Surplus lift opens door to spend-up

Just 11 weeks out from the election, the political parties’ spending and tax-cut plans have been given a boost by new figures showing the Budget surplus is tracking $1.5b ahead of forecast.

But Finance Minister Steven Joyce has moved to downplay the impact of this news, saying surpluses are needed to pay for commitments already made over the next four years.

The latest Treasury figures show the surplus before gains and losses for the 11 months to the end of May running at $4.5b, compared to a forecast surplus of $2.94b. This was driven mainly by improved business tax returns, though corporate tax was $688m above forecast and GST $245m higher than expected.

Expenses at $69.3b were $345m lower than forecast.

The overall operating surplus after net gains of $8.4b was $13.1b, $1.3b higher than forecast.

‘‘While these surpluses are significant, they will be needed to meet the cost of the significant investments we have committed to as part of the next four Budgets including the Government’s $32.5b infrastructure programme,’’ Joyce said.

‘‘It is only possible to make the investment decisions we have announced in the last few months because we have a strong economic plan which is delivering for New Zealanders. If we keep with the plan we will have the capacity to make more positive decisions into the future.’’

The Government announced a tax cut and family spending plan in the Budget and Prime Minister Bill English has dangled the prospect of further cuts beyond that.

The improved results for the 11 months to May saw net debt fall to $59.3b equivalent to 22.4 per cent of gross domestic product (GDP).