Hon Grant Robertson
Minister of Finance
The Government books are reflecting a further moderation in economic activity, although New Zealand is well placed to face the challenges of living costs, recent extreme weather and a subdued global economy.
“2023 was always going to be a difficult and testing year, with global growth slowing, and inflation staying higher for longer than expected.
“However, we start in a position of strength to tackle the challenges ahead. People are in paid work in record numbers and wages are outpacing inflation. Inflation is heading in the right direction though it is still too high. Tourists are returning and overseas workers are arriving in large numbers to help business fill vacancies,” Grant Robertson said.
For the ten months to the end of April, the Operating Balance before Gains and Losses (OBEGAL) recorded a deficit of $7 billion. That was $1.3 billion higher than forecast at Budget 2023 and $2.4 billion lower than for the same period a year ago.
Core Crown tax revenue was $1.4 billion below forecast, as lower corporate profits more than offset a rise in the number of people in work. Core Crown expenses were $0.3 billion below forecast.
Net debt was slightly above forecast at 20.1 percent of GDP.
“The Government’s books are not immune to a cooling economy. The Government is playing its part to respond to this in a responsible and careful manner. The deficit is significantly smaller than it was at the same time a year ago and Budget 2023 is forecasting real government consumption to fall 5 percent by the beginning of 2025. Our debt levels are among the lowest in the world.
“This has required some tough trade-offs as we respond to economic conditions while continuing to protect and support Kiwis doing it tough and growing the economy for everyone to make it stronger and more resilience for the future without adding to inflation.
“A major factor in Government spending is continuing to support those communities and regions affected with the recovery and rebuild from the extreme weather events. The Treasury has estimated the cost of asset damage from the floods and Cyclone at between $9 billion and $14.5 billion, with half of that related to infrastructure owned by central or local government such as roads.
“Around $2 billion of additional support has been committed so far, including a $1 billion flood and cyclone recovery package as part of Budget 2023. Another $6 billion in initial funding has been committed for a National Resilience Plan to focus on building back better from the recent weather events.
“Last week, the Government announced it will enter into a funding arrangement with councils in cyclone and flood affected regions to support them to offer a voluntary buyout for owners of Category 3 designated properties. It will also co-fund work needed to protect Category 2 designated properties, which will help councils get the right solution in the right place and avoid significant financial hardship for property owners.
“Our careful and prudent financial management means we have the fiscal headroom to meet the impacts of Cyclone Gabrielle and the challenges ahead. Our debt levels at 20.1 percent of GDP are among the lowest in the OECD and well below the Government’s debt ceiling of 30 percent.
“We are continuing to strike a balance between supporting Kiwis in the here and now and investing in essential public services and a resilient infrastructure network while carefully managing our resources to ensure the long term sustainability of the economy,” Grant Robertson said.