New Zealand opposition lashes deteriorating budget

·2-min read

New Zealand's Opposition Leader Chris Luxon says Finance Minister Grant Robertson's budget "gaslights the country" into thinking they are good economic managers.

On Thursday, Mr Robertson handed down his sixth budget, unveiling a $NZ7 billion ($A6.6 billion) deficit to fund infrastructure, including cyclone rebuild and public housing, as well as cost of living relief.

The budget comes less than five months before the October 14 election, and is a major fault-line in a campaign expected to be hard-fought and closely contested.

Mr Robertson's decision to extend his operating allowance by $NZ300 million ($A282 million), post a multi-billion deficit and kick a return to surplus out by another year to 2026, plays right into the opposition National's central claim that the government is "addicted to spending".

"This was presented as the no-frills budget but what we've got today is the blow-out budget," Mr Luxon said in parliament.

"We see a huge growth in debt to $97 billion by 2026. We are seeing massive budget deficits.

"We actually have Treasury, on page one of the executive summary ... saying interest rates are going to remain higher for longer. Not a single cent of tax relief going to hard-working Kiwis. Not nothing."

Westpac chief economist Kelly Eckhold appeared surprised at worsening deficit and debt from prior Treasury updates.

"The deterioration was worse than we expected, as the government has not been as frugal as we had anticipated," he said.

"As a result, the budget will add to inflation pressures in the short term."

Kiwibank said the forecast stronger near-term growth "will maintain inflationary pressures".

National say they will oppose two of the centrepiece pledges: the removal of the $5 co-payment for almost all prescribed medicines, which will make most scripts free, and free public transport for under 13s and half-price fares for 13 to 24-year-olds.

Opposition finance spokeswoman Nicola Willis said they would prefer to offer tax relief.

"These are policies that may be nice to have but they aren't a priority when New Zealanders ... are doing it really tough," she said.

The right-wing ACT party referred to government's spending plan as a "rocket fuel for inflation".

"The government promised to be back in surplus after five years. Now they're delivering six years of deficits, and next year they'll spend $7.6 billion more than they take in," leader David Seymour said.

Conversely, the Greens said the budget contained "some really important steps", claiming some of the policies as Greens wins.

"Nine years ago, we promised to extend the (childcare) subsidy to cover two-year-olds. Today it's a reality," co-leader Marama Davidson said.

"Greens have campaigned for ten years to deliver more affordable public transport and now, in government, it's a reality."