The New Zealand government is cutting back its spending by up to $2.4 billion over the next four years in response to global economic uncertainties and failure to meet tax revenue forecasts.
Finance Minister Grant Robertson, in a press release issued Monday, said public agencies are directed to roll back expenditures on consultants and contractors to pre-pandemic levels. The government anticipates about $97 million in savings annually from reduced contractor and consultant spending across several agencies.
Robertson explained that multiple policy changes, such as water infrastructure and health reforms, are about to be completed, which would ease the government’s reliance on public sector partners to provide certain services. He added that New Zealand’s response to COVID-19 is also coming to an end.
The budget cuts are part of the island nation’s response to meet tax revenue forecasts made by the New Zealand Treasury. According to Robertson, tax revenue during the period ended May is about $1.2 billion short of estimates.
The finance minister added that while the NZ economy is showing signs of improvement, the global economy remains fragile and will continue to affect the country’s progress.
He assured that the savings generated from the budget cuts will contribute toward the goal of keeping debt under 30 percent of gross domestic product.