Finance Minister Nicola Willis has unveiled the Government's mini-Budget alongside the Half Year Economic and Fiscal Update (HYEFU) produced by Treasury.
The mini-Budget delivers nearly $7.5 billion of savings as part of what Willis is calling a necessary "economic clean-up" as Treasury warns of slower-than-expected growth and just a "wafer-thin" surplus now expected in 2027.
Anyone looking for any surprises in the mini-Budget documents released on Wednesday will be disappointed, as the decisions for the most part reflect National's election promises.
These live updates have now finished.
2:45pm - The Fares Free campaign said it was disappointed to see the removal of the free and half-price public transport discount for those under 25. It said a poll had found the majority of New Zealanders wanted the discounts to be kept.
"Getting rid of the discounts is out of step with public opinion and will increase the cost of living for young New Zealanders and families," says Mika Hervel, Free Fares organiser and spokesperson.
"The removal of public transport fare discounts in the mini budget represents a step backwards for Aotearoa."
2:30pm - Labour's Robertson asks Willis how tax cuts will be funded. This isn't laid out in the mini-Budget, but Willis says it will be next year. She says that savings and reprioritisations will be used to fund the tax cuts.
Willis says the mini-Budget included $7.5 billion of savings that will help to support tax relief. She says the Government can commit to income tax relief next year.
2:25pm - Nicola Willis is currently answering questions from Greens co-leader James Shaw about public transport fares. The mini-Budget ends the previous Government's scheme of free and half-price public transport for those under 25. She says the way of getting more people using public transport is to make public transport more reliable.
2:15pm - In the House, Labour's Grant Robertson asks Finance Minister Nicola Willis about Treasury's advice with regard to the Government's tax plans.
Willis says the document shows that the mini-Budget decisions "will improve the fiscal outlook", and once combined with other signalled commitments - like tax plans - "the overall imapct would be broadly netural".
Robertson points out the following paragraph says there is a "risk" of the overall impacts not being neutral to "indirect, or second order impacts of the decisions".
2:05pm - Finance Minister Nicola Willis is currently speaking in the House about how Treasury is now only forecasting a "wafer-thin" surplus of $0.1 billion in 2027, down from what was projected pre-election, and that the Government was finding about $7.5 billion in savings.
She said the Government was tightening its economic belt.
1:59pm - The Council of Trade Unions is criticising the mini-Budget, saying it "leaves too many questions unanswered".
CTU Economist Craig Renney said despite calling for clarity on existing spending, the mini-Budget does not provide any analysis of the tax cut or spending programme of the incoming Government.
"It doesn't provide any analysis of the spending cuts being required of government departments, nor how they are to be achieved. It doesn't provide a fiscal strategy. In short, New Zealanders will have to wait to understand what is being changed.
"The government is claiming that it is cutting $1.5bn of spending per year. Of that, $0.5bn is commitments made by the previous government. $0.4bn is cuts which have already been committed to changing Early Childcare support. So only $0.6bn is new. $1bn of immediate cuts is money that comes from cuts to the transport budget - which is paid for by fuel taxes.
"The Government has claimed that it is delivering fiscal responsibility but has taken money from climate change to deliver tax cuts for landlords and it's taking $676m from welfare payments.
"It's unclear how that will make delivering on the child poverty targets easier or make the cost of living easier for low income families.
"The announcements today leave much still to be explained. There appears to still be a debate within government about when key planks of the tax cut package will be delivered. Yet there is nothing in this package to help with the cost of living. New Zealanders have to wait until May next year to find out what the plan is. The Government should be making this clear today."
1:50pm – Parliament is set to face off over the mini-Budget. Watch the stream above from 2pm.
1:47pm -The Green Party meanwhile is hitting out at National accusing it of saying "one thing during an election campaign" and then doing "the exact opposite when in government".
"It is no good for National Ministers to parrot their talking points about supporting people to make ends meet, only to make decisions that will do the exact opposite," says co-leader and finance spokesperson for the Green Party James Shaw.
"People cannot pay the bills with soundbites. Imagine sitting at home reading in the newspaper or watching on the television as government ministers tell you they will help, only to find it is getting harder and harder to make ends meet. It is textbook political gaslighting.
"Ripping away essential support for people right before Christmas is just cruel.
"The decision to axe 20 hours free ECE to two year olds will put families under huge pressure. Thousands of children will now not be able to have the best possible start in life. Parents all over the country will be forced to cut back on food to pay the bills. I am also very worried that the future of free school lunches has been put in doubt, with National identifying a programme that makes sure children do not go hungry as a "fiscal cliff.
"They are also going to make it more expensive for young people to hop on a bus or train. Everyday activities like going to the doctor, taking the kids to school, or visiting friends and family will now be more expensive for thousands.
"National's so-called 'climate dividend' is climate denial dressed up as a tax cut. That's it. I find it insulting, frankly, to the thousands of people who dedicate their lives to fighting for faster climate action. For the National Party to co-opt the language of climate action to justify delay is appalling.
"Today could have been the day that New Zealand ended poverty. It could have been the day the government made sure everyone has what they need to have kai on the table, a safe place to call home and to live a good life.
"It could have been the day it promised to confront climate change with the urgency and the scale that it demands. It could have promised to boost the pay of teachers and nurses and bus drivers, and to fund world class buses and trains.
"The spending decisions of every government are a choice. They are the product of deliberate decisions - and those decisions reflect the values and priorities of decision-makers.
"We know from the government's own advice that some of the wealthiest New Zealanders are not paying their fair share of tax. The top 311 families hold more wealth than the bottom two and a half million New Zealanders. Those with an average wealth of $276 million pay an effective tax rate less than half of the average New Zealander. National is deliberately choosing to keep this unfair status quo in place even thousands of people struggle to get by.
"I am also shocked by the willingness of this government to rewrite economic history to pursue its own ideological goals.
"They are acting as if COVID had nothing to do with spending on direct payments to people who need it, flexible working arrangements and rent freezes. They are making it up as they go along - and are doing enormous harm to people as they do."
1:42pm - Former Finance Minister Grant Robertson is hitting out at the Government, accusing them of having no economic plan.
"The Government's so-called mini-Budget is nothing more than a litany of distractions, delays and diversions which leave the country without any certainty or coherent economic plan," Robertson said.
"Today was a test for Nicola Willis as finance minister to finally reveal what her government was going to do and how they were going to pay for it. She has failed that test and left New Zealanders in limbo. How the government is going to pay for the inflationary tax cuts she has promised remains a mystery she refuses to solve.
"Her claims of self-funded cuts have been labelled a risk by Treasury, and her savings, cuts and project costs don't add up.
"There is also no information today on the costs of the coalition agreements that Nicola Willis has agreed to. There are some large commitments in the agreements including funding for prisons, increased funding for IRD, Police, St Johns, aged care and more.
"New Zealand deserves the facts. Nicola Willis' fictional narrative about the previous government consistently ignores the reports delivered by global ratings agencies and international organisations which credit the strength and resilience of our economy and have seen them increase or maintain their ratings.
"The facts are that the New Zealand economy is around 7 percent larger than before COVID, unemployment has been at record lows, wages are rising and our debt levels are lower than most of the economies we compare ourselves to. It has been a tough year for New Zealanders with cost of living pressures as inflation peaked. But it is now on a downward track.
"It is farcical to claim that there are any surprises in the Government's books which have changed little since PREFU in September. Just like every government there is a mixture of baseline and time limited funding in the Budget. In 2017 Labour inherited a large amount of time limited expenditure. It is up to the government whether that needs to be carried on or not in future Budgets."
1:32pm - The Taxpayers' Union is hitting out at the previous Labour Finance Minister after Willis released the Half Year Economic and Fiscal Update.
Jordan Williams from the Taxpayers' Union is calling for Grant Robertson to apologise.
Read Williams full comments below:
"Treasury has confirmed that the last government put New Zealand on a completely unsustainable fiscal path. Grant Robertson should be ashamed, as not since his mentor Mike Moore has a government been so dishonest with the public about what was really going on. He should be issuing an apology."
"It is very clear that tough decisions - and a brave Minister of Finance - are necessary to get the books back into shape."
"The economic backdrop is nearly as bad, with high net migration dragging us into positive growth - but only just. On a per person basis, New Zealand still faces getting poorer in the short term."
"Now that we know that the Pre-election Economic and Fiscal Update was in fact a fantasy land, we need to ask ourselves how our fiscal reporting model and institutions have failed taxpayers."
"After Mike Moore lied to New Zealanders about the state of the books in 1990, the Fiscal Responsibility Act was put in place to ensure there were no post-election 'nasty surprises' like those which we have seen today. Like back then, it is not so much the numbers, as the laundry-list of fiscal risks that are only seeing the light of day now. Items that Treasury has disclosed today were absent from the pre-election update; that is clearly not good enough."
"This feels a lot like 1990, which led to Ruth Richardson's 'mother of all budgets' the following year. Budget 2024 is going to require Nicola Willis to be made of stern stuff."
"While responsibility for the poor state of the books rests with Grant Robertson, Treasury too must accept some responsibility for the lack of transparency."
"Under the last Secretary, Treasury became far more politicised and less reliable. The new Secretary is an improvement, but this dropping of the ball in not being willing to deliver unwelcome news prior to the election suggests she has a long way to go to get Treasury's former status back."
"We have previously called on the Government to conduct a ministerial or government inquiry into Treasury's performance and public finance transparency. Today's documents demonstrate the reason it is needed."
1:16pm - Additional planned savings
The $7.5 billion in savings were just the beginning, Willis said, pointing to a Fiscal Sustainability Programme the Government had started to "embed a culture of responsible spending across Government".
"The first step in this programme is an Initial Baseline Exercise for Government agencies designed to find around $1.5 billion per annum in savings to deliver on our policy commitments and fund critical cost pressures," she said.
This would include $500 million per annum in baseline savings initiated by not completed by the former Government as well as previous promises to reduce consultancy and departmental spending.
Willis has also written to ministers asking that their agencies find savings ahead of next year's Budget, with each individual agency's target informed by their headcount growth since 2017.
This is part of National's coalition agreement with the ACT Party. It's unclear if it will meet National's pre-election target of finding savings on average of 6.5 percent across departments.
Other ways the Government plans to save money in the future include taxing online casino gambling operators, stepping up audit activities of IRD and replacing the current fees-free policy with a final-year fees-free policy.
1:14pm -So why is the Government pulling back on these programmes?
Willis said it's to strengthen New Zealand's currently "fragile" economic positive, deliver cost of living relief in the form of tax cuts next year and restore responsibility to public finances.
"Today's half-year economic and fiscal update (HYEFU) lays bare the extent of Labour's economic and fiscal vandalism, she said.
The HYEFU, which was released by Treasury on Wednesday, includes forecasts finalised on November 24, so prior to the Government forming and without account to the new Government's mini-Budget decisions.
Most significantly, Core Crown tax revenue is expected to be $1.6 billion lower across the forecast period compared to the pre-election update, including due to worse corporate tax take, while expenses are up due to higher debt-servicing.
This means that while the Government's books will still return to a surplus in 2026/27, it will be by just $140 million compared to $2.1 billion forecast in the pre-election update.
Willis described that surplus as "wafer-thin" and "deeper deficits" will necessitate the fifth consecutive increase to the Government borrowing programme, up by $7 billion more over the forecast period. The net debt track will be higher over the forecast period, Treasury said.
1:07pm - While the mini-Budget includes pulling the Brightline test back to two years from July 2024, estimated at $180 million, there's no other immediate relief – that will come next year, Willis said. Notably, details of restoring interest deductibility for landlords won't be announced until next year.
The savings laid out include reversing the previous Government's extension of 20 hours free early childhood education to two-year-olds and repealing free and half-price public transport for those under 25. Other savings are found by ending Let's Get Wellington Moving, Lake Onslow and industry transformation plans.
The Government will also end the commercial building depreciation programme from April (about $2.3 billion in savings) and index benefits to inflation.
The Government will also create a 'climate dividend' by returning funding from the Government Investment in Decarbonising Industry Fund (GIDI), return uncommitted funding from the Climate Emergency Response Fund (CERF) and return uncommitted CERF funding from the National Land Transport Fund (NLTF).
Read the full story here.
