Government announces strong surplus

The Government has announced a surplus nearly twice what was in the Treasury’s Budge 2018 surplus – this is good news for spending plans or debt reduction, but may also increase demands from state servants seeking large pay rises.

This gives the Government an opportunity to make some bold moves on things like child poverty, prisoner rehabilitation to reduce prison numbers, reducing violence, addressing drug abuse and related problems, and climate change.


Government books show surplus, falling net debt

A strong surplus and falling net debt reflect a growing economy and show the Coalition Government is managing the books responsibly, Finance Minister Grant Robertson says.

The Crown financial statements for the year to 30 June 2018 are the first official check in on the Government’s commitment to run surpluses, pay down net debt and keep expenses under control.

“It’s important we run surpluses and pay down debt to make sure we are in a good position to deal with any rainy day. Economists have been warning about growing risks in the international economy, particularly due to rising trade protectionism, which we need to be well-placed to face in case this flows through to the New Zealand economy,” Grant Robertson said.

“The headline results today are ahead of the Treasury’s forecasts in Budget 2018. This was largely due to timing issues with Crown expenses, which will reverse out as that planned spending occurs early in the 2018/19 year. This means Budget 2018 spending and investment plans are on track.

“The books show we are meeting the Budget Responsibility Rules. A headline $5.5 billion surplus operating balance before gains and losses (OBEGAL) is $2.4 billion above the Treasury’s Budget 2018 forecast.

“A number of factors contributed to this result being ahead of Budget 2018 expectations. A number of one-offs led to core Crown expenses coming in 1.4 percent below forecast at 30 June 2018. The Treasury says that this was largely due to timing issues, meaning much of this variance is set to reverse out in the 2018/19 accounts. Core Crown expenses were stable at 27.9 percent of GDP.

“A strong economy contributed to core Crown tax revenue coming in 0.9 percent higher than expected in the year to 30 June 2018. Corporate tax revenue was up, due to profits for both large and small businesses being higher than the Treasury had forecast at Budget 2018. This result indicates the strength of the growing economy.

“This underlying strength of New Zealand businesses saw the number of people in employment rise by 3.7 percent over the year, while average wages rose 3 percent. These numbers show that our economic fundamentals are strong.

“The financial statements also indicate the Coalition Government’s commitment to making the important infrastructure investments New Zealand needs to unlock the growth potential of our cities and regions. At the same time, we are making up for neglected investment in critical public services in recent years.

“Net capital investment of $5.9 billion in the year was the highest since 2009 and an increase of $2.2 billion from the previous year. This included investments in hospitals, schools and state highways, while also reflecting the Coalition Government’s move to resume contributions to the NZ Super Fund.

“We are committed to a balanced approach by adopting a responsible debt reduction track. At 30 June 2018, net core Crown debt was 19.9 percent of GDP, compared to the 20.8 percent forecast in Budget 2018.

“We remain committed to the Budget Responsibility Rule that net debt will be 20 percent of GDP in 2021/22. This gives us the space required to make the critical infrastructure investments that New Zealand needs, while still building a buffer,” Grant Robertson said.

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36 Comments

  1. PDB

     /  October 9, 2018

    No one can argue that they have inherited a strong economy from the National govt with money there to spend on pay rises for state servants IF they choose to do so by prioritising their spending.

    From now on the economy is all on the Col. govt’s head to either continue to do well or not.

    Reply
    • Blazer

       /  October 9, 2018

      Nearly 12 months in…this Govt inherited a huge debt from the previous administration which inflicted serious long term damage on hapless Kiwis.

      No doubt the faithful will trot out the usual duo..the GFC caused by ‘investment bankers’ and the Christchurch earthquakes.

      You would think Key put on his carpenters apron and went down and rebuilt Christchurch…himself.

      Great news for the Col…we could be on the…cusp of..something special!

      Reply
      • PDB

         /  October 9, 2018

        Blazer’s nonsense: “this Govt inherited a huge debt from the previous administration which inflicted serious long term damage on hapless Kiwis.”

        The reality;

        Grant Robertson – Stuff (Feb 2018): “”The low level of public debt is a really important part of it,” Robertson told Guyon Espiner. We are “a country that always has to be aware of external shocks” and that this is “…why we keep our public debt lower than a lot of other countries”.

        “The fundamentals of our economy are strong” he says.

        Reply
    • robertguyton

       /  October 9, 2018

      Can’t bring yourself to give credit to the Labour/Green/NZ1st Government can you, PDB. You must be annoyed though, that you can’t say, I told you so! I TOLD you the economy would crash under this mob’s rule!!! . In fact, the opposite to what you hoped has happened; “this mob” is doing a damn fine job! Suck it up!

      Reply
      • PDB

         /  October 9, 2018

        You are being silly again Robert – this govt were lucky if they got their heads around their portfolios by early this year – this is for the period 1st July 2017 – end June 2018.

        Judge them from now on as it is all theirs this point onwards.

        Reply
  2. Blazer

     /  October 9, 2018

    Grant Robertson has surprised many commentators as have others in the Col cabinet.

    A safe pair of hands on the tiller.
    Rejoice ,at last we have a competent Govt that doesn’t just ..’borrow and hope’! 😉

    Reply
    • PDB

       /  October 9, 2018

      ‘Spend and hope’ seems to be the mantra of the Col. govt – the National govt training wheels they were relying on come off from this point onwards.

      Reply
      • Blazer

         /  October 9, 2018

        National Govt=training wheels…very ..good.

        Reply
        • PDB

           /  October 9, 2018

          Lets hope that without them Robertson doesn’t get the wobbles and….fall over.

          Reply
          • Blazer

             /  October 9, 2018

            so National had the training wheels on for 9 years…you know it makes…sense.

            Reply
          • Gezza

             /  October 9, 2018

            This is very awkward for you PDB. The fiscal apocalypse has not yet occurred. Fortunately I can just sit back and watch what’s happening with mild annoyance knowing I’d have been no better off under National.

            Reply
            • PDB

               /  October 9, 2018

              See my reply to Robert above Gezza – hardly a surplus created by the Col govt, more likely in spite of them. Time now on is theirs to do something with the economy (or not).

            • Gezza

               /  October 9, 2018

              Yeah I read that PFB. Teachers union will be onto them like wolves now, to kick the game off. But at the moment there’s no need to panic.

            • Gezza

               /  October 9, 2018

              *PDB soz. Typing in the semi-dark.

            • PDB

               /  October 9, 2018

              The issue of course is if they give in and overpay the public servants and the money begins to dry up the country is left with massive ongoing costs to cover. Fuel costs have yet to filter down onto goods and services and the like, the falling dollar will make imports more costly. Next year will be interesting.

            • Gezza

               /  October 9, 2018

              Next year will be interesting.
              Every year is, PDB. 2017 was.

            • PDB

               /  October 9, 2018

              Most years haven’t been really interesting since the 1990s – the 1960’s, 70’s, 80s and 90’s each had a distinct flavour/style/feeling, nowadays decades are as bland as the type of house people live in and the colour car they chose to drive.

            • Gezza

               /  October 9, 2018

              2017 was certainly interesting all over the planet. Storms. Trump. Brexit. Far right on rise. Assad taking control/ ISIS sent underground. Fake News explosion. Change of government here. It’s always interesting.

            • PDB

               /  October 9, 2018

              Politically I agree – I suppose I was being a bit more general in terms of overall interest & colour. The 2000’s to me hardly had any identity compared to the decades before it.

  3. duperez

     /  October 9, 2018

    None of the conditions that exist are down to what happened in the previous 9 years of Government. That mantra has been ringing loud since last October.

    But today, suddenly, guess what any seeming good news is down to?

    Reply
    • PDB

       /  October 9, 2018

      What ‘conditions’? The last govt handed over an economy with growing surpluses – it’s up to the current govt to spend that money where most needed. In many cases they haven’t done so. If the Col. govt thinks the public service needs major pay increases the money was/is there to do so – no one forced Labour to hand billions of $ to Winston to fritter away or first year students, or even a winter home heating subsidy for Bob Jones.

      Reply
      • robertguyton

         /  October 9, 2018

        So it’s okay to refer to the previous Government and not be accused of whaddaboutism??
        Sweet!

        Reply
        • PDB

           /  October 9, 2018

          Your comment makes no sense (as usual). Whataboutism is avoiding answering a question by saying ‘what about..’ someone else that did the same or similar.

          Reply
          • robertguyton

             /  October 9, 2018

            If my comment made no sense, how did you make sense enough of it to reply?

            Reply
            • PDB

               /  October 9, 2018

              I replied simply to explain to you what whataboutism actually is, your comment itself still makes no sense in relation to this conversation.

            • robertguyton

               /  October 9, 2018

              It must have made some sense. You said it make no sense. I’ll give you an example of a statement that makes no sense: “Simon Bridges was voted Leader of the National Party by his peers”.

  4. Greens Co-Leader James Shaw calls on Government to spend its $5.5b surplus

    Green Party Co-Leader James Shaw is calling on the Government to use the money from its “extremely healthy” books to invest in New Zealand’s public sector.

    “What good is a surplus if you have people living in cars or garages – that makes no sense,” he told the Herald.

    “Frankly, a surplus is inefficient if you don’t use it.”

    Shaw said the Government should be using that money to invest in New Zealand’s “massive infrastructure deficit”.

    “New Zealand’s debt levels are well within what the international markets would deem to be prudent, interest rates are historically low and we have a massive infrastructure deficit; to me, that just all points in the direction of using that surplus for infrastructure investment in particular.”

    That investment, he said, should come from both the surplus and the 2.1 per cent headroom the Government has before it reaches its 30 per cent spending limit – a combined total of $11.5 billion.

    https://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=12139642

    Reply
    • PDB

       /  October 9, 2018

      Perfect time to pay down debt for ‘a rainy day’ not spend it all.

      Doesn’t even enter their minds to give tax relief – especially when people are overtaxed due to tax bracket creep that this govt has continued to ignore.

      Reply
      • robertguyton

         /  October 9, 2018

        Why the Government isn’t paying you to advise them on these issues of which your knowledge is superior to anyone else, PDB, astonishes me!

        Reply
        • PDB

           /  October 9, 2018

          Unlike Griff I’ve never said that & don’t believe that, but funny enough a blog like this is for expressing an opinion which I do.

          No doubt your mind-reading skills need work though.

          Reply
          • robertguyton

             /  October 9, 2018

            The topic of Pete’s post, the Government’s announcement of a strong surplus , has sent you into a frantic scramble, PDB. When the next confirmation of the Labour/Green/NZ1st Government’s suitability for leading the country is posted, I expect you’ll be twice as frothy! Can the rest of us bear that? Probably be tomorrow! You’ll be wrung out by the end of the week!

            Reply
  5. Kitty Catkin

     /  October 9, 2018

    How unprofessional to have a baby screaming and squealing all through an important announcement like this and having the PM interrupting herself as she keeps saying Hush, bubba, and explains why the baby is making such a noise.

    Why was the baby there in the first place?

    No other PM would do this, surely. Where’s the father who’s supposed to take care of the baby?

    Reply
    • Pink David

       /  October 10, 2018

      “Why was the baby there in the first place?”

      Because she finds it a useful tool.

      Reply
      • Kitty Catkin

         /  October 10, 2018

        Cynic.

        It really is not appropriate to have a screaming baby there when an important announcement is being made. It looks as if the country’s financial wellbeing takes second place. It’s totally unprofessional.

        Reply
  6. PartisanZ

     /  October 9, 2018

    Isn’t this good news … whoever is responsible for it?

    I actually do agree that free 3rd year tertiary makes better sense than free 1st year …

    I agree that a winter heating subsidy should be means tested …

    But I am SO GLAD this surplus won’t be going towards a four lane motorway from Wellsford to Whangarei that I can forgive Labour-led almost anything!

    Reply
  1. Grant Robertson rejects ‘spending spree’ | Your NZ

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