Economists say the government is stuck between a rock and a hard place off the back of Treasury's latest economic forecasts.
By Anneke Smith of RNZ
Tuesday's Half-Year Fiscal and Economic Update (HYEFU) saw a budget surplus stretch further out of reach, to 2029/2030.
Finance Minister Nicola Willis has promised to get the books back to black a year earlier while continuing to run "a tight ship".
"We have taken a deliberate, medium term approach to fiscal consolidation that minimises the impact on individuals and on public service delivery, but also, crucially, shows a credible path to surplus and debt reducing as a proportion of the economy."
Infometrics chief executive Brad Olsen said no matter what way it was cut, politicians faced tough calls both now and in the future.
Finance Minister Nicola Willis has defended her figures, while Labour’s Finance Spokesperson Barbara Edmonds says the economy is going backwards. (Source: Breakfast)
"At the moment, there's a really limited amount of additional new spending to afford all of the increasing costs of providing government services. Health becomes more expensive, education becomes more expensive.
"The government doesn't have a lot of options here, and that means that over time, you're still seeing the government books being in deficit all the way up to around 2030 or so.
"The government wants to see that return earlier but at the moment the fiscals aren't stacking up and the government will still spend more than it's earning for a considerable period of time."
Olsen said the coalition would have to to pursue deeper cuts if it wanted to have a shot at reaching surplus before Treasury's forecast period.
"The challenge for the government is that they've got a lot of commitments that they've made to a lot of different areas.
"There's a lot of baked-in spending from previous decisions by previous governments, and the current government, that have to be paid for.
"At the moment it means that they've got a lot that needs to be done, not a lot of fiscal room to move, which realistically means for the Finance Minister, she has to say no a heck of a lot more than she can ever say yes."
Independent economist Cameron Bagrie said conversation about the sustainability of superannuation could not be avoided forever.
"If you look at Treasury's statement on the long term fiscal position, we face some very tough, intense trade-offs going forward because on current policy projections government debt is going to go to 180 percent of GDP in 30 to 40 years as New Zealand superannuation and health expenditure basically explode, courtesy of demographics.
"So tweaking New Zealand KiwiSaver around the edges is not going to make a real big difference here.
"At the end of the day, we've got to put some pretty tough decisions on the table here going forward, whether we're going to return to what's called sustainable fiscal position in the next four to five years, or in the next 10 to 20 years. There's no easy choices here."
It all comes as the Taxpayers' Union runs a targeted campaign to pressure Willis to slash spending.
Willis challenged its chair Ruth Richardson to a public debate last week, saying she would go toe-to-toe with her predecessor "anytime, anywhere".
It's a quote that's come back to bite the Minister, given the Taxpayers Union offered to meet on Newstalk ZB on Thursday.
The offer had not been accepted, though there were still two days to go until the week was out.
The morning's headlines in 90 seconds, including family of the youngest Bondi attack victim speak, and new allegations about attempts to take over a prominent Auckland school. (Source: 1News)
SHARE ME