The end of year audited Crown accounts released today show the Government’s health led approach to the COVID-19 pandemic has protected New Zealand’s economy.
“On almost every indicator the accounts show that the New Zealand economy has performed better than forecast, even as recently as the Budget in May. It shows a strong rebound from the first lockdown in 2020, and bodes well for emerging from the current outbreak,” Grant Robertson said.
As expected, the Crown accounts for the year to June 2021 show the operating balance before gains and losses, or OBEGAL, was in deficit, to the tune of $4.6 billion. That result was $10.6 billion better than the Treasury forecast in Budget 2021, largely owing to the economy’s growth continuing to exceed Treasury forecasts.
Core Crown tax revenue was $12.9 billion higher than last year and $6.4 billion higher than forecast in the Budget coming in at $98 billion. With the country being in lower Alert Levels for most of the year, economic conditions were better than forecast. A strong labour market and consumer confidence have driven the increase in tax revenue. This included increases in company tax, GST and source deductions (PAYE).
Net core Crown debt was 30 percent of GDP at the end of June, below the 34 percent forecast in the May Budget.
“The decisions we made during last year’s COVID outbreak with economic support and health measures meant the economy bounced back better than almost anyone predicted. That strength has given us the fiscal headroom to support businesses and households when the Delta outbreak struck.
“As all countries around the world have done, we have had to take on some debt to support businesses and workers through this COVID-19 pandemic – any responsible Government would have done the same thing.
“However the level of debt remains lower than expected and far lower than most of our international counterparts. The average for advanced economies is above 90 percent net debt. In addition the cost of servicing that debt also remains very low by historical standards,” Grant Robertson said.
“We will continue to take a balanced approach, investing heavily to support wellbeing, our transition to being a low carbon economy and to improve productivity, while carefully managing our resources with an eye to the long term sustainability of the economy.”
The Budget Policy Statement and Half-Year Economic and Fiscal Update will be released on Wednesday 15 December.