Goodbye surplus, hello tax cuts: Finance Minister reveals she won't hit target of returning to surplus

The Finance Minister has all but confirmed she will not hit her target of getting the books back in the black by 2026, and it's looking shaky for 2027. 

But despite the economic conditions, she is rock solid on delivering tax cuts in her first Budget at the end of May. 

The tax cuts will form the centrepiece of the Budget. 

However, the finance minister is also promising increased funding on education, law and order, and health. 

So how much is she going to spend?  

 All she'd say was that her operating allowance to spend on new programmes will be less than $3.5 billion. 

It's time for a tax cut. 

"We are not going to press delay on such an important priority," Finance Minister Nicola Willis said on Wednesday.

She previewed her upcoming budget with a promise that she'll be putting money in Kiwis' wallets, despite many economists warning it's irresponsible. 

"It is the most responsible thing we can do to deliver for New Zealanders who have gone through a prolonged cost of living crisis," she said. "Many of whom are struggling." 

"The most effective relief we can give them is allowing them to keep more of their own money." 

However, Willis won't be drawn on whether it matches what National campaigned on. 

"I have to have some tricks up my sleeve on Budget day, and the tax package is going to be the centerpiece of our budget."  

Prime Minister Christopher Luxon was a bit looser with the secrets. 

"What we're going to do is deliver what we promised in the campaign, which is tax relief for lower middle-income New Zealanders. 

It comes despite the graphs all going in the wrong direction. 

Economic growth is predicted to be slower than expected in December, therefore the Government is going to be raking in less tax. 

So long to the surplus dreams. 

"Achieving a surplus in 26, 27 is almost certainly not achievable. A surplus in 27, 28 is still achievable, but not a given," she said.  

But Willis is not willing to cut harder or faster to get there. 

"We won't be chasing a surplus in any one particular year at any cost, particularly when that cost would be to front line public services." 

That came as an attempt to distinguish from the so-called Mother of all budgets in 1991, Ruth Richardson, who saw major cuts to benefits in the name of fiscal prudence. 

"We are going to set a moderate, sustainable course of fiscal correction, over several years," 

Willis made it clear her fiscal discipline will be installed in increments, rather than a cold hard shock. 

"This is 2024, I am Nicola Willis, and I'm a bit sick of being compared to every female finance minister that's ever been out there." 

The promise to boost funding to Health education and law and order stands  

"Will your increases to health spending go over and above what is needed, just to keep up with the population growth?" Newshub asked. 

"Yes," Willis responded. 

As does the no nasty surprises promise. 

"No, there's not going to be a surprise extra tax in the budget," she assured.  

But there was one missing commitment today - a major break in convention. 

Willis has not set herself a budget allowance to be judged against - only committing to keep new spending lower than $3.5 b. 

"Tax cuts simply aren't affordable," Hipkins responded. 

"I think the reason that the budget policy statement is so unclear is because they simply can't make their numbers add up." 

And so, we wait for Budget day, come the end of May.