Govt books resilient amid challenging global times

The resilient economy and the Government’s responsible financial management means New Zealand is well positioned to respond to a difficult and challenging global environment.

For the three months to the end of September, the Operating Balance before Gains and Losses (OBEGAL) recorded a deficit of $2.6 billion, a little higher than forecast at Budget 2022 in May. Tax revenue was slightly below expectations, while expenses were slightly above forecast.

“The latest figures are broadly in line with forecasts. They show the resilience of the economy despite the global challenges New Zealand finds itself facing. More people are in paid work which helps to ease cost of living pressures, while the Government is there with them and supporting them with the recently announced childcare package along with the extended fuel tax cuts and half price public transport fares,” Grant Robertson said.

“We are however not immune to what happens overseas which will put pressure on the Government’s books. We will continue to responsibly manage our finances and that means tough choices will be required as we tread a pathway back to surplus.

Core Crown tax revenue was $133 million below forecast at $26.7 billion, due to lower-than-expected GST returns and lower Fuel Excise Duties and Road Users Charges, which were cut to support New Zealanders with cost of living pressures. That has more than offset the increase in people being in work.

Core Crown expenses were $243 million above forecast at $31.2 billion, due to higher interest costs and health expenses, including for charges for vaccines that occurred during this period.

Net debt stood at 19.8 percent of GDP, which was above forecast due to the impact of market conditions affecting the financial portfolio held by the New Zealand Super Fund and ACC derivatives. Using the old measure, Net core Crown debt is below forecast at 38.4 percent of GDP compared with projections of 39.8 percent of GDP.

“Our debt levels are among the lowest in the OECD and well below the Government’s debt ceiling of 30 percent, ensuring we are well positioned to weather further economic shocks,” Grant Robertson said

“Our successful economic plan and responsible fiscal management means New Zealand is in a strong starting position that allows us to focus on what matters to Kiwis – growing wages and cost of living pressures, investing in hospitals, schools, and housing and addressing climate change.

“Our economy is open and larger than before Covid, we produce what the world wants and our immigration reset is making a difference in attracting overseas workers to address workforce pressures. The summer is full of promise with the return of increasing numbers of tourists. However, the global environment is challenging and we will have to be careful and balanced in our response.

“We continue to prioritise our spending and target support to where it is needed most while keeping debt in check and making important investments in New Zealanders security and wellbeing. This is the right and responsible approach in these uncertain times,” Grant Robertson said.