Crown accounts surplus, more pressure on spending booost

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.

No surplus?

Stephanie Rodgers claims that the surplus announced yesterday is not actually a surplus – because, she says, the Government should have spent more so there wouldn’t be a surplus.

There is no surplus

In Year Eight of this National government, the idea of a budget surplus is a joke (and not just because it’s been completely engineered by the catastrophic Auckland housing bubble). They’ve promised it for nearly a decade. They’ve fiddled the books to make the numbers come out OK. They even declared a surplus in the middle of the financial year – that’s how desperate Bill English has been to pretend that everything’s going along just fine in New Zealand.

That shows an alarming lack of understanding of how how a Government budget works, and why the surplus was announced now.

“Finance Minister Bill English has today presented the Crown accounts for the year to June”.

It’s normal to announce financial results a while after the end of the financial year, like about now.

The Government is required to announce crown accounts, even when the timing isn’t too Rodgers’ liking.

The truth is, there is no surplus.

This surplus isn’t a success for our government. It is a sign of their failure. It shows they do not understand what their job is: to look after the people of this country. To govern us – not bean-count.

There is no surplus – not if you care about people more than money.

So Rodgers doesn’t want a surplus because she wants more money spent, probably a lot more money than Crown revenue, which means a deficit. She would probably complain if a deficit was announced at this time of year too.

$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.”