Honeyed words about the govt’s finances flow from the Beehive – but there’s a souring when Nats’ nibble at the same numbers
From a Beehive perspective, the government’s books are in good shape, even though the Operating Balance before Gains and Losses (OBEGAL) recorded a deficit of $6.5 billion for the 11 months to the end of May. That was $2.1 billion higher than forecast at Budget 2023 but (look on the bright side, folk) $1 billion lower than for the same period a year ago.
Those and other figures in the last set of government financial statements are cheering for Finance Minister Grant Robertson. He says the resilience of the New Zealand economy, including through strong employment data and low levels of government debt, is supporting Kiwis as the moderation in economic activity is being reflected in the Government’s books.
Commenting on the same set of figures in Treasury’s Interim Financial Statements of the Government of New Zealand for the eleven months ended 31 May 2023, National finance spokesperson Nicola Willis has released a statement less generously headed: Labour blows the books.
Commenting on the same set of figures in Treasury’s Interim Financial Statements of the Government of New Zealand for the eleven months ended 31 May 2023, National finance spokesperson Nicola Willis has released a statement less generously headed: Labour blows the books.
Obviously, when there is a deficit, the government must be borrowing.
Point of Order accordingly asks:
- Who today will benefit from the government’s spending of borrowed money?
- First – it is spending on tourism planning.
Tourism Minister Peeni Henare says this will fund a new team which will work with regions across the country as they implement their own destination management plans – taking into account each region’s unique attractions, while ensuring they collaborate at a national level.
In other words, it will subject the regional planners to the government’s central planners.
Regions are already developing their plans across the country, thanks to $11.5 million in funding from the Government’s COVID-19 $47 million relief package for Regional Tourism Organisations.
Henare said:
“The additional funding from the international visitor levy will put a team in place that is responsible for progressing destination management activity nationally, working closely with tourism organisations and business, government, and communities across Aotearoa to improve the visitor experience.
“The team will bring a national perspective to regional tourism issues, identifying and progressing actions that will bring the greatest collective benefit, and helping to coordinate regional activity on national tourism priorities such as the Industry Transformation Plans.”
- Second, it is pumping money into Māori and Pacific health services.
- Kahu Taurima is allocating an initial $7 million for the purchase of 20 new paediatric retinal cameras (to improve access to Neonatal Retinal Screening for premature babies, and to protect young eyes).
- More than $74 million will be invested over the next two years as Kahu Taurima continues to progress. This funding will enable 40 hauora Māori partners and five Pacific partners to put families at the centre of their maternity and early-years health services.
- Latest from the Beehive
New paediatric equipment for hospitals, and services for community-based Māori and Pacific providers, are the first steps in transforming health services for the youngest New Zealanders, Associ
The Government is ensuring our regions are prepared to maximise the opportunities and manage any negative impacts as tourists flock back to Aotearoa New Zealand.
The resilience of the New Zealand economy, including through strong employment data and low levels of government debt, is supporting Kiwis as the moderation in economic activity is being reflected in the Government’s books.
In his statement on the state of the government’s books, Grant Robertson said:
“This year is a difficult one for the global economy, marked by slowing growth and prolonged high inflation. New Zealand is not immune to those forces while the North Island weather events have also taken their toll on affected communities, which will flow through to the Government’s books,” Grant Robertson said.
“New Zealand is well placed as we face these challenges, with people in work in record numbers, wages are growing, inflation pressures are easing, tourists and international students are returning and overseas workers are helping business fill vacancies.”
The figures which Robertson featured include:
- Core Crown tax revenue was $2.2 billion below forecast, mainly due to lower corporate profits and investment returns. Core Crown expenses were $249 million below forecast.
- Net debt was slightly above forecast at 18.9 percent of GDP.
The Government had already taken steps to respond to the uncertain economic environment by “carefully and responsibly managing its spending”, he said.
The deficit is smaller than it was at the same time a year ago.
Budget 2023 is forecasting real government consumption to fall 5 per cent by the beginning of 2025. Our debt levels are among the lowest in the world.
But the government’s focus remains on protecting and supporting Kiwis dealing with the rising costs of living, “providing strong public services and sustainably growing the economy without unnecessarily adding to inflation”.
Robertson drew attention to |some positive signs.
Unemployment remains at historic lows, and levels of employment are high. The most recent data shows 2.37 million jobs, with an increase in the most recent month of May of over 5,400. Inflation appears to have peaked, and business confidence, particularly in their own activity, is starting to improve.
The North Island weather events will have a sizeable impact on the Government’s finances this financial year and in coming years’ as it supports the communities and regions affected with the recovery and rebuild.
The Treasury has estimated the costs of asset damage from the floods and Cyclone at between $9 billion and $14.5 billion, with half of that related to central or local government such as roads.
Some $2 billion of additional support has been committed so far, including a $1 billion flood and cyclone recovery package as part of Budget 2023. Another $6 billion in initial funding has been committed for a National Resilience Plan to focus on building back better from the recent weather events.
The Government is supporting growers, farmers and businesses affected by the North Island weather events by underwriting bank lending and offering cheaper finance options and ensure the long term survival of critical regional industries, Robertson said.
Discussions are continuing on cost-sharing arrangements with councils on buying out high risk properties due to the extreme weather events while the Government will also co-fund work needed to protect Category 2 designated properties.
“Our responsible financial management means we have the fiscal headroom to meet the impacts of extreme weather events and future challenges. Our debt levels at 18.9 percent of GDP are among the lowest in the OECD and well below the Government’s debt ceiling of 30 percent.
“We are striking a balance between supporting New Zealanders in the here and now and investing in strong public services and a resilient infrastructure network while carefully managing our resources to ensure the long term sustainability of the economy,” Grant Robertson said.
National’s Nicola Willis (we are not surprised) challenged Robertson’s analysis and said “Treasury’s figures show
“… that the Government has underestimated how badly the economy is tanking – and now the books have blown out.”
She noted that government debt had soared by an additional $5 billion, and the books had been plunged further into the red, with a deficit that is $2 billion larger than forecast.
Moreover, the $2 billion shortfall in company tax revenue “is an indictment on the Government’s economic management”.
Businesses were drowning under a tidal wave of new costs and worsening inflation, “and these are weighing the economy down”.
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
1 comment:
Only the 'controllers' of this corporate government would think that New Zealand's books are in good shape, as that's the plan. Massive unpayable debt, death and destruction.
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