Prime Minister Jacinda Ardern claims New Zealand is "outperforming Australia economically" and a leading economist agrees thanks to our comparably low unemployment rate.
It comes as new Treasury data shows the Government is now $107.5 billion in debt, representing 33.9 percent of GDP, which is calculated by comparing what the Government owes with what it produces, or its gross domestic product.
Figures released in Budget 2021 showed Government debt is expected to increase by close to $100 billion in the next few years, peaking at 48 percent of GDP in 2023. The Government expects to get back to surplus from 2027.
Tax revenue for the 10 months to the end of April was $79.1 billion, $2 billion above forecast due to higher than expected corporate and income tax as well as GST revenue, which suggests there is money circulating in the economy.
Finance Minister Grant Robertson said on Thursday the big debt pile reflects the Government's "ongoing economic recovery" from COVID-19. He didn't hold back from throwing shade at National as he read out the results to Parliament.
"Mr Goldsmith, I'm not taking advice on numbers from you," he said in response to heckling from former finance spokesperson Paul Goldsmith, who was stripped of the role after missing a $4 billion fiscal hole in National's election budget.
Goldsmith brushed off Robertson's quip as "gratuitous sledging".
The Government appears to be confident in its financial position despite the growing COVID-19 bill, with the Prime Minister going so far as to say New Zealand is outperforming its trans-Tasman neighbour on some measures.
In Parliament on Wednesday she highlighted how New Zealand's unemployment rate is 4.7 percent compared to Australia's 5.5 percent. Australia also has higher debt - expected to reach almost AU$1 trillion within four years.
"Our unemployment rate is lower than Australia... our debt levels are lower, and our growth rates are a solid 3.5 percent across the forecast period, which is also higher," Ardern said. "So on all measures, New Zealand is really outperforming Australia economically."
Senior Infometrics economist Brad Olsen says Ardern is correct that New Zealand's economy is outperforming Australia's on the metrics she presented.
Olsen said the unemployment rate is "probably the most important and closely watched", because if New Zealand's rate starts to drop below, it could spark a brain-drain to Australia.
"If Australia's unemployment rate was to improve further, and the gap between New Zealand and Australia's unemployment rate closes, there's a heightened risk that some New Zealand workers - particularly in the infrastructure and nursing areas - look to see what job opportunities look like across the ditch."
Olsen noted how Australia's budget shows a higher level of debt than New Zealand and longer time taken to get back to a surplus because they're investing significantly more debt-funding to support further economic stimulus.
"The question about if this investment is 'good' or not, is what the money is spent on," he told Newshub.
"Australia has a much larger infrastructure package currently being worked on, compared to concerns in New Zealand that the speed of Government spending on various infrastructure packages isn't large enough or able to roll out.
"Shovel ready projects often should be renamed 'pencil ready', with the speed of Government investment spending not keeping up with the level of announcements made by the Government."
Robertson says while New Zealand's current economic situation is "encouraging", the global environment remains "volatile", with supply chain issues still affecting the economy.
He said the recovery remains "uneven" among some sectors and regions in New Zealand.
"We are still facing elevated levels of debt and deficits for some years to come as a result of the borrowing needed to support New Zealanders through COVID 19."
