Budget Speech

The Budget Speech is the Budget Statement the Minister of Finance delivers at the start of Parliament's Budget debate. The Budget Statement generally focuses on the overall fiscal and economic position, the Government's policy priorities and how those priorities will be funded.

Budget Speech
Published: 30 May 2019
Also published on the Treasury website.

Wellbeing Outlook

Mr Speaker,

Evidence from the Treasury's Living Standards Framework which is made of four elements of wellbeing suggests New Zealanders currently have relatively high levels of wellbeing, but there are significant gaps.

The state of our financial and physical capital is broadly strong. New Zealand has relatively high material living standards and the economy is forecast to grow at 2.6 per cent on average over the next five years. While this is a lower growth rate than we have seen in recent years, it is still well ahead of forecasts for other advanced economies, including the US, UK and Canada.

The labour market is strong, with unemployment at 4.2 per cent and set to remain at around 4 per cent across the forecast period.

Wage growth is strong and is expected to average 3.4 per cent over the next five years, ahead of inflation.

The Government's books are in good shape. The Treasury forecasts the Government's fiscal position to remain strong, with surpluses across the forecast period and net debt reducing to below 20 per cent of GDP in 2021/22, consistent with our Budget Responsibility Rules.

Analysis of our human capital suggests that on average, New Zealanders are healthy and well-educated. Life expectancy continues to gradually increase and is above the OECD median. Our adult skill level is in the top performing OECD countries, and our expected educational attainment is above the OECD median.

Although the condition of our natural capital is generally worsening, the proportion of New Zealanders with access to suitable drinking water has gradually improved in recent years. In comparison to other OECD countries, the quality of our air is good in most places and at most times of year.

Evidence of our social capital suggests that New Zealanders are well connected. We generally have a strong sense of belonging and are in the top performing OECD countries for indicators like freedom from corruption, trust in others and trust in government institutions.

Despite these areas where New Zealand is relatively successful, our analysis has shone a powerful light on where the Government needs to intervene and invest to improve the overall wellbeing of New Zealand.

These areas of need include New Zealand's poor mental health outcomes, significant numbers of children living in poverty, the country's high levels of greenhouse gas emissions, unequal growth and low productivity, and significant disparities across indicators of wellbeing between Māori and Pacific peoples and other ethnic groups.

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