New Zealand earmarks $2.5 billion spending in slowing economy

WELLINGTON: New Zealand on Thursday unveiled a $2.5-billion (£1.98 billion) spending package under a much-hyped ‘Wellbeing’ budget, prioritising mental health and alleviating child poverty, but it expects a smaller surplus and slower economic growth over the next year.
Much of the excitement around the budget, touted as a world’s first that measures broader living goals, was dampened amid a national furore over hacking accusations after details were leaked ahead of its release. The opposition has called for heads to roll over the blunder.
“Today’s budget shows you can be both economically responsible and kind,” Prime Minister Jacinda Ardern said after the budget was released.
The budget increases the annual operating allowance for new spending to NZ$ 3.8 billion ($2.48 billion) per year over the four-year forecast period, from a forecast NZ$ 2.4 billion in the previous budget.
About NZ$ 1.9 billion was slated for mental health services over that period, a key issue for the government with New Zealand still having one of the highest suicide rates in the world.
NZ$ 1.1 billion was set aside towards reducing child poverty. The Labour-led government also allocated funds for tackling domestic violence, and for infrastructure projects like rail, hospitals and schools.
“We are measuring our country’s success differently,” said Finance minister Grant Robertson. “We are not just relying on gross domestic product (GDP), but also how we are improving the wellbeing of our people, protecting the environment and strengthening of our communities.” The operating allowance for budget 2020 has also increased to $3.0 billion from $2.4 billion.
The national rail service, KiwiRail, was given a NZ$ 1 billion boost.
The Treasury department, however, downgraded its gross domestic product forecasts to 2.1 per cent in the year ending June 30, 2019, compared to 2.9 per cent predicted in December, hurt by a cooling global economy and slackening domestic consumption.
GDP was forecast at 3.2 per cent in fiscal 2020, and was seen averaging at about 2.6 per cent over the forecast four-year period.
Net debt was also forecast to rise slightly above 20 per cent of the GDP, before dropping to 19.9 per cent in 2022.
Robertson warned the economy faces continuing risks from the US-China trade disputes and Britain’s exit from the EU. The budget forecast an operating surplus of NZ$ 3.5 billion for the year ending June, up from NZ$ 1.7 billion forecast in December, but is then expected to narrow to NZ$ 1.3 billion in 12-months to June 2020. — Reuters