Finance Minister Grant Robertson is digging in for war with the Reserve Bank by announcing a multi-billion-dollar spending package that threatens to undermine the Bank’s attempts to tackle inflation.

Labour will be hoping the Government’s cost-of-living spending announcements - expanding free early childhood education, abolishing prescription co-payments, and free public transport for children - will blunt the effects of higher interest rates and inflation, which Treasury now expects will be higher for longer.

Far from trimming back or reprioritising significant amounts of money, Robertson announced a Budget with billions more spending and billions more borrowing than expected six months ago, adding $300 million more this year, then $500m more in his next three Budgets, leaving the Crown with net core Crown debt of $181b in 2027 (37 per cent of GDP), up from $128b now and $59b when Labour took office in 2017.

The books will be in deficit until 2026, one year longer than previously forecast.

Robertson said he did not believe the Reserve Bank would need to hike interest rates to deal with his increased spending.

“I don’t think this is the impact of what is in that Budget,” he said.

The key highlights:

• Extension of 20 hours Early Childhood Education to 2 year olds - $1.2b
• Abolition of $5 prescription co-payment - $619m
• Cheaper public transport for children - $327m
• $71m infrastructure spend
• Inflation stays higher for longer
• Net core Crown debt hits $181b

Already economists are lining up to dispute him, with Infometrics Chief Executive Brad Olsen saying the risks of further hikes were elevated.

Labour will be hoping the additional spending is enough to win them an election - and this Budget is full of election goodies.