Source: NZCTU
The Treasury’s latest forecasts, released today, show the Government’s economic strategy isn’t working and that workers will be paying the price for years to come, said NZCTU President Sandra Grey.
“This Government’s fiscal choices have exacerbated the economic downturn over the past couple of years and working people have suffered the consequences,” said Grey.
“Since the Government took office, 37,000 more people are unemployed. It’s no surprise that tens of thousands of Kiwis have left for Australia in the past year.
“Treasury is now forecasting the unemployment rate will peak at 5.5% and will stay above 5% for the entirety of 2026. That means around 165,000 Kiwis out of work through 2026.
“The forecasts show the economic recovery will be further delayed, with the return to growth slower than expected in May. The anticipated recovery is highly fragile, reliant on favourable exports, a strong rise in net migration, and a return to 7% annual house price growth. Even if we do see recovery next year it will take a long time for this to feed through to the job market.
“Even on its own terms, the Government’s economic policy is a failure. Christopher Luxon and Nicola Willis have justified their fiscal choices on the idea New Zealand could cut its way to prosperity and better-looking government accounts.
“But the Government’s cuts to public services, and its failure to intervene in a stalling economy has meant higher unemployment and lower tax revenue, which has only made the fiscal challenge worse. This has been exacerbated by the tax breaks they gave to landlords and tobacco companies.
“National’s fiscal plan going into the election was to return the books to surplus by 2027. On the numbers released today a return to surplus is not expected within the forecast period. Net debt is expected to continue to rise, peaking at nearly 47% of GDP in 2028.
“Cutting expenditure during an economic downturn only worsens life for working people and makes it harder for the Government to achieve “balanced books”. Unfortunately, the Minister of Finance is refusing to open her eyes to this reality and has signalled today that further cuts are likely.
“The Government needs to rethink its fiscal policy and focus on supporting a broad-based economic recovery in 2026. On the current numbers, working people are being left behind,” said Grey.
