Acting Prime Minister Grant Robertson says the government will be setting new fiscal rules after its previous self-imposed rules were suspended due to the Covid-19 pandemic.
With Prime Minister Jacinda Ardern in Singapore on the first leg of an overseas trip that will also take her to Japan, Robertson has been chairing this week's Cabinet meeting.
Debt and inflation
Robertson says the government will be setting new fiscal rules after its previous self-imposed rules were suspended due to the Covid-19 pandemic.
He says it is important to ensure that not only is debt kept under control but that infrastructure is invested in.
"I'll have more to say on that on Budget Day."
He says he has to balance the low level of debt New Zealand had coming into the Covid-19 pandemic "against the fact that New Zealand has a massive infrastructure deficit".
Inflation figures for the first quarter will be announced on Thursday.
Robertson says the big drivers of cost-of-living pressures are being generated offshore.
"In particular the Covid-19 pandemic and the pressure that's put on supply chains, we've got the war in Ukraine now that is putting further pressure on that. And so while we have to be careful with our spending ... it is important that we don't cut our nose off to spite our face and take away funding that's really important in areas like health or housing."
He says the government has to look carefully to ensure all its initiatives are value for money, but the government is having to completely rebuild the health system.
A lot of the large-scale financial supports provided during the Covid-19 pandemic are disappearing he says, replaced with much more targeted cost-of-living style supports, but there are other long-term investments New Zealand needs to make in infrastructure.
He says the government could for example decide to stop building more state houses but "we've got a housing crisis".
Some people will no doubt experience mortgage stress, he says, and those who have borrowed recently will need to carefully manage their money in the next period.
He says he will not speculate on the movement of house prices, they go up and down, but he believes there's a resilience in the New Zealand economy which has got us through Covid and will get us through further economic challenges.
Robertson says there is always a balancing act between monetary and fiscal policy, and there are things the government can do alongside the Reserve Bank.
"But I'd reiterate, government spending on the health system is important. If we were to cut that we would not reduce the cost of food that people are paying, or the cost of fuel."
He says he does not think New Zealanders are to blame the government for inflation, that they can see that it is a global phenomenon.
"They only need to see the headlines every night where we hear inflation in the US has gone over 8 percent, inflation in the UK has gone over 7 percent, they can see the war in Ukraine, they've heard about the supply chain constraints, they know them themselves because they've ordered goods that aren't arriving as quickly ... these global factors are what is driving inflation."
He says the income insurance scheme will not come into effect until the end of 2023 at the earliest, so there are no costs being imposed on anyone in the meantime.
The Reserve Bank is independent and has a job to do, he says, and its actions point to the fact they recognise their primary role is to control inflation.
Addressing infrastructure deficits
He says while many households are facing economic challenges right now, and despite the worst economic shock in more than 100 years "the New Zealand economy grew by 5.6 percent to year end 2021 and we currently have a low unemployment rate of 3.2 percent".
Robertson says part of the economic approach has been through addressing infrastructure deficits and creating jobs, including via the RMA fast-track consenting process.
Three new projects have been approved today, bringing the total to 50. They include New Zealand Wind Farms Te Rere Hau Wind Farm project expanding the existing wind farm in the Tararua range southeast of Palmerston North; the Waimarie Street residential development in St Heliers, Auckland; and the Flint's Park West project in the Lake Hayes area.
He says the boom in house construction combined with the apprenticeship boost initiative is driving up the number of skilled New Zealanders available to work on these projects.
Robertson says reconnecting with the world and sending the message New Zealand is open for business is a key component to Aotearoa's economic rebuild.
He says goods exports are now at levels 5.7 percent higher than pre-Covid.
The return of tourists from Australia last week alongside the move to orange saw a bumper economic weekend across the country, he says.
"I know many hospitality and tourism operators sorely needed this and I hope it continues."
He says cruise ships will be let back into New Zealand "as soon as possible" but Cabinet is awaiting some further advice from the Ministry of Health.
"My understanding is that there would be no intention for any cruise ships to come to new Zealand until at least October and I am sure we would have things well and truly sorted out by then."
He says that is the date the government has been told cruise ships would want to return, rather than the date the government has specifically set.