From the Beehive (Minister of Finance Grant Robertson): Govt accounts in surplus, debt remains low

The Government’s books are in good shape with the accounts in surplus and expenses close to forecast, Finance Minister Grant Robertson says.

The Treasury today released the Crown accounts for the five months to November.

The operating balance before gains and losses (OBEGAL) was above forecast by $0.7 billion resulting in a surplus of $100 million.

The variance is due to lower than forecast Core Crown expenses and higher than forecast revenue.

“While the month by month results do tend to fluctuate due to tax timing changes, it is pleasing to see this positive result,” Grant Robertson says.

“The surplus and low levels of debt show the fundamentals of the New Zealand economy remain strong.”

Net debt remains low at 20.1% of GDP, while expenses were within 0.6% of forecast.

Net investments gains of $3.6 billion were $1.3 billion above forecast, largely because of favourable changes in market prices.

“Our careful fiscal management has resulted in low government debt, which alongside record low borrowing costs has given us room to invest an extra $12 billion to future-proof New Zealand,” Grant Robertson says.

“This package of infrastructure projects will provide further support to boost the New Zealand economy in the face of slowing international growth and global headwinds.

“It will also give certainty to the construction industry about upcoming infrastructure projects and will create more opportunities for Kiwis.

“We’ll be announcing the specific projects in the near future,” Grant Robertson says.

I think we can expect some election year spending announcements on top of the proposed large spend on more infrastructure.

It will be interesting to see if they adjust the personal tax rates – part of the reason for rising revenue is tax bracket creep.

Grant Robertson has been a relatively low profile and uncontroversial finance minister, with most criticism coming from the left who want a lot more Government spending.

Like: Borrow, build, hold says Green co-leader

Government should hold onto the houses it has pledged to put out on the open market, Greens co-leader Marama Davidson says.

The Government taking on more debt for public housing would open up more opportunities than fully funding existing programmes like the Auckland Housing programme.

Davidson said a reluctance to ditch the Budget Responsibility Rules and take on debt is the reason those houses aren’t being provided to low-income tenants as part of a mixed tenure development scheme.

“We’ve got low borrowing rates, we’ve got expensive land, the Crown can borrow money. It can hold onto more of the houses it is building right now.”

Stuff:  Green Party scrap Budget Responsibility Rules

The Green Party is ditching its commitment to the restrictive Budget Responsibility Rules, which set targets for lowering government debt and spending.

The Greens first signed up to the rules ahead of the 2017 election while teaming up with Labour.

Labour retained a commitment to the rules, while signalling it wanted to somewhat loosen them next term.

So they may not move much on this until after this year’s election, if Labour and Greens get back into government, and NZ First don’t demand most of the extra spending.