Government surplus of $5.5b

A thriving economy and some delayed spending has sent the surplus up to $5.5 billion, high enough that the Government has already met its debt target for 2022.

Treasury released the financial statements for the year to July yesterday, showing exactly how much the Government spent and took in the year prior.

This is the first official check that the new Coalition government is spending what it said it would.

A strong tax take of $80.2b saw the operating balance before gains or losses (OBEGAL) surplus rise to $5.5b, a full $2.4b higher than what Treasury projected in the May Budget and $1.4b higher than the year prior.

While Crown expenses were on the up too, the tax take was rising higher – mostly as a result of higher average wages, higher employment, and higher corporate profits.

Some of this higher-thanexpected surplus can also be explained by one-off factors, which led to core Crown spending coming in 1.4 per cent lower than expected – although still higher than the year before.

Treasury said this was largely because of timing issues, meaning some of the spending they expected to come last year will instead come this year – so the surplus could easily be smaller next year.

Despite the healthy books, Finance Minister Grant Robertson was keen to make clear that he wasn’t planning a spend-up when talking to media yesterday. ‘‘I don’t think we’re awash with cash. The situation is the Government’s books are in good order.’’

The period covered includes four months where the Nationalled Government was in charge and eight months when the Coalition Government reigned.

It takes in spending included in the Coalition Government’s ‘‘mini-Budget’’ like free tertiary education and the resumption of payments into the Super Fund, but most of the rise in spending was because of the increased population and a higher number of people collecting superannuation as the population aged.

The tax take and economic growth was so strong that the Government has already met its 2022 Budget Responsibility Rule target of getting net debt down to below 20 per cent of GDP – it was down to 19.9 per cent of GDP, or $57.5b. That target has been criticised as too stringent by those who argue the Government should be spending more on infrastructure and housing.

Notably, the Crown entity sector was not in surplus but in $0.8b of deficit, mostly because of ACC and EQC expenses.

Robertson noted that while the economic figures were now quite out of date, the Government had seen further encouraging economic figures since July.

But he cautioned against too much optimism. ‘‘It is a good result. But I do want to remind people that one of the key drivers of this was timing issues. We expect that there will be fluctuations above this target in the coming years.’’

Robertson said he was keen to keep money in the kitty for a ‘‘classic rainy day scenario’’ – nothing that the $800m Mycoplasma Bovis bill did not fall within the accounting period.