The government is starting its 100-day plan with a laser focus on bringing down the cost of living and inflation, Prime Minister Christopher Luxon says.
Speaking at Monday's post-Cabinet briefing, Luxon, accompanied by Finance Minister Nicola Willis, said they campaigned on alleviating the hurt felt by hard-working Kiwis struggling to make ends meet due to cost of living pressures.
"Luxuries are being cut, and in many cases so are necessities. It is difficult out there and many Kiwis are all feeling it...
"You will have seen that today that I announced an increase to the family tax credit and best start rates for new parents beginning 2024. The income tax act requires that Working for Families payments must be adjusted once inflation hits 5 percent.
"This is just one part of our wide-ranging plan to get New Zealand back on track, and we will be relentlessly focused on that in the next 100 days and further."
Willis said the government's mini-Budget would be released on 20 December alongside Treasury's half-year economic and fiscal update.
"That mini-Budget document will reflect a number of time-critical decisions made by the incoming government including some already confirmed in our 100-day plan.
She said the timing of the mini-Budget was simply because the government did not have much time to pull it together.
It was "absolutely not" just politics, she said.
"Now that I am behind the curtain, I am seeing things that I didnt' expect to see. Some of the fiscal risks that were updated in the pre-election update were referred to but I didn't know the quantum of how big those risks were.
"Now that I know that information, I think it's really material."
Luxon said the government was focusing on the 100-day plan, but was also looking at longer term one-year and three-year plans.
The mini-Budget would also "outline a series of actions this government is taking to restore a culture of fiscal discipline", Willis said.
"Both to guide the Budget 2024 process and to deliver ongoing fiscal sustainability in the years to come. All three parties in govenrment are resolute in their commitment to getting better value for taxpayers' money, to bringing the government's books back in order, and ensuring New Zealanders can keep more of what they earn."
She said it would require a much more disciplined approach to spending decisions than the government had shown in recent years.
"I am concerned by the scale of the financial challenges left to us by the outgoing government. I am still receiving advice on both the number of those challenges, their size, and the options available to the incoming government."
She said these came in two broad categories: Risks that were referred to in the pre-election update but the "true scale and urgency of which was not made clear" for reasons including commercial sensitivity.
"Some of these risks are now upon us and they are much larger than have been suggested."
She said the second category was government programmes that were set to expire because the government chose to fund them only on a short-term basis.
"In some cases this practice is extremely disingenuous, this is because it makes the books look better in future years even though it is highly unlikely ministers genuinely intended to stop funding those programmes."
After giving an example of Pharmac funding, Willis said: "Did they really intend to withdraw funding for listed medicines, and if not why didn't they account for that in their pre-election update".
She said she asked Treasury to provide advice on how often this had happened, and "the preliminary advice is that the sum is likely to approach many billions of dollars over the forecast period".
"I will also have more to say about what amendments may be required to the public finance act. This is in order to ensure that future governments are more upfront about these choices."
She pointed to legislation set to be introduced to the House next week to return the Reserve Bank to a single mandate, removing the requirement to consider effects on employment levels.
"History tells us that the best way to deliver strong, consistent growth in employment is by first delivering low and stable inflation.
"I know the Reserve Bank shares our absolute commitment to bringing inflation back down, even so the current dual mandate creates the risk of a future policy mistake."
Willis said Treasury had highlighted that the single mandate could positively influence expectations for future rates of inflation.
"The decision in 2018 to introduce the dual mandate went against 30 years of success. Today, our government is making clear that on our watch inflation is enemy number one. Stable inflation is the prerequirsite on which maximum sustainable employment rests."
She pointed to cuts to public spending, reduced costs on business, and unwinding regulation as other measures to tackle inflation.
Photo: RNZ / Samuel Rillstone
