Deputy Prime Minister Grant Robertson has addressed the Government's spending and again responded to questions about whether its fiscal decisions during and after New Zealand's COVID-19 lockdowns are fuelling inflation.
During an interview with Newshub Nation, the Finance Minister was asked - not for the first time - whether Government spending had played a part in New Zealand's current cost of living crisis.
Robertson, who's been the Finance Minister since 2017, responded by saying Government spending needed to increase when the COVID-19 pandemic unfolded.
"That level of Government spending was necessary but what happens now, and is happening now, is that comes off," he told Newshub Nation.
"We got Government spending up to around 35 percent of GDP - similar to what it was in and around the GFC (Global Financial Crisis) and the Canterbury earthquakes. It's now coming down, by the end of this year, to 31 percent and it will track down further from there.
"There were no costless decisions - we had to invest in supporting people through COVID. Now we need our fiscal position to consolidate and that is what we're doing."
Pushed on whether New Zealanders were now paying for Government spending decisions, Robertson said he stood by "the fact that we saved lives and we saved livelihoods".
"When we did initiatives like the wage subsidy scheme, which is what we're talking about here, that's the thing that kept people in work. We also invested heavily in our health system to make sure people stayed healthy and alive."
He told host Simon Shepherd the Government had been focusing on consolidating its fiscal position since May's Budget.
"We know we need to be careful with our spending. Now, there are some core things we've got to keep spending on… it's not a matter of making a knee-jerk reaction like that - it's an absolute plan to say, 'We need to keep investing in health, we need to keep investing in education and the services that people rely on.'
"People will see when we do our Budget policy statement in a week or two, and when they see the Budget next year, that we will have to be very careful in what we invest in from here on out in order to bring ourselves back to that fiscal position.
"We work every day, with our ministers, to make sure that they're spending wisely."
Robertson spoke to Newshub Nation after Reserve Bank (RBNZ) Governor Adrian Orr earlier this week hiked the official cash rate by 75 basis points - the largest-ever rise - increasing interest rates with the goal of curbing inflation.
According to Orr, the RBNZ needed to deliberately slow spending down to get inflation under control.
"The quicker inflation expectations come down, the less work we need to do and the less likely it is that we have a prolonged period of low or negative growth," Orr said after admitting the RBNZ was deliberately engineering a recession.
Orr also urged New Zealanders to stop splashing the cash to help slow the red-hot economy. He said the need for sensible spending extended to the Government.
Robertson would not say exactly where the Government planned to cut its own spending but said it would be made more clear in Budget 2023.
He went on to note the Government found $1 billion in savings in this year's Budget.
"We go through and we say, 'Is this spending still necessary, do you still need this money?'" Robertson told Shepherd. "We know that there are hard times to come, that's why you prepare."
He also said the Government had struck a balance between investing and being responsible with spending.
"We will always look at the specific circumstances that we're in."
Watch the full interview above.
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