The Government has managed to give itself some headroom in a tight fiscal environment, Parker says.
So there was some scope for new spending.
“So there are the public sector cuts at $2.4 billion and another $350 million from student fees – the amount that they were gonna give to third-year students,” she says.
“That’s a little bit of money to play with. But you know, there’s a lot of other aspects, tax revenue’s going to be down because the economy’s not doing as well as we’d hoped.”
New Treasury forecasts would be “ugly”, Dann says.
“They’re gonna be updated from pre-[Iran] war expectations,” he says.
So, where could new spending land?
It would need to go somewhere that would improve economic growth long-term – or at least not add to current inflation concerns, Dann says.
That could mean some extra money for health, perhaps broadening subsidies for GP visits to head off Labour’s free-visit policy, he says.
Parker makes the case for something to boost investment in KiwiSaver.
Moves to boost energy security would also be popular. A subsidy for solar panels could be an option, Parker says.
This week, The Economy of Everything podcast also dives into the growing divide over when the Official Cash Rate should be hiked.
Parker and Dann also look at the rise of artificial intelligence (AI) as an excuse for companies (and governments) looking to cut staff and cut costs.
Listen to the full episode for the full conversation.
The Economy of Everything is available on the iHeart app or wherever you get your podcasts.
The series is hosted by Liam Dann, business editor-at-large and Tamsyn Parker, business editor for the NZ Herald. Thanks to CMC Markets.
