Control spending, improve economy
The OECD has released its 2024 report on New Zealand, urging the government to rein in spending to stabilise the economy.
Finance Minister Nicola Willis (pictured above) highlighted the report’s findings during its presentation in Wellington by OECD Chief Economist Clare Lombardelli.
“Spending overruns and slippage after the pandemic led to a permanent increase in the government spending to GDP ratio, resulting in a substantial deterioration of New Zealand’s fiscal position,” Willis said.
Government response to OECD findings
The report recommends setting operating allowances and tax policies aimed at gradually reducing the fiscal deficit.
“This affirms the government’s decision to steadily bring government spending under control through our ongoing fiscal sustainability programme,” Willis said. “It also reinforces our approach of fully funding planned income tax relief through offsetting revenue and spending measures.”
Broader economic and policy challenges
Aside from fiscal discipline, the OECD report also touched on other critical areas needing attention, such as enforcing competition policy, easing overseas investment settings, lifting educational achievements, and advancing reform of the resource management planning system.
Willis acknowledged the alignment with many OECD recommendations and the government's openness to further suggestions.
“The government is already acting on many of the initiatives proposed by the OECD and we will give consideration to its other recommendations," she said.
Government’s commitment to economic recovery
Willis stressed the report’s role in reinforcing the need for robust economic management following a challenging period marked by high spending, inflation, and interest rates.
“This report reinforces the urgent need to rebuild the New Zealand economy after a period of elevated spending, inflation, and interest rates,” she said. “The government is on the right track with our plan to drive greater value from public spending, lift educational achievement and give businesses the confidence they need to invest, hire and grow.”
Read the government media release here.
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