NZ: Substantial increase in social spending - Westpac

Analysts at Westpac, note that the NZ government has substantially increased its planned operational spending in 2019 Budget, against a backdrop of largely unchanged GDP and revenue forecasts.

Key Quotes

“The biggest spending increases are in child poverty reduction and mental health, with relatively little focus on economic development.”

“Projected surpluses are lower and net debt higher, while remaining within the Fiscal Responsibility Rules.”

“Capital spending plans have been further delayed.”

“We see downside risks to the Treasury’s growth forecasts, which were unfazed by the weaker than expected starting point for the economy. This could have implications for the affordability of the Government’s spending plans in later years.”