Banking & Finance New Zealand says it is committed to reducing spending By Reuters April 27, 2023 REUTERS/Lucy Craymer Chris Hipkins said the government would not introduce any major new taxes in this year’s budget The New Zealand government is committed to reducing spending even though severe weather events earlier this year caused asset damage of roughly NZ$9 billion ($5.51 billion) to NZ$14.5 billion, Prime Minister Chris Hipkins said. New Zealand was hit by flash floods in the country’s largest city of Auckland in January followed by Cyclone Gabrielle, which tore through the North Island in February leaving a trail of destruction. Half of the total estimated weather damage costs relate to public infrastructure. Hipkins said the government would not introduce any major new taxes in this year’s budget and that the cost of repairs would largely be met by budget operating and capital allowances. “For our part, the government is committed to reducing our proportion of spending to dampen demand in the economy,” he said in a speech to the employers and manufacturers association. New Zealand is already dealing with historically high inflation and the central bank has previously raised concerns that any boost in government spending could add to the inflation problem. Hipkins said his aim is to get government spending down to around the low thirties as a percentage of GDP. The government’s core expenses was 35 percent of GDP in the year ended June 2022 and is forecast to fall to 32.8 percent of GDP in the current financial year. “This will be an orthodox, no-frills budget focused on funding the things most important to New Zealanders like support with the cost of living and cyclone recovery,” Hipkins said. He said infrastructure will be a major focus of the budget with the country not only needing to rebuild following the cyclone but also in need of new hospitals and schools.