Government revenue was $2.9 billion below forecast in the nine months ended 31 March, due to a lower tax take and the failed March carbon auction.
Core tax revenue was $86.3 billion, $2.3 billion lower than Treasury had expected in its Half Year Economic and Fiscal Update 2022 published in December. Corporate taxes were $900 million lower, individual taxes were down $600m, and GST revenue was $800m below forecast.
The struggling carbon price has also weighed on the Government’s income, with the low price of NZ Emissions Trading Scheme (ETS) units and the failed auction resulting in a $1.2 billion reduction in revenue.
In March 2023, the NZU (NZ units) price was $54.50 compared to the forecast price of $85.
Core crown revenue—which includes tax and other income—was $91.7 billion, or $2.9 billion below expectations, with the loss of ETS income partially offset by higher interest revenue.
Expenses were also marginally lower than expected at $92.5 billion, down $700 million on forecasts, due to less costs in social security and welfare payments among other items.
The operating balance before gains and losses—which represents underlying income and expenses—was a deficit of $3.4 billion, or $2.5 billion worse than forecast.
Treasury said this was largely due to the lower revenue and additional expenditure outside of the core Crown expenses relating to the North Island extreme weather events.
Net gains on financial instruments, such as the NZ Super Fund and ACC investment funds, were better than expected and helped push the total operating balance into a surplus of $4.5 billion, compared to an expected surplus of $700m.
Gross debt was $3 billion higher than forecast at $143.4 billion—or 37.7% of GDP—due to foreign currency borrowings, unsettled trades and government bonds.
Net debt was at $72.8 billion, or 19.1% of GDP, modestly below the forecast of 20.4% and partly due to NZ Super Fund growth.
Tough budget
Minister of Finance Grant Robertson said the slowdown in economic activity was being reflected in the Government’s books.
“It’s inevitable that the government’s books will be affected as the economy cools. We are doing our bit to restrain spending and responsibly manage our finances. The upcoming Budget has required tough choices as we respond to the deteriorating economic conditions,” he said in a statement.
The May Budget will prioritize helping those most affected by economic difficulties and damaging weather events.
“Our careful and prudent financial management means we have the fiscal headroom to meet the impacts of Cyclone Gabrielle and the challenges ahead. Our debt levels at 19.1% of GDP are among the lowest in the OECD and well below the Government’s debt ceiling of 30 percent”.
74 Comments
They'll claim it has sensitive information and give you nothing. Would love to see the number of OIA request declines since Labour got in vs previous governments as I know for a fact that there were a lot of them declined in the Ministry of Health to people looking into the COVID mandates and where the recommendations for MIQ etc came from
The "most open & transparent Govt ever" has a few other ways to keep information from the electorate
http://norightturn.blogspot.com/2023/05/the-most-open-and-transparent.h…
Yes this is one of the tactics that wasn't very common pre the current, and I specify the current, Labour government. Precisely one of the dubious tactics noted by Guarav Sharma when he called foul on his own party. This would have been included in the OIA 'training' he claimed they had to go through which didn't match the purpose of the OIA.
Perhaps if someone had the time and motivation, such as journalists, they could OIA all the proactive COVID rereleases from 2020 and 2021 around COVID and list all of the omissions to show just how much we have had withheld directly on purpose, and hence revealing what was going through the minds of politicians at the time of why they didn't want us to know it, and how it could have been different should the releases been made public at the time. Sadly I feel the royal commission enquiry won't cover this topic, but it is crucial in exposing to the general public the magnitude of deceit, and put systems and legislation in place to avoid any similar situations in future for the betterment of NZ.
For once I'm buying the NatAct line about needing to trim the bloated public service.
A friend got a job at Kainga Ora about a year ago. $120k to do a pointless job as part of a pointless team. Nothing would be lost if that whole team was cut out of existence. My friend stuck it out for six months and then started looking for a new job, something with purpose.
Yes, we need someone who can refocus funding on frontline services, not hand huge sums of money to bureaucrats and their appointed consultants to have a play with.
MBIE spent 585m on personnel in 2022 up 13% from a year ago at a time when they were supposed to be wrapping up MIQ. There was another $140m spent on consultants and contractors, only about $25m of which were for IT projects.
Its ridiculous and out of control. Take the Reserve Bank as a prime example. Its run for years doing its job with around 250 employees. Then Labour got in, and now it has 500 employees. What are they all doing these days?
"The Reserve Bank is paying more attention to how climate change is affecting the banks and insurers it regulates. It is looking into whether it should issue a digital currency and is exploring ways to improve Māori businesses' access to capital."
Yip just confirms the socialist / greens ideals are continuing...
Take from the poor and give back too the poor while the rich clip the ticket.
Robertson will spin it but he and Ardern created the issues they have and Orr is compromised
James Shaw should be asked how much our world saving climate change ideals are going to cost!
We do indeed need to end the accommodation subsidies - I just finished my written submission to the Petitions Committee - no report-back yet but I'm hopeful it will be referred on;
https://petitions.parliament.nz/976f3ed6-afd2-4824-a6eb-da6940d67d88
There really aren't any other options and the number just keeps going up. Of all things, we need to cut subsidies to the private sector first. And that includes the ETS carbon credit subsidies to the nationally important energy intensive industries (our biggest emitters).
Once you introduce something it’s very hard to take it away. WFF makes your effective tax rate over 50% when factoring in reductions per dollar earned after a certain income. There’s a point where you either need a big increase in income or you a pretty much standing still.
ETS money goes into a the Climate Emergency Response Fund which is spend on various climate-related things, such as subsidies for businesses to decarbonise industrial processes, buying electric buses, and (until recently) the cash-for-clunkers scheme.
There is a list here: https://www.budget.govt.nz/budget/2022/wellbeing/climate-change/summary…
He wouldn't know he thinks money just grows on trees to hand out to some hairbrained scheme they thought about while jetsetting around the world going to climate change meeting to book another meeting while shaming you and I for even thinking about going overseas. How dare you
Quite honestly the smug and self satisfied expression of the the Finance Minister in the caption photo sums up nicely the near to six years of this government. In fact, it depicts rather artistically , the mantra of the previous Labour government, “we know, we say, you do.”
We will be sharing our already-crunched infrastructure with 100k new workers and their families projected to move to NZ in the year to Oct 2023. Most will be paying taxes within weeks or a month of arriving if you believe the industries that lobbied hard for migrants. Add bracket creep on wages going up by 7-8% YoY.
And yet the FM is setting the scene for middle NZ to not pin any hopes on the Crown making meaningful investments into the economy in this Budget round.
sadly its not 100k actual workers -- more like 30k and 70k dependants who need healthcare , housing and education - and they haven't made any meaningful investments to date -- just empty promises that cost $$$ millions -- light light rail supposedly operational .. last year !
2nd harbour crossing anyone
Robertson claims debt at $143 Billion the NZ debt clock says its $155 Billion both can only be right if there is some explanation I do not know of, $12 Billion is hardly rounding but then perhaps Robbers son is lieing or his Abacus is short of a couple of beads. https://www.debtclock.nz
Those debt numbers are tracked by Treasury and are correct as of March 31. The debt may've increased since then.
I cannot find any methodology for the Taxpayers Union debt clock, but it looks like an estimate based on spending/revenue forecasts in the previous budget. I'd also note that it was built in 2020 ... so it may be out of date. Not sure how it incorporates new information, such as the missing revenue from ETS and other variables.
Treasury/Robertson's numbers are accurate as of 31 March, anything more recent is just an estimate.
Criticism of the government is welcome but calling someone a liar for no reason is defamation.
How much better the books would look if he hadn't lost 10B on bond trading as opposed to raising debt at a near zero rates.
Treasury says its best estimate of the expected direct fiscal loss from the Reserve Bank's QE, its so-called Large Scale Asset Purchase (LSAP) programme, is about $10.5 billion.
“Our careful and prudent financial management means we have the fiscal headroom to meet the impacts of Cyclone Gabrielle and the challenges ahead. Our debt levels at 19.1% of GDP are among the lowest in the OECD and well below the Government’s debt ceiling of 30 percent”.
Yes. But these kind of comments are designed to tickle the emotional triggers of the sheeple. That's all.
Because we have low public debt, we have an infrastructure deficit and the gubmint wants to import more people to make the GDP scorecard look flash. Nothing to crow about. That might sound a little DGM but eventually people will see through Robbo's charade. I don't rate him and believe he's reading from a script and following an institutional playbook.
Its what we get when the head finance man has an Arts degree and zero experience managing anything financial previously.
Pretty typical of this govt where lack of skills shows through in a lack of delivery, a need to rewrite legislation as soon as its passed not counting the range of unintended consequences
The sooner they are gone the better
I've made the point before that incentivising the planting of pine is probably the most inappropriate Govt policy I have ever seen. Plant native FFS, the carbon sequestering delta between pine and native is irrelevent at a global level. So wrong on every level, they deserve to fail spectacularly.
My carbon contact advises me via a brief text that it was due to the govt deciding take the hit themselves (though us ultimately) rather than see the costs transmitted to joe public via price inflation.
i.e Rather than business having to charge more (and so discourage purchase of high carbon goods), the tax payer has effectively warn the cost. They have undermined the own carbon scheme and removed the incentive for business to lower their carbon footprint.
They need calling out on this, though I suspect the lack of journalistic knowledge makes it difficult.
Calling the scheme a dog is anther issue. What they have done to the dog is the issue.
I'm not an expert on the ETS, but my understanding is that the demand wasn't there at auctions and the price fell as a result. Why would the Govt manipulate the price lower, it makes no sense? It also discredits the entire point of a market traded NZU. From a pure markets perspective, it appears there is more supply than demand.
Here we go ... The reverse of what government & the RBNZ did during covid.
Just as the results of the two of them getting carried away and ignoring what each other were doing was obvious to anyone with Macroeconomics 101 - their combined actions now will result in a massive lurch the other way ...
To destruction and beyond!
Regular reminder needed that the NZ Govt is not in debt by any sensible measure. We are one of a handful of OECD countries in which the Govt has more financial assets than it has debts (we are around $70bn in the black). In other words, households and businesses owe the Govt more than the Govt owes us. Most of the other countries in this position are fossil fuel exporters who are saving up the proceeds of their sales.
So, when Grant gives it the 'tough decisions' nonsense - remember that all he is doing is trying to win votes by making the Labour party look 'prudent' to centrist swing voters. Meanwhile the country is falling to bits because his Govt (and every other Govt for years) has been scared to make the case for investment in our country and its people. The bloody shame of it.
Bang on so true. Flog the assets then waste the money to look good for next election. What happens when there is nothing left. Flood the country with immigrants to make the books look good but create the same ponzi scheme we had before because rather than good quality applicants we drive down the middle income rate by importing cheap labour
A lot of comments here are pointing out how completely incompetent the Labour government have been, but I think that might be missing the mark. Karl Popper, one of the greatest philosophers of the twentieth century, says the real success of western liberal democracy in providing innovation and prosperity has less to do with electing the right person, but rather it’s about being able to remove bad actors. It's about testing ideas. It’s a form of error correction so that the bad ideas can be removed so that good ideas can rise to the surface. The worst situation, in Popper’s view, is the entrenchment of political power along religious, racial or other lines. Popper also points out the need for open discussion and free speech. So, in that context when you consider Labours 3 waters, their public interest journalism fund, their aggressive clamp down on free speech. Labour aren’t just incompetent, they’re dangerous. They’re damaging the fabric of our western liberal democracy.
There’s already existing legislation to tackle real hate speech, and the free speech union’s website (fsu.nz) covers that in detail. At a deeper level we have to be able to discuss everything because the foundation of problem solving is knowledge creation, and the foundation of knowledge creation is conjecture and criticism. Any bill which suppresses conjecture & criticism is damaging something quite fundamental to human progress. The government has clearly demonstrated a willingness to suppress descending views on climate change, vaccines, covid lockdowns, race relations, and gender issues etc.
Free speech is the right to offend
Utter drivel, people don't open their mouths just to specifically target offence to others. I have said it before and will do so again, if humans cannot discuss differing views, of which some will take offence to yes, that is human nature and subjectivity of having our own individualism, then we will all become a monoculture society where we all say, think, bleat and parrot the same ideas, because otherwise we 'can't' say a long list of things due to having the 'potential' to offend someone.
We are a prosperous species because we have developed the ability to come together with different views and ideas, and hash it out to find the most appropriate solution to problems. It started with neanderthals working together to hunt, and culminates today in having democratic societies. It is a dangerous route to go down the line of offence being the reason for legal changes needing be made.
"people don't open their mouths just to specifically target offence to others" I did not state a case for or even suggest that strawman however you do seem to accept the probability of offence which is my point.
"It is a dangerous route to go down the line of offence being the reason for legal changes needing be made." Exactly. Which is why the current Govt has not been able to explain, let alone implement it's originally planned & ill advised restrictions on free speech.
Rowan Atkinson summarises this well: In full: Rowan Atkinson on free speech - YouTube
If ACT weren't so big in terms of percentage vote share then the right block would be doing far better.
Unlike most of the posters here, centre voters are not attracted at all by ACTs percived policies of cuts to everything and more neo liberalism.
So right leaning voters moving to ACT to give National & Luxon a hurry along are harming the centre right vote.
If National were 44% and ACT 6% then they would be shoe in.
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