Finance Minister Grant Robertson’s 2023 Budget promised to return New Zealand to surplus by 2025, but experts say this echoes a familiar refrain: a promise that’s been made before, and maybe even made impossible by a rapidly changing global economy.
History of Surplus Promises
OPINION writer Nicola Willis recently pointed out that every Finance Minister makes this promise, and it’s a promise that’s been broken time and time again. Take Grant Robertson’s predecessors, for example. The 2018 and 2019 Budgets did deliver surpluses under Minister Bill English, but the Covid-era deficits under successive Finance Ministers wiped out those gains.
The 2023 Budget and Treasury’s Forecast
Fast forward to the present, and the 2023 Budget under Finance Minister Grant Robertson moved the surplus forecast a year closer, promising that New Zealand would finally return to surplus by 2025. But experts like the Hon. Richard Prebble are skeptical, pointing out that this promise echoes a familiar refrain.
Prebble’s concerns are valid, given the changing global economy and the impact of external factors on New Zealand’s economy. What this means is that policymakers and the public need to temper their expectations and be prepared for a long-term effort to achieve fiscal balance.
The Road Ahead
Getting back to surplus will take time, effort, and a commitment from policymakers to make tough decisions. The Government’s forecast assumes a return to pre-Covid economic growth rates, but this is far from certain. The global economy is increasingly complex, and the impact of factors like inflation, interest rates, and trade tensions will continue to shape New Zealand’s economic prospects.
In short, while the promise of a return to surplus is welcome, we should be cautious in our expectations and focus on making incremental progress towards fiscal balance. Only then can we say with confidence that we’re on the path to a sustainable economic future.
