Labour Promises Budget Surplus by 2029/30, Aims to Restore Reserve Bank's Dual Mandate

Labour has outlined its fiscal strategy, promising to achieve a budget surplus by the 2029/30 financial year under the original operating balance before gains and losses (OBEGAL) measure. This contrasts with the current government's approach, which forecasts an earlier surplus by stripping out ACC deficits. Labour's plan emphasizes balancing the books while continuing to invest in essential services and infrastructure for New Zealand. The party also aims to reduce net debt to 20% of GDP over time and maintain core Crown expenses at approximately 33% of GDP. A significant policy shift proposed by Labour is the restoration of the Reserve Bank's dual mandate. The party argues that monetary policy decisions should consider maximum sustainable employment alongside the existing inflation target of 1-3%. This move would reverse the current government's decision to focus the bank solely on inflation, which Labour criticizes for contributing to high unemployment levels. Furthermore, Labour intends to reinstate wellbeing reporting, a measure removed by the current government from the Public Finance Act. This reporting requires Treasury to detail the state of wellbeing in New Zealand, its changes, and associated risks. Labour plans to use these wellbeing measures, alongside traditional economic indicators, to assess the effectiveness of government policies in improving the lives of New Zealanders, focusing on aspects like well-paid work, financial security, health, and future confidence. The party also committed to establishing an independent Parliamentary Budget Office to provide analysis of government finances and election promises, a move that National has previously supported but not implemented.

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We will return to a positive operating balance while still investing in the people, services, and infrastructure New Zealand needs.