NZ voters have elected a new government. That government will face huge economic challenges, and their response will be stimulatory fiscal policy.
Whichever hue New Zealanders cast their vote for, they can be thankful that the election produced a resounding result rather than a lame duck government.
The extraordinary circumstances facing the New Zealand economy will require strong and decisive leadership. National is forming the new government along with Act and UnitedFuture, and potential accommodation of the Maori party.
Policies will largely be centrist.
With regards to the economy, initial planned actions by the new government will be:
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The introduction and passage of an extended tax package, with additional tax cuts beginning on 1 April 2009.
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Appointing a Minister of Infrastructure and implementation of National’s infrastructure plan.
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The introduction of an RMA reform bill to reduce the costs, delays, and uncertainties in the Act.
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The introduction and passage of National’s transitional relief package into law to offer extra assistance to Kiwis who are worst hit by redundancy.
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A line-by-line review of government department spending.
With fortunate timing, the New Zealand economy will receive substantial fiscal stimulus in the coming year. The fiscal impulse will amount to around 3% of GDP. And it has a lot to offset – the world economy is deteriorating with obscene haste, and NZ unemployment is set to rise rapidly.
