Budget cuts to beat profit-driven inflation

The Kākā by Bernard Hickey · Aug 29, 2023 · 35m

TL;DR: The Labour Government announced $4 billion of spending cuts over four years late yesterday, just 12 hours before the release of an IMF report calling for a tighter budget, either through spending cuts or taxes on capital gains.

Labour chose the spending cuts, although they amount to less than 0.3% of GDP or the equivalent of $10 per household per week. They’re also unlikely to lead to actual public sector job losses or spending cuts from current levels, given most of the cuts are to budgeted increases and future capital spending.

Just as well, because the ‘optics’ of choosing to cut…