The Government yesterday revealed that its finances were in good shape, with a $5.5 billion surplus and debt falling below the Finance Minister's 2022 target, four years early.
NewstalkZB said Finance Minister Grant Robertson stressed to journalists yesterday that it was important to be prepared for a “rainy day.”
Robertson reportedly said: “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 NZ economy.”
NewstalkZB said the Government books show the Coalition has a lot of headroom to deal with any potential economic shocks.
The $5.5 B surplus said that $2.4 B ahead of Budget forecasts.
Robertson said a number of factors contributed to the surplus being so far ahead of expectations.
Government spending was 1.4% below forecasts as of June 2018 because of “timing issues.” This was largely a result of things like lower than expected spending across the education sector and less than had been forecast being spent on the year-end family tax credit claims.
Treasury said there were also one-off factors such as “timing delays” with Government initiatives – such spending on the Provincial Growth Fund and social housing expenses – being pushed out to the 2018/19 year.
Robertson said these factors will “reverse out” over the next financial year.
He said the Government has met its Budget Reasonability Rules four years early. Self-imposed rules had stated the Coalition Government would keep debt at below 20% of GDP and to keep spending below 30% of GDP by 2022.
NewstalkZB said Treasury's numbers show debt is 19.9% and spending was 27.9%. This is $300 million and $6 B below the limits, respectively.
However, the Finance Minister said the 20% and 30% limits were not targets, and he expects the level of debt to fluctuate over the coming years.
He said corporate tax revenue was up, due to profits for both large and small businesses being higher than Treasury had forecast in Budget 2018.