NZ on Track for Worse Than Predicted Deficit Despite Slashing Government Spending . ( New Zealand )

The reduction in expenditure isn’t enough to balance a sharp fall in the tax take from an economy officially in recession..

Although it has slashed public service numbers and ended some programmes, New Zealand’s coalition government is heading towards its first budget with forecasts of a higher-than-expected deficit.

The National-NZ First-ACT government took office with an ambitious agenda centred on major cuts to public servant numbers.

To date, over 4,000 people have lost their jobs as a result, with more expected. ACT Leader and Minister for Regulation David Seymour has previously indicated the total could reach 7,500.

But the reduction in expenditure isn’t enough to balance a sharp fall in the tax take from an economy officially in recession.

Treasury figures show a deficit of $5.04 billion (US$3 billion) for the nine months ended March, which is $619 million more than forecast in the December financial update.

Core tax revenue was $88.5 billion, $1.2 billion below forecast. Weaker income from corporate taxes and GST were partly offset by a rise in taxes on investment returns.

However, overall tax revenue was about six percent higher than at the same time in 2023, reflecting the strong labour market and resultant income tax returns, although GST returns increased less than the rate of inflation.

“[This is] indicating that consumers have cut back their real spending in response to mortgage interest rate and price increases,” Treasury said.

Expenses were nearly $1.4 billion less than forecast at $101 billion. Net debt was slightly lower than expected at $173.7 billion—or 42.9 percent of the economy’s value—while gross debt was above forecast due to the government increasing short-term borrowing to meet normal expenses.

The latest Organisation for Economic Co-operation and Development (OECD) report strongly advised the government to balance its books as quickly as possible and warned that any tax cuts should be fully funded by spending cuts and increased revenue.

Independent calculations say the government’s current cost-saving measures fall $1.5 billion short of the $9 billion needed to pay for the pre-election tax cut promises, and it will have no choice but to borrow to keep its promises.

Aside from the fall in tax incomes, this is partly due to the dumping of some of National’s revenue-gathering policies during coalition negotiations, in particular, the dropping of a “foreign buyer tax” that had been budgeted to raise $2.9 billion a year.

Officials have found that others will raise less money than the party had predicted. Added to that are increased costs from an acceleration of special tax cuts for landlords, worth $2.9 billion.

Finance Minister Nicola Willis has said tax cuts in the Budget—due to be delivered on May 30—will be fully funded and will proceed.

However, Prime Minister Christopher Luxon told reporters in March that, while the government would deliver some form of tax relief this year, the public would need to wait until the Budget in May to find out if it was as much as promised at the election.

...oh, those poor Kiwis.......they were sooooo badly served by this fraud....but....not to worry....she has hit the deck running....!!!....would just love to see what the Kiwis think of all this....!!

“Jacinda Ardern, who earned international acclaim for her leadership as New Zealand’s prime minister, [BARF!!] has been appointed to dual fellowships at Harvard Kennedy School—as 2023 Angelopoulos Global Public Leaders Fellow and as a Hauser Leader in the School’s Center for Public Leadership. The announcement was made today by Kennedy School Dean Douglas Elmendorf. The fellowships will begin this fall.

“Jacinda Ardern showed the world strong and empathetic political leadership,” Elmendorf said. “She earned respect far beyond the shores of her country, and she will bring important insights for our students and will generate vital conversations about the public policy choices facing leaders at all levels.”

The Angelopoulos Global Public Leaders Program, established with support from Gianna Angelopoulos-Daskalaki, provides opportunities for high-profile leaders who are transitioning from public service roles to spend time in residence at Harvard Kennedy School. The Hauser Leaders Program, which launched with support from Rita and Gustave Hauser and is based in the School’s Center for Public Leadership, brings several high-profile leaders from public, private, and nonprofit organizations to campus each semester to engage with students and faculty on building skills in principled leadership.

“I am incredibly humbled to be joining Harvard University as a fellow—not only will it give me the opportunity to share my experience with others, it will give me a chance to learn,” Ardern said. “As leaders, there’s often very little time for reflection, but reflection is critical if we are to properly support the next generation of leaders.”

To date, over 4,000 people have lost their jobs as a result, with more expected. ACT Leader and Minister for Regulation David Seymour has previously indicated the total could reach 7,500.

But the reduction in expenditure isn’t enough to balance a sharp fall in the tax take from an economy officially in recession.

Well duh. If they fired 4,000 people, that's 4,000 taxpayers no longer paying taxes! And at bloated gov't salaries, I bet they were all in mid-upper tax brackets too!

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