New Zealand’s economy has fared better than anticipated, thanks to a faster-than-expected move down Covid-19 alert levels.
But the future outlook is less rosy in the Pre-election Economic and Fiscal Update than in forecasts from the May Budget.
The Government’s current $23.4-billion deficit is expected to worsen to $31.7 billion in the next financial year - before starting to recover.
Net core Crown debt of $83.4 billion is forecast to climb to $201.1 billion - or 55.3 percent of GDP - by 2023/24.
And the unemployment rate is expected to peak at 7.8 percent in the March 2022 quarter, lower than the previously forecast peak of 9.8 percent in this year’s September quarter.
Finance spokesperson Grant Robertson says Labour will get on top of the deficit with careful economic management.
"And decrease it from it's peak of 10.5 percent, to 3.4 percent of GDP in 2024, and then through the projection period, down to 1 percent and below."
On the subject of debt, Robertson told Heather du Plessis-Allan that getting debt down to the Government's original target of 20 percent of GDP will take "many, many years".
"We will continue to invest in growing the economy, growing it as fast as we possibly can and bringing that debt down further.
"If I were to predict a time to get us back to 20 percent within the next decade, I would be saying to New Zealand to expect billions of dollars of cuts to public services, I'm not prepared to do that. We've put forwards a balanced plan that is about careful financial management, about investing in our products of growth, and having a revenue system that helps get debt under control."
Robertson says that he also does not think that getting debt down to 30 percent of GDP in 10 years, as National has suggested, will lead to $80 billion of cuts in the expected spending.
"We want to reduce debt progressively over time. Around $46 billion of debt would go under the programme you saw today in PREFU across the projection period. I think, if we grow the economy better over the next few years, we will be able to do even more than that."
He says that this long tail is because the country's global trading partners are going to be dealing with Covid for longer than New Zealand.