Incoming govt gets strong economic start
A $4.1 billion surplus for the year to June is banked on the Government books, with delayed spending sitting behind the higher-than-forecast figure.
As political parties played a game of dodge across the road in Wellington, Treasury released the financial statements of the Government showing a surplus posted for the third year in a row.
Finance Minister Steven Joyce said the accounts were a ‘‘direct demonstration of the hard work of New Zealanders since the global financial crisis’’, and a reflection of a ‘‘strong economic plan’’ since 2008.
The surplus result was due to core Crown expenditure being $502 million less than forecast, said to reflect timing differences.
The cost of repairs following the Kaikoura quakes had totalled about $800m and there was an operating balance of $12.3b, compared with an operating loss last financial year of $5.4m.
New Zealand’s gross domestic product (GDP) had also risen 2.7 per cent, off the back of growth in private consumption and residential investment.
Core Crown tax revenue increased in nominal terms to $75.6b – up 7.4 per cent and largely due to an increase in employment and corporate profits, driving increases to wages and salaries and consumer spending.
Residual cash was in surplus by $2.6b which meant net debt had been reduced to just under $60b – to 22 per cent of GDP.
When Treasury last opened the books in August, the starting point for Crown debt was better by $2b than in the Budget.
Net debt then was expected to fall below 20 per cent as a proportion of GDP by 2021 and to less than 15 per cent by 2025.
‘‘This is the first time net debt has reduced in actual dollar terms since the GFC and the Christchurch earthquakes,’’ Joyce said.
‘‘It’s a significant milestone in the country’s economic recovery from those twin shocks.’’
Yesterday’s release was broadly consistent, and there was barely a departure from the pre-election economic and fiscal update that was revealed in August.
It was likely to be welcome news to party leaders with costed policies, as negotiations progressed between NZ First and the two major parties to form a Government.
Treasury secretary Gabriel Makhlouf confirmed officials had provided requested information mostly related to costings to parties in negotiations.
Elsewhere in the Government books Crown capital spending totalled $3.7b in the year to June, with about 60 per cent of that spend directed into the transport and education sectors.
There were 718,000 New Zealanders receiving state superannuation, with the cost rising $800m in the past year.
Of all Government spending, about 70 per cent goes on superannuation, health, education and other social assistance.