Surplus shrinks and Crown debt rises

The previous Government's $4.1b surplus will shrink under the new Labour-led Government to $2.5b in 2018.

Core Crown debt is also forecast to rise under the new Government's projections and peak in 2020 at $69.4b or 21.9 percent of GDP.

The Government's also only given itself $6.6b of wriggle room over the next four years for new operational expenditure, meaning it has an average of $1.4b a year to cover unforeseen costs.

The previous National-led Government made the surplus a sign of its economic success following the global financial crisis, achieving one in 2015 after 6 years of deficit.

The wafer-thin surplus in 2015 grew to $4.1b in 2017, but the forecast shows that will drop to $2.5b next year and rise slightly to $2.8b in 2019. It will only hit $5b in 2020.

Over the next 4 years, the Government has allowed:

  • $21.7b of new operating allowance expenditure (the Government has already allocated $15.1b of it, leaving it with an allowance of $6.6b)

  • $12.6b of new capital expenditure (the Government has allocated $3.7b, leaving it with an allowance of $8.9b)

Part of that expenditure is the cost of re-starting contributions to the NZ Superannuation Fund. It will get $7.7b over the next 5 years.

KiwiBuild will cost $2b upfront, but it will see an extra $5.4b of investment into residential construction over the next 4 years, which is an increase of 10 percent.