Finance Minister Grant Robertson says the Government’s coffers are looking better than expected, with debts and deficits lower than predicted as New Zealand recovers from the Covid-19 pandemic, according to projections released by the Treasury today.
Robertson said Crown accounts for the first five months of the 2020/21 financial year were $1.9 billion smaller, or 30 per cent better than expected by the Treasury in December.
It comes as the Budget Policy Statement (BPS) was unveiled today, which sets out the overarching priorities of the Government’s budget in May and determines how much new money has been set aside for new spending.
Speaking at a BNZ breakfast event in Wellington this morning, Robertson said the Treasury’s new projections showed net debt would be at 36.5 per cent of GDP in the 2034/35 financial year.
In September’s Pre-election Economic and Fiscal Update (PREFU), net debt was expected to be 48 per cent, 11.5 percentage points higher than today’s expected figure.
This would mean the country would have $60 billion less debt by that financial year.
“My focus continues to be on getting the balance right — investing in public services while keeping a lid on that debt,” Robertson said.
“While these are only projections, they show the progress that we are making.”
Robertson said the budget allowance for the year hasn't changed from last year’s announcement. During the election, Labour said it would set aside $2.625 billion for its operating allowance in 2021 and for the next four years.
He said the Government’s objectives in the Budget would be to continue the Covid-19 response, delivering priority and time-sensitive Labour promises, supporting core public services and delivering on existing investments.
Labour would also continue on its “wellbeing objectives” as part of its “Wellbeing Budget” approach, he added.
These objectives were a just transition to a low-emissions economy while recovering from Covid-19, using technology to lift productivity and wages, lifting Māori and Pasifika incomes and skills, reducing child poverty and improving health outcomes for Kiwis.
Robertson also acknowledged the housing crisis. He said the Government, as it signalled in January, would begin to crack down on property speculators and tackle the demand for housing later this month.
“We all know building more houses, particularly affordable houses, is critical. But we also can do more to manage demand, particularly from those who are speculating.”
He said he wanted to incentivise investment in new builds and “tilt the balance more towards first home buyers”.
Proposals for the measures from both the Treasury and the Reserve Bank will be presented to Cabinet shortly, he said.
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