Finance Minister Bill English 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.” . .
Eight years ago, outgoing Finance Minister Michael Cullen was forecasting a decade of deficits and that was before the GFC and earthquakes.
This turn around is the result of careful spending with the focus on its quality rather than quantity; and policies which promote growth.
That the surplus was achieved in a year when one of the country’s biggest export earners, dairying, was in the doldrums and the sheep industry was only marginally better makes it even more of an achievement.