Nicola Willis Outlines Plan to Boost NZ’s Economy Amid Fiscal Challenges

Government sets priorities for Budget 2025 to lift productivity, control spending, and drive growth.

Finance Minister Nicola Willis has outlined the Government’s strategy to lift New Zealand’s economic performance and address fiscal challenges, as revealed in the Half-Year Economic and Fiscal Update (HYEFU) and Budget Policy Statement released today.

While acknowledging a deterioration in the Crown’s financial position over the past six years, Willis signalled a turning point for the economy, with inflation under control, interest rates easing, and economic growth expected to recover.

Economic Recovery in Sight

“The economy has reached a turning point,” said Willis. “Inflation is back under control, the Reserve Bank has begun reducing interest rates, and we anticipate household spending and business activity will lift.

“After bottoming out in the September quarter, the economy is forecast to grow 0.5% this financial year and accelerate to 3.3% growth in the following year.”

Fiscal Position and Surplus Target

Despite signs of recovery, the HYEFU revealed a further deterioration in the Crown’s financial position. Core Crown tax revenue is forecast to be $13 billion lower over the next four years. This shortfall will delay the Government’s return to surplus under the new Operating Balance (OBEGALx) measure by one year.

Willis attributed the fiscal decline to Treasury’s revision of overly optimistic assumptions about the economy rather than recent government decisions.

“This underscores the importance of the Government’s disciplined approach to public spending and its focus on economic growth to restore fiscal health.”

Budget 2025 Priorities

The Budget Policy Statement outlines four key priorities for Budget 2025, aimed at unlocking New Zealand’s potential and building a more resilient, productive economy:

Lifting Economic Growth: Addressing long-term productivity challenges through investment, reduced red tape, and enabling infrastructure projects to proceed faster.

Social Investment: Implementing a targeted approach to improve the effectiveness of social services and deliver better life outcomes for high-need communities.

Tight Spending Control: Prioritising essential policy commitments and cost pressures while ensuring spending restraint and a focus on value for money.

Long-term Infrastructure Pipeline: Developing a sustainable, future-proofed plan for infrastructure investments to support growth and economic recovery.

Actions Already Underway

Willis noted that significant progress has already been made in several key areas:

Education Reform: Refocusing on core subjects like reading, writing, and mathematics to strengthen skills and productivity.

Fast-track Legislation: New laws have been introduced to accelerate consenting processes for major infrastructure projects.

Reducing Red Tape: Bureaucratic processes are being streamlined to enable businesses and investments to thrive.

Social Investment Agency: A new agency has been established to ensure smarter investments in social services.

Infrastructure Planning: Work is underway to build a robust pipeline of long-term infrastructure projects to meet national growth needs.

Addressing the Challenge and Unlocking Opportunity

Willis emphasized the need to go beyond short-term fixes and focus on policies that unlock New Zealand’s earning potential.

“To deliver public services, create opportunities for young New Zealanders, and avoid burdening future generations with excessive debt, we need to focus on growing the economy,” Willis said.

She highlighted the scale of the challenge but expressed optimism about the country’s potential: “The Government will realise that opportunity by unlocking New Zealand’s and New Zealanders’ potential.”

Looking Ahead

With Budget 2025 as a key milestone, the Government is focused on fostering economic recovery, maintaining fiscal responsibility, and investing in long-term growth initiatives.

Further details on specific spending, infrastructure investments, and growth measures will be unveiled as part of the 2025 Budget release.

“New Zealand faces challenges, but we also have enormous opportunities,” concluded Willis. “We are determined to build an economy that delivers for all New Zealanders now and into the future.”

Finance Minister Outlines Plan to Boost New Zealand’s Economy Amid Fiscal Challenges Government sets priorities for Budget 2025 to lift productivity, control spending, and drive growth

Finance Minister Nicola Willis has outlined the Government’s strategy to lift New Zealand’s economic performance and address fiscal challenges, as revealed in the Half-Year Economic and Fiscal Update (HYEFU) and Budget Policy Statement released today.

While acknowledging a deterioration in the Crown’s financial position over the past six years, Willis signalled a turning point for the economy, with inflation under control, interest rates easing, and economic growth expected to recover.

Economic Recovery in Sight

“The economy has reached a turning point,” said Willis. “Inflation is back under control, the Reserve Bank has begun reducing interest rates, and we anticipate household spending and business activity will lift.

“After bottoming out in the September quarter, the economy is forecast to grow 0.5% this financial year and accelerate to 3.3% growth in the following year.”

Fiscal Position and Surplus Target

Despite signs of recovery, the HYEFU revealed a further deterioration in the Crown’s financial position. Core Crown tax revenue is forecast to be $13 billion lower over the next four years. This shortfall will delay the Government’s return to surplus under the new Operating Balance (OBEGALx) measure by one year.

Willis attributed the fiscal decline to Treasury’s revision of overly optimistic assumptions about the economy rather than recent government decisions.

“This underscores the importance of the Government’s disciplined approach to public spending and its focus on economic growth to restore fiscal health.”

Budget 2025 Priorities

The Budget Policy Statement outlines four key priorities for Budget 2025, aimed at unlocking New Zealand’s potential and building a more resilient, productive economy:

Lifting Economic Growth: Addressing long-term productivity challenges through investment, reduced red tape, and enabling infrastructure projects to proceed faster.

Social Investment: Implementing a targeted approach to improve the effectiveness of social services and deliver better life outcomes for high-need communities.

Tight Spending Control: Prioritising essential policy commitments and cost pressures while ensuring spending restraint and a focus on value for money.

Long-term Infrastructure Pipeline: Developing a sustainable, future-proofed plan for infrastructure investments to support growth and economic recovery.

Actions Already Underway

Willis noted that significant progress has already been made in several key areas:

Education Reform: Refocusing on core subjects like reading, writing, and mathematics to strengthen skills and productivity.

Fast-track Legislation: New laws have been introduced to accelerate consenting processes for major infrastructure projects.

Reducing Red Tape: Bureaucratic processes are being streamlined to enable businesses and investments to thrive.

Social Investment Agency: A new agency has been established to ensure smarter investments in social services.

Infrastructure Planning: Work is underway to build a robust pipeline of long-term infrastructure projects to meet national growth needs.

Addressing the Challenge and Unlocking Opportunity

Willis emphasized the need to go beyond short-term fixes and focus on policies that unlock New Zealand’s earning potential.

“To deliver public services, create opportunities for young New Zealanders, and avoid burdening future generations with excessive debt, we need to focus on growing the economy,” Willis said.

She highlighted the scale of the challenge but expressed optimism about the country’s potential: “The Government will realise that opportunity by unlocking New Zealand’s and New Zealanders’ potential.”

Looking Ahead

With Budget 2025 as a key milestone, the Government is focused on fostering economic recovery, maintaining fiscal responsibility, and investing in long-term growth initiatives.

Further details on specific spending, infrastructure investments, and growth measures will be unveiled as part of the 2025 Budget release.

“New Zealand faces challenges, but we also have enormous opportunities,” concluded Willis. “We are determined to build an economy that delivers for all New Zealanders now and into the future.”