Government books show one-of f boost


There is a one-off boost of just over $2 billion in the government coffers as New Zealand heads towards a general election.
However, that growth is not likely to be sustained in coming years.
The Government has opened the books in the pre-election fiscal update, so all parties can see its finances.
In this update, the operating surplus for the 2017 financial year is
$3.7 billion compared with the
$1.6 billion forecast in the May budget.
The forecast surplus growth tails off after that and, from 2019 to 2021, is expected to be lower than the estimates in May.
In the budget, the surplus was predicted to be $4.1b in 2019, but in the latest update that drops to $3.5b.
However, there is still a $6.4b surplus predicted for 2021.
Finance Minister Steven Joyce said these numbers did not leave a lot of room for further tax cuts or other measures to boost family incomes. If National was re-elected, he has signalled another “families package” in 2020 and that could happen sooner if there was a significant improvement in economic conditions.
Mr Joyce said a National government would not borrow to fund a second families package, and that would be a condition of any future policy.
Treasury Secretary Gabriel Makhlouf said the boosted surplus in 2017 was partly due to much higher than expected tax revenues, which were not expected to continue.
The economy continues to grow at a steady rate, at an estimated 2.8% in 2017 slighter lower than forecast in May.
It is expected to pick up to 3.7% in 2019 before dropping back to 2.3% two years later.
That has been driven by continued strong population growth and improved global economic conditions. Treasury said, while house prices have eased a bit, investment in the housing market was expected to stay strong, but maybe not growing at such a fast pace.
There has been an improvement in expected debt levels in the next four years, with net core Crown debt expected to come down a lot more quickly than budget forecasts, dropping below 20% of GDP by 2021.
Opening the books give all parties a fresh opportunity to study government coffers and includes overall economic forecasts and analyses of policy decisions.
The previous financial statements showed the surplus was $1.5b ahead of expectations, due to surging tax revenue and tight control over spending.
A pre-election opening of the books helps parties and voters make decisions on what New Zealand can afford and the likely policy costs for an incoming government. NZN

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