The last Government is gone and are probably very happy that they do not have to deal with the financial mess created by a ballooning bureaucracy, higher interest on Government borrowings and little money to spend on infrastructure or anything else.
The new Government has serious challenges in implementing a plan for disciplined spending, reduced bureaucracy, better delivery of services and financial outcomes for the money spent, assisting the many facing hardship through cost of living and cost of housing, and encouraging a pathway forward. That is what they have been elected to do but this cannot be accomplished overnight.
However, there is a more positive attitude in the country which is desperately needed.
The negatives remain: –
High-interest rates for longer.
Government and current account deficits will continue for longer.
High cost of living.
Shortage of housing.
More people in poverty.
Councils in trouble with double-digit rate rises for many. Many Local Councils removed water infrastructure from their 10-year plans naively thinking the Government was going to pick up the tab. How can councils now do the unplanned and unbudgeted water stuff as well?
Extraordinarily high levels of immigration. How did it come to this? When we needed immigrants, they could not get in and now there are too many.
Unemployment is forecast to rise until early 2025.
Internationally, there are many worrying signs in Ukraine, China, Israel, Japan and the US. Ships avoiding the Suez Canal put up shipping costs again. Money printing continues (which is inflationary) and interest rates and inflation remain high). Gold is being stockpiled in China and India. You have to wonder why.
Trust tax remains at 39% from 1/04/2024 so tax avoidance audits by IRD come back into play. This is all a stupid waste of resources for little gain.
We now know yesterday from the mini-budget that: –
Forecast Tax revenue is weaker.
Forecast economic growth is low.
All will stay worse for longer.
And the week before from Stats NZ yes, we were effectively in a recession earlier this year after all.
A positive for me was the decisive action to cancel the astronomical funding of KiwiRail ferry infrastructure. The Government clearly said, “Enough is Enough”. Do it efficiently, do it economically, but still do it well.
Other positives: –
House prices are creeping up, the number of property sales is increasing but households are being more cautious on spending.
Tax changes are coming but not soon enough. The Bright Line test is to be reduced to two years, interest deductibility for landlords is to be phased back in and there should be relief for many middle New Zealanders.
Is it time for optimism? Yes, if you have some control over your business costs and have products or services people want or need. If not, or you have high debt, then there is cause for concern.
Cutting costs, reducing debt and proactively looking for ways to increase your income all need to come into play. Don’t just keep doing what you always did, otherwise you keep getting what you always got. It is time to re-evaluate, change and adapt. Aim to be ahead of the rest.
Keeping on top of your day-to-day financial position and performance is a key to success in these times. Setting expectations, measuring performance and the financial outcomes of decisions taken is a vital component towards success. Then plans can be tweaked or adapted where needed based on good up to date information. If you don’t have this capability, investment into this area in 2024 with new relevant apps to improve the quality and timeliness of information is crucial.
We are here to help in any way we can.
We wish you are great Christmas and despite many negative signs a prosperous and fulfilling 2024.
