The Pre-Election Economic and Fiscal Update forecasts the country will not return to surplus until 2026-27.
The Treasury expects slow economic growth to continue over the next 18 months.
High inflation will mean continued high interest rates over the next year, gradually easing from late 2024.
While these high interest rates are expected to constrain economic growth over the next year, the unemployment rate is forecast to rise to 5.4%, not starting to fall until mid-2025.
In short, households and businesses are expected to remain under pressure.
Any forecast is, by its nature, not something with outcomes set in stone and it will not be hard to recall instances of Treasury predictions which fell short of the mark. There are always matters which fall outside the most careful number-crunching such as major disasters like earthquakes, extreme weather events, pandemics, and wars elsewhere.
The continued economic downturn in China is also something outside the government’s control, but which would have a significant impact here.
Not that such matters have been to the forefront in the responses to the fiscal update from the two main political parties.
Finance Minister Grant Robertson, perhaps allowing himself a brief sigh of relief because the figures were not as bad as some expected, says it shows the New Zealand economy has remained strong despite slower local and global economic conditions and high inflation.
The Labour mantra is the economy turning the corner after a rough period.
But while Mr Robertson insisted the government’s continued focus on careful and prudent financial management was even more important given the impact of the aftermath of this year’s North Island weather events, the National Party was painting him as the last of the irresponsible big spenders.
Little is being said by either party about the impact of record net immigration which provisional figures show stood at 96,000 in the year to July.
While this may be great news for employers who have been struggling to find workers in a variety of fields, how does it affect pressure on housing where we already have high numbers in emergency housing? (At the end of July Ministry of Social Development figures show there were 3552 households in this situation, including 3576 children.)
For both parties, splashing the cash during the election campaign remains problematic if they are not to look irresponsible.
As the National Party rides high in the polls, there will be increasing interest in its fiscal plan which it is expected to deliver before overseas voting begins on September 27.
National leader Christopher Luxon’s hyperbolic description of Mr Robertson as one of the worst finance ministers the country has had was an unnecessary aside, particularly when his party’s plans to raise some of the money for tax cuts from overseas buyers and online gamblers continue to look ropey.
The questions about this will not miraculously disappear because Mr Luxon and his finance spokeswoman Nicola Willis insist they are confident about the amount of money these measures will raise.
Questions are also being raised about an anticipated $500 million hole in the kitty of the Emissions Trading Scheme’s climate emergency response fund which National wants to raid for its "climate dividend", a fancy name for tax cuts.
That comes on top of the issue of whether this is a proper use of this fund in the face of more frequent mayhem-causing severe weather events.
It is not clear whether National’s fiscal plan will give much detail about its cuts to spending across the public service.
It has said it wants to reduce spending on back-office functions on average by 6.5%, but there will be scepticism about whether that can be achieved without affecting front-line services.
