Crown accounts for the Government show a $343 million deficit in the first three months of the 2019 Financial Year, which was broadly in line with the May Budget forecasts and on track to end with a surplus of $3.7 billion for the full year.
They also show the Government’s debt rose to 20.9 percent of GDP from 19.9 percent in June 2018, but is below the Budget forecast of 21.7 percent.
A small deficit in the first quarter had been forecast in the last Budget. Deficits are normal at the start of a financial year, as tax revenue increases as the year progresses while expenses are paced more evenly through the year.
The last financial year also began with a deficit of $90 million, according to Treasury’s statement. The previous government took credit for reducing the deficit from a forecast $343 million in that quarter.
Finance Minister Grant Robertson said he had been advised the early deficit would reverse out into a surplus as the year progressed.
Government expenses were 1 percent below their forecast.
National’s Regional Development Spokesperson Paul Goldsmith called for tax cuts.
“The amount of taxes pouring into the Government’s coffers suggest it is making too big a raid on the wallets of ordinary New Zealanders while driving up the cost of living. It should be considering tax relief rather than additional taxes and levies,” he said.
The continued strength in the Government’s books could give rise to calls for more borrowing. New Zealand tends to focus on the Government’s net debt to GDP ratio, instead of the more internationally common gross measurement.
New Zealand’s gross debt is just 30.7 percent of GDP, remarkably low by international standards.
The Economist this week lauded Australia’s “remarkable” public bookkeeping, noting it has “one of the lowest [debt] levels in the rich world”. But Australia’s gross debt is 41 percent of GDP, a full third above New Zealand’s.
But Robertson’s statement on the release of the accounts showed no loosening of the debt track in sight.
“We are running sustainable annual surpluses, keeping expenses under control and managing net debt carefully,” Robertson said.
“At the same time, we are making record investments in infrastructure and public services like health, education and housing. This is a careful balance between making the important investments New Zealand needs while making sure we’re not burdening future generations.”