Government action has ensured New Zealand is well positioned to face the challenges of a slowing global economy following forecasts the country will experience a shallow recession next year.
“The Reserve Bank is forecasting the economy will grow robustly in the second half of 2022 and first quarter of 2023 by a collective 1.8 percent, before a period of negative growth totalling 1 percent of GDP,” Grant Robertson said.
“As I’ve said many times, as a trading nation we are not immune to what happens overseas. Global growth forecasts continue to deteriorate and the IMF is expecting economies either to be in recession or be in conditions that feel as if they are next year.
“We know this is a tough time for Kiwis who are experiencing cost of living pressures and rising interest rates. New Zealand is well placed in a challenging global environment. Unemployment is near record lows, more people than ever are in paid work and wages have been growing faster than inflation. The Government’s books are in a strong financial position, with debt levels among the lowest in the world.
“We have already clearly signalled in Budget 2022 in May our pathway to surplus and the need for careful fiscal policy. Government spending as a percentage of GDP is forecast to fall considerably over the coming year from 35 percent to 31.6 percent. We will continue to strike a balance; responsibly managing our finances, targeting support to where it is needed most and investing in a resilient economy.
“New Zealanders know we have their backs when times are tough as we did through Covid.
“We’ve done the work to put New Zealand in a strong position to handle this situation. Now is the time for cool heads, not for panicky responses and more policy U-turns as seen by the National Party on tax today. It’s clear once again you can’t trust National on tax,” Grant Robertson said.
It’s great to know the Minister of Finance believes the Government’s books are in a strong financial position. Moreover, that he’s got our backs as times become tougher.
However, as the Government alluded above, this is a tough time for Kiwis.
With low income earners largely feeling the brunt, many are anxiously awaiting to hear what exactly is the Government going to do to further cover their backs?
Here’s a suggestion. GST. Remove it for all community cardholders.
It would be noninflationary. With the decrease in the total price of goods offsetting the corresponding tax cut CPI pressure.
Government revenue losses via the GST removal will quickly be offset by ongoing external/imported inflation, thus related price increases, hence further GST tax boosts.
Additionally, covering the backs of the most vulnerable now creates huge savings going forward. For example, in health, crime and justice.
Moreover, low income earners expenditure isn’t what is driving local inflationary pressure. They didn’t create the turmoil, yet face the excessive burden. Therefore, their backs need covering.
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