The Government accounts today demonstrated the strength of the economic recovery from COVID-19 with expenses down, revenue up, and the forecast OBEGAL deficit nearly halved. Net debt was broadly as forecast, and expenditure on COVID-19 was less than anticipated. Without our COVID response, government spending overall was less than took place under the previous National government.
CTU Economist Craig Renney said “As expected, this was a much stronger set of accounts than had been predicted in May. The Government has a much stronger financial position heading into the end of the year. This bodes well for the next Budget, and for our continued financial recovery from COVID-19.
“The strength of the labour market is demonstrated through a fall in the expected spending on Jobseeker benefits, and an 11% increase in taxation from wages. This reflects the low levels of unemployment, and rising wages. Taxable profits rose 26.2% this year, showing that companies had another very successful year despite the COVID restrictions. Companies also received $9.6bn in COVID support during the last year.
“In a difficult economic environment, New Zealand has a strong financial position. Our debt levels are well below those of our international peers, and there and incoming revenue was positive. This should give the Government confidence that it can invest in long-term challenges, housing, poverty, and our $104bn infrastructure gap. It should ignore those who want to deliver tax cuts, and instead invest in the things that will make a difference for New Zealanders,” said Craig Renney.
