The Government’s responsible and balanced financial management is on show in a better than forecast set of books that show the economy has turned a corner, Finance Minister Grant Robertson says.
For the year to the end of June 2023, the Operating Balance before Gains and Losses (OBEGAL) recorded a deficit of $9.4 billion, below the forecast of a $10 billion deficit in the Pre-election Economic and Fiscal Update (PREFU) and also below last year’s $9.7 billion deficit.
“We are turning a corner towards better economic times. We had the second strongest growth in the OECD last quarter and now the final audited annual accounts are $600 million better than expected,” Grant Robertson said.
“The economy is picking up with Inland Revenue’s tax monitoring report for July and August showing tax revenue is much stronger than forecast in PREFU and closer to what had been projected by Treasury in May’s Budget.
“Treasury is forecasting average annual growth of 2.6 percent over the forecast period, with the addition of 100,000 plus extra jobs and wage growth will outpace declining inflation, meaning household budgets will stretch further.
“Core Crown tax revenue in the June 2022/23 year was $3.9 billion higher than a year earlier at $112.4 billion, mainly due a growing economy with more people in work, and in line with what was forecast in the PREFU.
“Core crown expenses was $127.6 billion, just below the $128 billion forecast in last month’s PREFU. As a proportion of GDP, expenses fell to 32.2 percent of GDP in the June 2022/23 year down from 34.5 percent a year earlier.
Net debt stood at 18 percent of GDP, slightly below that forecast in PREFU and well below the Government’s ceiling of 30 percent of GDP.
“We have laid a solid foundation as we deal with the ongoing impact of the global pandemic and the recovery and rebuild from the devastating floods and Cyclone Gabrielle earlier this year.
“We have identified $8 billion in savings this year and we will continue to look for more. This will ensure we remain on a pathway back to surpluses, as we did in the years before the pandemic.
“Our net debt levels at 18 percent of GDP compare favourably to the countries we often compare ourselves with. According to the IMF, in 2023 net debt will reach 36 percent in Australia, 95 percent in the UK and 95 percent in the US.
“New Zealand’s strong fiscal position has been endorsed by the major ratings agencies, who continue to have confidence in the strength of the New Zealand’s economy to withstand future shocks.
“Now is not the time to upend this strong economic management with unfunded tax cuts that will drive more children into poverty, push up inflation and higher mortgage costs.
“There is every reason to be optimistic about the future and lock in the gains from our plan to build a stronger, more resilient and inclusive economy.
“Free trade agreements now cover around three quarters of New Zealand’s exports, more businesses are investing in R&D, more people are upskilling through apprenticeships and targeted trades training, tourists and international students are returning and our immigration reset is attracting skilled overseas workers.
“We are building for the long term to seize the opportunities in front of us and deliver high wage jobs and low emissions that make our families and businesses stronger in good times and bad,” Grant Robertson said.