021, according to the HYEFU forecasts. This represents strong growth at a time when the economy is running at capacity, and is in line with other forecasters.

The HYEFU forecasts also show continued careful management of the Government’s books on behalf of all New Zealanders and in line with the Budget Responsibility Rules.

The Treasury has warned that there are growing risks around the international growth outlook, which could feed through to the New Zealand economy. This is why it’s important that we continue to run surpluses, and keep expenses and debt under control to provide a buffer for any rainy day.