Treasury has a useful pdf summarising the Half Year Economic and Fiscal Update. Key data includes:

  • GDP forecast to grow at 3.7% this year and 3.5% next year
  • Unemployment rate to drop to 4.2% by 2019
  • Net migration to slow from 70,000 to 20,000
  • Inflation to sneak up to 2%
  • OBEGAL surpluses of:
    • $0.5b in 2017
    • $3.3b in 2018
    • $5.4b in 2019
    • $6.8b in 2020
    • $8.5n in 2021
  • NZ Super Fund contributions to resume in 2021
  • Net debt to reduce from 2018
  • Cost of NZ Super to go from $12.3b this year to $16.0b in 2021
  • Core crown expenses to go from 29.4% of GDP to 27.7%
  • Core crown revenue to go from $76.1b this year to $97.1b in 2021

There is no doubt in my mind that are a matter of when and how much, not if. No National led Government can soak up an $8.5 billion surplus by only increasing spending. That is what Cullen did.

We are one of the few countries in the world to have such a great set of books, and such strong economic growth forecast. Surplus give options – you can pay off debt, reduce taxes and increase spending. A sensible government will do all three, not just one or two of them.

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