Finance Minister Grant Robertson has used his pre-Budget speech to announce a fresh belt tightening exercise by his ministers and has indicated a tax revenue windfall over the last six months is more likely to be used on extra operational spending than extra capital spending when he delivers Budget 2018 next Thursday.
Finance Minister Grant Robertson has indicated that billions of dollars has been unlocked for this Budget and subsequent Budgets because a growing economy and various policy tweaks have given the Government $2.3 billion a year of headroom, and nominal GDP is growing quickly.
Treasury reported the Government's surplus was $910 million better than expected in the nine months to March 2018, largely because solid economic growth drove higher corporate tax receipts, higher income taxes and higher GST receipts. Treasury said tax revenues were $1.1 billion better than it forecast in December and this was expected to hold for the rest of the financial year.
In today's email we followed up the HYEFU highlights.
Rod Oram took a close look at the Treasury's fresh forecasts to find some reassuring scenarios. But he points overseas to the risks around Donald Trump and a frothy stockmarket as factors that could turn the Goldilocks view on its head.
The new Government's self-imposed debt target is limiting its ability to borrow to fix growing infrastructure deficits. Bernard Hickey reports it will be forced into fancy and expensive financing tools such as PPPs and infrastructure bonds.
1. Grant's Budget belt big enough -- just
Treasury has gone through the Labour-led Government's policies with a fine tooth comb teasing out where costs will increase, and listed them as "policy change risks."
The new Government has unveiled a Budget outlook that fits its big health, education, transport and welfare spending plans within its self-imposed restrictions to reduce debt and keep running surpluses.
The Government's flagship families package will be introduced essentially as planned, with a few tweaks.