Govt Unveils Economic Growth Strategy to Tackle Cost-of-Living and Jobs

The Treasury projects average economic growth of 2.7% per year over the next four years, which is expected to create 240,000 new jobs.

Prime Minister Christopher Luxon and Minister of Finance Nicola Willis have unveiled a comprehensive economic strategy aimed at easing cost-of-living pressures, creating jobs, and building a high-growth economy for the long term. The Government’s plan combines immediate relief measures for households with structural reforms designed to raise wages, attract investment, and lift productivity across key sectors.

“We know things are still tough for a lot of families,” said Luxon. “That’s why our Government is laser-focused on growing the economy and pulling every lever available to help Kiwis get ahead.”

Economic Outlook: Growth and Jobs Forecast

The Treasury projects average economic growth of 2.7% per year over the next four years, which is expected to create 240,000 new jobs. Ministers say these forecasts demonstrate the economy is on the right path, but acknowledge the need for continued action to support families feeling the squeeze today.

Luxon and Willis emphasized that while long-term growth is essential, the Government is equally committed to providing immediate support to New Zealanders facing high living costs.

Cost-of-Living Relief Measures

The Government has introduced a raft of initiatives to provide short-term financial relief for households, including:

• Abolishing retail surcharges: The Government is banning in-store payment surcharges, which cost New Zealanders up to $150 million annually. “This means no more extra fees at the till, allowing people to spend their money where it counts,” said Luxon.

• Tax relief: After a year of implementation, the Government’s tax changes mean the average household is now $1,560 better off, according to Minister Willis.

• FamilyBoost expansion: Families can now receive up to 40% off childcare costs, further easing pressure on working parents.

• Fuel and prescription savings: The Auckland regional fuel tax has been removed, and 12-month prescriptions have been introduced to reduce recurring health costs.

• Senior and family support: The Government has increased the rates rebate for 66,000 seniors, and boosted Working for Families payments, which provide targeted assistance to lower and middle-income families with children.

Fighting Inflation and Reducing Mortgage Pressure

Minister Willis also highlighted progress on inflation, saying the Government’s economic management has brought inflation down from a peak of 7.3% under the previous government to 2.7% today.

“We’ve stopped the wasteful government spending that was fuelling inflation,” said Willis. “Lower inflation means lower interest rates.”

One major benefit: families refixing a $500,000 mortgage are now saving around $320 per fortnight compared to September 2023. The Government also noted that rent inflation has decreased, offering further relief for renters.

A Five-Pillar Plan for Long-Term Economic Growth

Beyond short-term support, the Government has outlined a five-pronged strategy to create a more resilient and prosperous economy:

1. Developing Local Talent Investing in education, skills training, and employment pathways to ensure New Zealanders are equipped for high-value jobs in a changing economy.

2. Creating Competitive Business Settings Simplifying regulations, reducing compliance costs, and making it easier to start and scale businesses across all regions.

3. Promoting Global Trade and Investment Opening doors for exporters, attracting foreign investment, and strengthening New Zealand’s position in global markets.

4. Supporting Innovation, Technology, and Science Backing R&D and cutting-edge sectors to drive productivity and encourage breakthrough advancements in areas like health, agriculture, and green energy.

5. Infrastructure for Growth Building a pipeline of nationally significant infrastructure projects, including transport, digital networks, and housing to future-proof the economy.

“Our long-term strategy is about lifting incomes by lifting the economy,” said Willis. “We are building the conditions for sustainable wage growth, better jobs, and more opportunities for everyone.”

Public Confidence and the Path Ahead

While the Government’s plan has been welcomed by many business and industry groups, economists caution that global headwinds—from inflation to geopolitical uncertainty—still pose risks to recovery. However, the combined approach of short-term relief and long-term planning is seen as a pragmatic pathway.

The Government promises ongoing updates on progress, with a commitment to fiscal discipline, community engagement, and ensuring all New Zealanders benefit from growth.

“Ultimately,” concluded Luxon, “this is about building an economy that works for everyone—not just today, but for the generations to come.”