Huge rearview mirror surplus won’t last

THE Crown accounts published yesterday are a confirmation of two things: one is that the previous government left the books in sound condition, and the other is that Grant Robertson has kept them in a sound condition.

There was no question the final accounts for the 201718 year were going to end in surplus. The question was how much.

The $5.5 billion surplus is higher than last year’s surplus of $4 billion, and $2.4 billion higher than the forecast as recently as the May Budget.

The figure is helpful and unhelpful for Mr Robertson.

It is helpful because having such a sound set of accounts it is yet another counterbalance to the continuing negative sentiment from the business community towards the Labourled Government, something Mr Robertson and and Prime Minister Jacinda Ardern now just accept as a fact of political life.

But it is unhelpful because to the cashhungry public sector — including teachers — it will appear as though Mr Robertson is awash with cash and has billions spare to play with.

He does not. And he will be at pains to point that out.

Most of Labour’s costly spending items are not in these accounts.

Most do not kick in until the financial years starting on July 1, such as the families package (except the accommodation supplement increases which began on April 1) or are nowhere near being ramped up — such as spending on Kiwibuild or the Provincial Growth Fund.

Much of the set of accounts released yesterday actually relates to spending decisions from National’s last 2017

Budget.

They are a rearview mirror. To that extent, they are a hybrid, largely from National’s decisions and Labour’s management.

Treasury has also advised that half of the $5.5 billion surplus is down to timing issues and will be reversed in the current financial year.

Mr Robertson is likely to cop pressure from the Left about the fact the Government debt target of 20% of GDP before 2023 appears to have been met four years early — 19.9% in this set of accounts.

Mr Robertson counters that by saying it is a guideline, not a target, and he expects fluctuations in the years ahead.

He also talks about need to be resilient, to be prepared for the next rainy day, biosecurity crisis, global trade war or earthquake.

In that respect he does a good imitation of Bill English and Steven Joyce, which is fitting because he shares this set of books with them.