Matt Tukaki & Matt Roskruge –
https://waateanews.com/wp-content/uploads/2026/09/Matt-Tukaki-Matt_Roskruge-NZ-Economy-2026-1.mp3
Treasury’s pre-election opening of the books shows a stronger outlook for Government finances, but a less convincing improvement for households.
The Pre-election Economic and Fiscal Update, or PREFU, sets out Treasury’s forecasts for the economy and Crown finances under current government policies. It gives voters a common starting point for assessing election promises.
Compared with May’s Budget, Treasury now forecasts a deficit of $6.8 billion this financial year, down from $11.4 billion. The return to surplus remains on track for 2028/29, with a larger buffer than previously forecast. Government debt is also expected to peak lower.
Stronger tax revenue is the main reason. Business-tax results have exceeded expectations, while higher prices increase the dollar value of incomes, spending and profits, lifting the tax take.
Finance Minister Nicola Willis presented the figures as evidence that the Government’s approach is working. Treasury’s assessment is more qualified: the underlying economic outlook is little changed, and significant risks remain.
For whānau Māori, the labour market is a crucial test. National unemployment is forecast to reach 5.2 percent next June, slightly higher than Treasury expected at Budget time. A recovery that takes longer to generate jobs offers limited reassurance to people seeking work, including rangatahi entering the workforce.
Household costs remain another pressure. Inflation is expected to ease, but that generally means prices rise more slowly, not that earlier increases are reversed.
Higher inflation also creates a difficult trade-off for public services. It boosts government revenue, but increases the cost of delivering healthcare, education and other services within constrained budgets.
Persistent high oil prices could further delay recovery and keep pressure on household finances.
The improved books are welcome. For whānau, however, the meaningful test will be secure work, incomes that stretch further, and services available when they need them.
Author: Professor Matt Roskruge
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