The PREFU is sending a message to all political parties about the dangers of undisciplined government spending, BusinessNZ said.
The pre-election economic and fiscal update shows a significant deterioration in the Government’s accounts, with large forecast increases in core Crown expenses and net core Crown debt and a mediocre growth forecast in the short to medium term.
The PREFU shows net core Crown debt topping $100 billion over the next two years and not starting to reduce until 2027.
The inflation rate is similarly not expected to return to the Reserve Bank’s 0-3 percent target inflation range much before 2027.
BusinessNZ Chief Executive Kirk Hope said while Covid and cyclones had contributed to the deficit and the high inflation rate, the core of the problem lay with big government spending.
"Natural disasters are not an excuse for poor financial management. New Zealand is prone to natural disasters, and we shouldn’t continue with deficit spending because the next one-off event could significantly destabilise the economy,” said Hope.
"Political parties contesting this year’s election should take note of the state of government accounts and refrain from big spending promises on the campaign trail.”
Hope continued that business voters are more interested in hearing promises about controlling expenditure and growing the economy and want to see sound analysis of expenditure and regulatory plans to help get back into surplus faster.
This year’s election should be contested on the basis of sound financial management, said Hope.