Hurrah – the RBNZ has lowered interest rates, but then the Crown accounts put a stopper on any celebrating with champagne
Finance Minister Nicola Willis was sounding chipper on Wednesday, after the Reserve Bank cut the Official Cash Rate (OCR) to 4.75 per cent – this was “welcome news” for families and businesses, she enthused
“Lower interest rates will provide much-needed relief for households and businesses, allowing families to keep more of their hard-earned money and increasing the opportunities for businesses to invest and innovate.
“New Zealanders have been doing it tough over the last few years with the economy in recession, high interest rates and sharply rising prices.
“That is changing as inflation falls towards the target level, interest rates come down and businesses have the confidence to invest and hire again.”
Willis portended a brighter future in the headline on her media statement: Brighter days ahead for Kiwis
A day later, her news – under the heading Accounts confirm need for spending restraint – was more sobering. The days ahead would not be so bright for public servants and we should brace for some rundown in public services.
The latest Crown Accounts for the 2023/24 year showed the government’s operating balance before gains and losses (OBEGAL) was a deficit of $12.9 billion –$1.8 billion more than forecast in the Budget in May last year (when Grant Roberston was calling the fiscal shots).
This was attributed to worse-than-expected results from Crown entities and state-owned enterprises.
The net core Crown net debt at the end of the financial year was $175 billion, or 42.5 per cent of GDP. That was less than the 43.1 per cent forecast in the Budget, but still represents an increase of $118 billion in only five years.
Core Crown spending in 2023/24 was $139 billion; the government is now spending $58 billion more than when the last National-led government left office.
Willis said the figures underscored the need for the Government’s ongoing efforts to restore discipline to public spending.
This means further reductions of public service staff numbers, presumably.
In another statement, Willis gave us a measure of how the brakes had been put on contractor and consultant spending and growth in the public service workforce.
She brandished workforce data which showed spending on contractors and consultants fell by $274 million, or 13 per cent, across the public sector in the year to June 30.
During the year, the number of public servants grew slightly to 63,537 but the details reveal a year of two halves – ballooning growth under the Hipkins government offset by a 3.3 per cent reduction under her government.
The annual increase of 0.7 per cent, or 421 employees, compared to average increases of almost 5 per cent over the previous five years.
“New Zealanders have been doing it tough over the last few years with the economy in recession, high interest rates and sharply rising prices.
“That is changing as inflation falls towards the target level, interest rates come down and businesses have the confidence to invest and hire again.”
Willis portended a brighter future in the headline on her media statement: Brighter days ahead for Kiwis
A day later, her news – under the heading Accounts confirm need for spending restraint – was more sobering. The days ahead would not be so bright for public servants and we should brace for some rundown in public services.
The latest Crown Accounts for the 2023/24 year showed the government’s operating balance before gains and losses (OBEGAL) was a deficit of $12.9 billion –$1.8 billion more than forecast in the Budget in May last year (when Grant Roberston was calling the fiscal shots).
This was attributed to worse-than-expected results from Crown entities and state-owned enterprises.
The net core Crown net debt at the end of the financial year was $175 billion, or 42.5 per cent of GDP. That was less than the 43.1 per cent forecast in the Budget, but still represents an increase of $118 billion in only five years.
Core Crown spending in 2023/24 was $139 billion; the government is now spending $58 billion more than when the last National-led government left office.
Willis said the figures underscored the need for the Government’s ongoing efforts to restore discipline to public spending.
This means further reductions of public service staff numbers, presumably.
In another statement, Willis gave us a measure of how the brakes had been put on contractor and consultant spending and growth in the public service workforce.
She brandished workforce data which showed spending on contractors and consultants fell by $274 million, or 13 per cent, across the public sector in the year to June 30.
During the year, the number of public servants grew slightly to 63,537 but the details reveal a year of two halves – ballooning growth under the Hipkins government offset by a 3.3 per cent reduction under her government.
The annual increase of 0.7 per cent, or 421 employees, compared to average increases of almost 5 per cent over the previous five years.
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Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
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