Prime Minister Christopher Luxon warns Kiwis battling the cost of living crisis are going to continue feeling pain next year as he believes it’s going to take time to fix the economy.
He puts this down to the Labour Government of the past six years which he described as spraying money around like a fire hose.
Luxon and Finance Minister Nicola Willis have been critical of the Labour Government since coming into power, saying they've left the government books in a "hell of a mess".
"It's classic National-led Governments having to come in and clean up the mess and that's really what we've inherited, is an economy in bad shape and I suspect will be deteriorating," Luxon told Newstalk ZB on Monday morning.
He also didn't have good news for Kiwis who were hoping 2024 would bring a change in fortunes and an improving economy.
"It's going to take us time to restore the government books and to get everything into tip-top shape again. It's going to take us years I suspect, if every year, being financially disciplined, making sure we're spending the money as if it's the taxpayers, which it actually is," he said.
"So making sure we do the right thing. So it's acknowledging we've got a tough situation, doing a stocktake of exactly where the books are and then what are the things that we've been able to do in the first three weeks that might be able to improve the situation and then obviously setting up for the big budget in May where we will really get it in shape."
This all comes after the Reserve Bank revealed last week Gross domestic product fell by 0.3 percent from the June quarter.
Luxon believes the decline in the economy is down to the old Labour Government.
He told Newstalk ZB the economy is in bad shape because of a huge amount of "wasteful government spending" that has driven inflation up, increased interest rates and seen the economy start to contract.
"That's why it's so, so important we get to the root cause of the problem, which is the government spending and inflation and we've got to do everything we can to get inflation back under 3 percent," he said.
"When we've got price stability, people can plan, they can invest, they know their mortgage rates are coming down, not going up. That gives them more discretionary income, it means people can borrow to actually invest in new plant and equipment and expand a business, which means they take on more workers."
So Luxon said his Government is focused on getting the economy fixed.
"That's why we're going through all of the government spending programs to make sure we're not just spraying money around like a fire hose, just sort of spraying it everywhere, which is what's been going on," he said.
Kiwis have been battling the cost of living crisis since 2021 with inflation remaining stubbornly high at 5.6 percent – more than double the Reserve Bank's (RBNZ) target.
The price of food is another unwanted headache, with Stats NZ releasing figures last month showing food prices remained 6 percent higher in November than they were a year earlier.
Then adding to all this, thousands of Kiwis are re-fixing their mortgages from a low rate seen during COVID-19 of around 2-3 percent to new rates of around 6-7 percent.
