New Zealand recorded a $9.7 billion deficit over the past financial year, more than double that of 2021, but far lower than what was projected at May's Budget.
Treasury on Wednesday opened the Government's books for the year to June 30, 2022, covering a period of significant spending by the Government on combatting the Delta and Omicron COVID-19 outbreaks.
That included spending on business support, the wage subsidy, leave support and New Zealand's vaccination rollout.
Finance Minister Grant Robertson is promising future spending will be more "targeted" as the end of the past financial year also marked the end of the emergency economic response to COVID-19.
He's touting the latest economic figures as showing New Zealand has some of the strongest financial books in the work and is well placed to respond to an "increasingly volatile global economy".
But he's also on the attack. Throughout a speech at Treasury on Wednesday, he made repeated references to tax cut proposals for the "wealthy" as being inappropriate in the current environment. He denied he was striking out at National's "flawed" proposals because Labour is trending down in political polls.
The accounts show the Operating Balance Before Gains and Losses recorded a deficit of $9.7b. This compares to a deficit of $4.6b the year prior. But it's half of the $19b deficit forecast in May's Budget Economic and Fiscal Update (BEFU).
Robertson said the better than expected result is due to stronger economic conditions and lower spending than forecast.
The Government's also collected more money in tax revenue than what was projected.
At the May Budget, core Crown tax revenue was forecast to be $103.8b, but the Government actually received $108.5b. That compares to $98b in 2021.
Wage increases, a growth in employment, and an increase in corporate taxable profits are behind the increased tax revenue. Corporate tax was up $4.1b on 2021.
Core Crown expenditure was $125.6b over the past financial year, up from $107.8b in 2021. However that's down from the $128.4b projected at the Budget.
An increase in overall expenditure over the past year was due to the Government's response to COVID-19. For example, over the past financial year, $4.7b was spent on the wage subsidy compared to $1.2b in the previous year. The vaccination and immunisation programme cost $1.7b, up from $0.4b in 2021.
Robertson said expenditure was down on the Budget's forecasts as not all money set aside for the COVID-19 response was eventually spent. Some expenses - like those on therapeutics and vaccines - will be moved into the 2022/23 year.
The Government's net debt is slightly higher than expected at $61.9b compared to the forecast $61.2b. As a percent of GDP it works out at 17.2 percent.
When using an internationally comparative measure, a statement from the Finance Minister said New Zealand's debt measure is about half the level of Australia, a quarter of the United Kingdom's and a fifth of the United States.
"On the measures that matter the Government has steered the New Zealand economy and Government books through the 1-in-100 year economic shock of the pandemic favourable compared to the [Global Financial Crisis]," Robertson said.
"Our economy has bounced back quicker, unemployment is lower, and the increase in debt compared to the size of the economy is comparable."
The Finance Minister said the figures show the Government's health response to Delta and Omicron was also "one of the best economic responses in the world".
He said this put New Zealand in a good position within a "volatile global environment" where there are "choppy waters ahead".
"The global environment is challenging and will continue to put significant pressure on the Government books, so we will keep running a tight ship in order to acheive a return to the surpluses our Government posted pre-COVID."
With the Government's emergency COVID-19 response coming to an end, Robertson has said there will be "more targeted" spending in the future. The operating allowance, which is new spending, for the 2023 Budget is currently set at $4.5b, down from $5.9b in Budget 2022.
At a speech in September, Robertson said the "tighter period" coming up will "require some tough choices" but that won't mean "austerity cuts to spending".
On Wednesday, he repeatedly took aim at tax cut proposals, such as those National is making.
"There is simply no room for unaffordable and untargeted tax cuts to those who need them the least. As we have seen, tax cuts with no plans for how to pay for them are economically reckless."