Jacinda Ardern’s pledge to “pare back” government spending has begun, with half-price public transport fares and petrol levy cuts first on the chopping block.
However, Finance Minister Grant Robertson announced next year’s budget operating allowance of $NZ4.5 billion ($A4.2 billion) would remain unchanged, leaving room for new projects in an election year.
On Wednesday, Mr Robertson confirmed cheaper fuel and public transport would be phased out by the end of March.
“The government has invested over $1 billion ($A944,910) over the past year to reduce fuel prices however it is not sustainable to continue to subsidise the cost of petrol indefinitely,” Mr Robertson said.
The phase-out coincides with annual lifts to benefits, tax credits, super payments and student allowances on April 1 which are pegged to wage growth.
In the face of a major inflation challenge, the government is on the hunt for programs it can cut or kill to avoid overstimulating the economy.
Headline CPI inflation in New Zealand has roared to 7.2 per cent and pushed the Reserve Bank to raise the official cash rate from 0.25 per cent late last year to 4.25 per cent.
In a series of year-ending interviews last week, Ms Ardern said her government would be “squarely focused” on economic challenges in 2023, urging her ministers to spend their summer breaks identifying wasteful projects.
Mr Robertson – who referred to the task as “reprioritisation” – is also attempting to walk a traditional Labour line of helping those worst off.
About one million Kiwis will continue to enjoy cheaper bus and train fares beyond the March 31 cut-off, with the government keeping half-price tickets for Community Service Card holders.
“We are transitioning to more targeted support for those most feeling the pinch,” Mr Robertson said.
As is traditional in New Zealand, each December the finance minister confirms the spending envelope they will play with in next year’s budget.
Mr Robertson said the operating allowance would remain unchanged, noting it had already been pegged to future health needs.
While the inflationary challenge paints a difficult picture for the overall economy – which Treasury and the Reserve Bank say is heading into recession – it has grown government revenue to record levels.
That has boosted the projected deficit in 2024 to $NZ461 million ($A435 million), tantalisingly close to a surplus.
Mr Robertson pointedly referenced the six years of deficits following the global financial crisis under an opposition National government compared to the five forecast years of deficits from COVID-19 under Labour.
“I always like to be in the position to be able to deliver a surplus. It’s an important part of responsible fiscal management,” he said.
“We’ll keep monitoring where the economy is and whether that is possible.”
Extracted in full form: New Zealand to end cheaper fuel and fares | The Canberra Times | Canberra, ACT