Managing revenues and expenses
The Government is investing in the near term to secure the recovery with the need for fiscal stimulus reducing over time
The fiscal strategy takes a balanced approach to managing core Crown expenses, which are expected to decline as a share of GDP over the forecast period from 33.1 percent in 2020/21 to 29.2 percent of GDP by 2024/25 (Figure 16). The elevated level of Government spending in the economy highlights the role that fiscal policy has played in cushioning the blow of the economic shock associated with COVID-19 and supporting employment. The gradual reduction in core Crown expenses over the forecast period reflects that the majority of COVID-19 fiscal support will be gradually withdrawn.
Figure 16 – Core Crown expenses
Source: The Treasury
The Government is taking a balanced and careful approach to expenses. Future Budget allowances are smaller than during COVID-19. This means a continued focus on value-for-money investments that support the Government's priority areas outlined in the Speech from the Throne, while maintaining essential services, like healthcare and education.
The Wellbeing Approach provides a strong value-for-money framework that is supporting investment decisions by helping the Government target spending to areas it is needed most (see Wellbeing Outlook Chapter).