Budget Policy Statement

Budget goals and objectives

The Government's overarching goals for its term of office are to:

• Build a stronger, more productive economy that lifts real incomes and increases opportunities for New Zealanders.
• Deliver more efficient, effective and responsive public services to all who need and use them - in particular, to restore law and order and improve health outcomes and educational achievement.
• Get the government's books back in order and restore discipline to public spending.

These objectives will guide the Government's Budget decisions. They are also the Government's wellbeing objectives, as meeting these objectives is the most important contribution the Government can make to the long-term social, economic, environmental and cultural wellbeing of New Zealanders.[1]

For Budget 2024, the Government has identified the following priorities:

• Delivering meaningful tax reductions to provide cost of living relief to New Zealanders, who have seen no change in personal income tax rates and thresholds since 2010. Tax reductions will be funded by reprioritisation, savings and new revenue measures, and this package will not add to debt.
• Identifying enduring savings across government departments and agencies.
• Improving public services by shifting spending to higher-value areas and focusing on results.
• Keeping tight control of government spending while funding a limited number of high-priority Government policy commitments and urgent cost pressures that cannot be funded through reprioritisation.
• Developing a long-term, sustainable pipeline of infrastructure investments.

As the Government indicated in December last year, Budget 2024 will be challenging. The previous Government set a $3.5 billion operating allowance for Budget 2024 but pre‑committed around two-thirds of this allowance ahead of time.

The previous Government also left a number of initiatives with only time-limited, and expiring, funding. The extent of this time-limited funding is a major challenge for the Budget. For example, decisions were made in 2022 to provide additional funding for Pharmac to purchase new medicines and widen access to already funded medicines, but this funding stops on 30 June 2024. Making this and other initiatives time-limited made the future fiscal track look better but left any incoming government with difficult choices. Put together, the cost of pre-commitments and extending time-limited funding exceeds the previous Government's operating allowance for Budget 2024.