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Source: New Zealand Parliament – Hansard

Question No. 2—Finance

2. ANNA LORCK (Labour—Tukituki) to the Minister of Finance: What reports has he seen on the New Zealand economy?

Hon GRANT ROBERTSON (Minister of Finance): The Government’s health-led approach to the COVID-19 pandemic and support for the economy has been reflected in the Crown financial accounts released last week. For the year to June 2021, the Crown accounts show the operating balance before gains and losses—the OBEGAL—was at a deficit of $4.6 billion. This was $10.6 billion better than had been forecast in the Budget in May. Net core Crown debt stood at 30 percent of GDP, $11.6 billion less than forecast and well below the average for advanced economies, of 90 percent. In addition, the cost of servicing that debt remains very low by historic standards. With the Government’s books in better shape than expected, it does give us more options to respond to the ongoing effects of the pandemic, but we cannot afford to be complacent. We are still facing elevated levels of debt and deficit for some years to come, and we will need to invest our resources carefully in response.

Anna Lorck: What is the impact of the economy on the country’s tax take?

Hon GRANT ROBERTSON: The stronger than expected economic environment saw core Crown tax revenue at $98 billion for the year to June 2021, $12.9 billion higher than the previous year, and $6.4 billion higher than forecast in the Budget. This was across all tax types. With the country being in lower alert levels for much of the year, the strong labour market and consumer confidence drove these tax revenue increases. The focus on saving lives and livelihoods that has been the hallmark of the Government’s approach to COVID-19 has meant that the economy has 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.

Anna Lorck: What constraints are there on the economy arising from the pandemic?

Hon GRANT ROBERTSON: While the economy’s performance has exceeded the expectations of commentators and forecasters, the Delta outbreak shows that the recovery is uneven for some sectors and regions. Globally, the pandemic continues to disrupt supply chains, which is, in turn, affecting the New Zealand economy. It is appropriate that the Government continues to take a balanced approach as we work through the uncertainty, investing heavily to support wellbeing, our transition to a low-carbon economy and to improved productivity, while all the while carefully managing resources with an eye to the long-term sustainability of the economy.