Govt books in solid shape as extreme weather costs start to roll in

The Government’s balanced and disciplined financial management has left New Zealand well placed to focus on supporting Kiwis dealing with cost of living pressures and the recovery and rebuild of Cyclone Gabrielle.

“As I’ve previously said, 2023 is going to be a difficult and testing year. We are well placed to respond as New Zealand navigates a pathway through cost of living pressures, the impact of recent extreme weather and an uncertain global environment. Unemployment is low, exports are growing, tourists are returning and the Government’s books are in solid shape,” Grant Robertson said.

The monthly statements show that core Crown tax revenue is $1 billion below forecast. This is partially offset by core Crown expenses being below forecast by $0.8 billion. Overall the Operating Balance before Gains and Losses (OBEGAL) recorded a deficit of $3.2 billion, $594 million higher than forecast at December’s Half Year Economic and Fiscal Update and $5.1 billion lower than for the same period a year ago.

Net debt was 18.9 percent of GDP, below the forecast of 20 percent of GDP.

“The cost of living is a top priority for the Government and we are taking action to help ease some of the pressures that families are under. Fuel tax cuts and half priced public transport have already been extended until June. On 1 April, we significantly lifted the incomes of seniors, students, beneficiaries and those on Working for Families, benefiting 1.4 million people. At the same time, our childcare package has made it cheaper for more families. We have also indicated that the cost of living will be a major focus in May’s Budget.

“This result includes some of the impact of the recent extreme weather. The full cost of the flooding and cyclone will be sizeable and will require significant resources. Those extra costs will be outside of our control but we are committed to supporting those affected through the recovery and rebuild.

“Our disciplined financial management means we have the fiscal headroom to meet the impacts of Cyclone Gabrielle and future economic shocks. Our debt levels at 18.9 percent of GDP are among the lowest in the OECD and well below the Government’s debt ceiling of 30 percent.

“We know however that the Government’s books will be affected in the months and years ahead as more information becomes available about the impact of the storms and our approach may need to change in response.

“We are continuing to strike a balance to support Kiwis through these challenging times and invest in strong public services and a resilient infrastructure network while carefully managing our resources to ensure the long term sustainability of the economy,“ Grant Robertson said.