$1.8b surplus announced

The Crown accounts for the year to June were presented yesterday, with the big news being a bigger than expected surplus.

Media release:


Government surplus increases to $1.8 billion

Finance Minister Bill English has today presented the Crown accounts for the year to June, showing a surplus of $1.8 billion in 2015/16, up from $414 million in 2014/15.

The Crown accounts show core Crown expenses are under 30 per cent of GDP for the first time since 2006, net debt has stabilised to 24.6 per cent of GDP and net worth has grown to $89.4 billion in 2015/16.

Mr English says the $1.8 billion operating balance before gains and losses (OBEGAL) in 2015/16 – which compared to a forecast of $176 million in Budget 2015 – is a significant turnaround on the $18.4 billion deficit in 2011 following the Global Financial Crisis and Canterbury earthquakes.

“Government surpluses are rising and debt is falling as a percentage of GDP which puts us in a position to be able to make some real choices for New Zealanders,” Mr English says.

“The New Zealand economy has made significant progress over the past eight years. This delivers more jobs and higher incomes for New Zealanders, and also drives a greater tax take to help the Government’s books.”

Core Crown tax revenue was $1.6 billion higher than forecast in Budget 2015.

“We’ve also been getting on top of our spending, exercising fiscal restraint while still investing responsibly in our growing economy and public services.

Core Crown expenses were $73.9 billion in 2015/16, below the forecast of $74.5 billion at the beginning of the year.

“We’ve focussed on results and are starting to address the drivers of dysfunction by investing in better public services. We remain committed to maintaining rising operating surpluses and reducing net debt to around 20 per cent of GDP in 2020.

“If there is any further fiscal headroom, we may have the opportunity to reduce debt faster and as we’ve always said, if economic and fiscal conditions allow, we will begin to reduce income taxes.

“The outlook for the economy is positive, the Government’s books are in good shape and we are addressing our toughest social problems. However, we also need to bear in mind that there are a lot of risks globally and that is why it is important to get our debt levels down.

“Budget 2017 will make positive long-term choices to strengthen the economy and our communities.”

Leave a comment

18 Comments

  1. Conspiratoor

     /  14th October 2016

    Two words. Immigration and tourism, both simple enough to deliver without any effort or thought to the implications. We should be asking ourselves what is the flip side of the ledger. Who is going to pay for the social and infrastructure consequences

    Reply
    • Gezza

       /  14th October 2016

      I’m a bit short on the the readies. Would you mind doing it c?

      Reply
      • Conspiratoor

         /  14th October 2016

        From what I understand of your lifestyle G, you are a simple soul who leaves a zero footprint on the planet. You and yours will be long gone before the next generation are forced to confront the consequences of this madness, when we will be nothing more than an asian suburb. So please continue as you are, spreading goodwill and harmony throughout the blogosphere. Now I must away and pay the man. Cheers,c

        Reply
        • Gezza

           /  14th October 2016

          Good point. They’ve got to go. Who else have we got? You thinking Winston or Andy?

          Reply
          • Conspiratoor

             /  15th October 2016

            I’m thinking a hybrid G. andy’s social conscience with winstons appeal to the common man with jks ability to play golf like a pro

            Reply
    • Gezza

       /  14th October 2016

      This announcement by English gives the impression the government is paying off debt. But in answer to a question in the House from Grant Robertson earlier this week re how much debt has the government paid off so far Bill English said none. What the heck? Is he getting financial advice from Trump?

      Reply
      • Now there’s a surplus paying off debt is one of a number of options.

        English is playing a bit with “debt is falling as a percentage of GDP”, and “we may have the opportunity to reduce debt faster” could be interpreted in different ways, like ‘a bit faster than it could otherwise have been paid off’. He’s been a politician for a long time.

        Reply
        • Bill

           /  14th October 2016

          How is it a surplus when we have so many sectors under funded and under resourced. Housing NZ, Medsafe and the Police to name a few.

          Reply
          • Gezza

             /  14th October 2016

            ““We’ve also been getting on top of our spending, exercising fiscal restraint while still investing responsibly in our growing economy and public services.”

            I suspect the clue is in that code phrase “exercising fiscal restraint” (= underfunding).

            Reply
            • PDB

               /  14th October 2016

              Not necessarily – more funding in most sectors doesn’t automatically mean better results – it’s how you use that funding.

  2. Jeeves

     /  14th October 2016

    Two more words: National Debt

    Reply
  3. Jeeves

     /  14th October 2016

    $ One $ Hundred $ & $ Fifteen $ Billion $

    and they trot out this “surplus” like they had a great day at the races but they’ve pawned our children’s futures to do it.

    Reply
    • PDB

       /  14th October 2016

      As far as I’m aware New Zealand is way down the world rankings in terms of govt debt – considering we had a major earthquake on top of the GFC that’s pretty good going.

      The fact we are in surplus means we have the ability to improve our position whilst most countries are not.

      Reply
      • I believe Jeeves is referring to the debt of both the public and private sector, i.e. http://www.nationaldebtclocks.org/debtclock/newzealand. Need to look at whether the government is simply shifting the burden of the provision of public services and infrastructure not only over to the private sector but onto future generations as mentioned already.
        Obviously, the government running a surplus is contractionary in that they’re sucking money out of the economy but the reserve bank and the banks are more than making up for that with credit creation channelled through housing.
        Anyone, know much about the impact the country’s credit rating has on the banks ability to borrow since they’re mostly overseas banks anyway?

        Reply
      • PDB – how much of the earthquake costs were covered by the national earthquake insurance fund vs the present government?

        Reply
  4. Its an operating surplus not a cash surplus…. The soon we have a cash surplus the better then debt can be paid off. The debt incurred to keep all those love services everyone is so addicted to running like WFF…..

    Where is the BoL?? He uis a financial genius, maybe he can explain it all…./sarc

    Or is he here with a different nom de guerre

    Reply
  5. patupaiarehe

     /  14th October 2016

    A surplus is great news, but I am wondering how likely a surplus is in 2025, when no-one smokes anymore, and the excise tax take is well over a billion less….

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s