Fiscal situation is finally looking good

Thanks to Ruth Richardson, Governments can no longer hide the state of the accounts from the electorate, The pre-election fiscal and economic update is mandatory. The 2026 one is here. And for the first time in many years it looks positive. Key details:

• Unemployment forecast to drop from 5.6% to 4.3%
• Cumulative nominal GDP to be $18b higher than forecast in the Budget
• The OBEGALx balance is forecast to almost reach surplus in 2027/28 and grow to a surplus of $12b by 2030/31
• Core crown expenses to reduce to 29.8% of GDP by 2030/31 (30% is the level that Labour and Greens in 2017 said is the maximum NZ should have)
• Net core Crown debt is expected to peak at 43.9% of GDP in 2027/28 before gradually declining to 39.5% by the end of the forecast period

It is critical we get back into surplus and start reducing debt (before the next global economic shock). A change of government will doom this prospect.

Here’s how much extra spending the four parties of the left are promising:

1. Labour $50.5b
2. Opportunity $219.4b
3. Greens $236.7b
4. TPM – incalculable

The higher our debt goes, the more money that we have to spend on interest on the debt, rather than on education and health etc.