Treasury has opened the Government's books, revealing just how much money is on the table for big-spend promises this election.
The surplus is bigger than predicted, but it's just a blip, and future surpluses are expected to slide to lower than forecast.
Labour's been waiting until the fiscal update to provide more details on its tax policy. On Wednesday afternoon, Opposition leader Jacinda Ardern said the party rules out increasing income tax.
The fiscal update at a glance:
- $3.7b surplus for the 2016/17 financial year - $2.1b higher than expected
- Tax revenue is $1b higher than expected
- Net core Crown debt $2b lower than the forecast
- By 2019, surplus predicted to be $500m lower than expected
- By 2021, surplus expected to be $800m lower than forecast
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3.18pm Ardern rules out raising taxes - including top rate
If Labour leads the next government, Jacinda Ardern will not be raising taxes.
"We are not campaigning on an increase in taxes for personal income, and it is not part of our plan," she told media on Wednesday.
Ms Ardern has completely ruled out raising even the top tax rate on income over $150,000.
"That's not going to happen. We will not be campaigning on the top tax rate, and I've no intention of giving that to the tax working group."
2.17pm: Public Service Association slams 'artificial' Govt surplus
The Public Service Association has set up 100 life-sized cut-outs of "missing health workers" outside a Wellington primary school.
The PSA says each cut out represents 300 missing health workers. It says the health sector is underfunded to the tune of $2.3b.
"The Government is robbing nurse Peta to pay surplus Paul," National Secretary Erin Polaczuk said.
"The artificial surplus has been created by underfunding health and mental health services, education and public services."
1.40pm: Teachers say surplus shows mispending
NZEI President Lynda Stuart claims the larger than expected surplus is possible "because of the chronic underfunding of the education of New Zealand's children."
“This surplus has come at the expense of public services. This Government is telling New Zealanders that roads… are more important than children, the sick, the vulnerable and our environment."
12.35: The Greens say surplus shows necessary changes can be made
The Green Party says the bigger short-term surplus means more money to improve the lives of New Zealanders.
"Further tax cuts from National before they've even restarted payments to the New Zealand Superannuation Fund would smack of desperation and highlight how they're more interested in staying in power rather than managing the economy for the long term," Green Party leader James Shaw said.
12pm: Political reporter Lloyd Burr got the low-down as the Government opened the books:
Finance Minister Steven Joyce is ruling out any new big-ticket election lollies like tax cuts, despite the Government's finances showing a surplus $2.1b higher than expected.
Treasury has opened up the Government's books ahead of the election, and it shows a surplus of $3.7b for the 2016/17 financial year.
- High earners don't want tax cuts - Ardern
- Patrick Gower: Steven Joyce puts Labour in financial straightjacket
That's $2.1b higher than forecast in May's Budget and is mainly driven by higher than expected tax revenue.
However, the massive jump appears to be just a blip and forecasts show it won't last - and will actually go backwards.
In 2019, it's predicted to be $500m lower than forecast in May's Budget, and by 2021, it will be $800m lower than forecast.
Mr Joyce says there's not much room for additional election spending promises over the next four years because of the forecasted lower-than-expected surpluses over that time.
"Anything significant in the meantime would involve more borrowing or raising additional tax revenues," he says.
"Government annual operating expenditure in these forecasts increases from $77b to $90b over the next four years, which is sufficient for significant ongoing improvement in the provision of public services," says Mr Joyce.
He says another families package including tax adjustments could only realistically be introduced after 2020.
The pre-election update also shows tax revenue is $1b higher than expected and net core Crown debt is $2b lower than the forecast released in May.
However, GDP growth is lower than predicted and is underpinned by migration driving population growth.