Prime Minister Christopher Luxon blames New Zealand's recession on previous Government's 'economic vandalism'

  • 21/03/2024

Prime Minister Christopher Luxon is blaming New Zealand going into another recession on the previous Government's "six years of economic vandalism". 

It was revealed on Thursday that New Zealand is back in a technical recession after the economy shrank two quarters in a row.   

Gross domestic product (GDP) fell by 0.1 percent in the December 2023 quarter, official data found. This is the fourth quarter in the past five where the economy has contracted. 

Labour's finance spokesperson Barbara Edmonds noted the Government continued to talk about "irresponsible tax cuts that will only drive-up inflation", despite the recession. 

"Instead of policies to make childcare more affordable, making most prescriptions free or half price public transport, this Government has just spent nearly $3 billion on landlords and is still planning tax cuts that won't benefit working people in the way they promised," she said. 

"Even the IMF (International Monetary Fund), an international body that monitors and advises on countries' economies, has warned the Government about spending money on tax cuts that could be inflationary. For a party that claims economic credibility this is a massive blow. 

"We told the National Party their numbers didn't add up and they ploughed on ahead with promises anyway and ignored all warnings. 

"They should heed these warnings and pull back on their plans for tax cuts, which will only be more inflationary and lead to harder times ahead for working people as services are cut in order to pay for them." 

Luxon lashed back when speaking to media on Thursday, saying: "I don't take any economic lessons from the last Labour Government and Chris Hipkins." 

"I'd just say to New Zealanders, if you ever elect a Labour Government again you shouldn't do so for a generation given the economic mismanagement we've inherited." 

He said the numbers out Thursday were to the end of December and his Government only formed in November. 

"We don't undo six years of economic vandalism and mismanagement in one Budget, but what we're going to build is back a culture of financial discipline into Wellington and that's what we've been working incredibly hard on." 

The 2024 Budget will be delivered on May 30, with Luxon promising tax cuts for middle- and low-income Kiwis. 

"You'll have to wait until the Budget but we're working on balancing how we'll protect frontline services, how we get rid of the wasteful spending and actually how we grow our economy. That's what good, responsible economic managers do," Luxon said. 

"Our Government is having to clean up after the last one, this is the hangover of all of that." 

Luxon said his Government had been "moving incredibly fast through" its first 100 days in power to get the economy in motion. 

"New Zealanders have been doing it tough for the last few years and that is because the previous administration, as I keep saying, spent more therefore drove domestic inflation up. 

"It's led to higher interest rates and... When you get [in] that situation you get the the economy shrinking and, as a result, you get the risk of rising unemployment. That's what I've been talking about now for two years."