The impact of New Zealand's response to the Delta and Omicron outbreaks on the country's finances will be revealed on Wednesday, with Treasury opening the Crown accounts to the public.
The accounts, which cover the 2021/22 financial year, will reveal how much money the Government took in through taxation, its level of expenditure and how much of a deficit the country is in.
The Budget Economic and Fiscal Update (BEFU) released in May forecast New Zealand's Operating Balance Before Gains and Losses (OBEGAL) would be a deficit of $19b, up from a deficit of $4.7b the previous year. A return to surplus was projected for 2025.
In 2020, when COVID-19 first struck, the deficit was $23b. Prior to that, New Zealand had been in surplus since 2015 after the Global Financial Crisis and Christchurch Earthquakes hit our finances.
BEFU also forecast the Crown's tax revenue would be $103.8b over the past financial year, while expenses would be $128.4b. Overall, net debt was forecast to be $61.2 b, or 16.9 percent of GDP.
The Crown accounts will be released by Treasury at 1pm on Wednesday. Newshub.co.nz will have coverage of the latest figures from then and comment from the Finance Minister as well as opposition parties.
Prime Minister Jacinda Ardern previewed the accounts on Monday by saying they would cover "the toughest period in our COVID response, including the responses to both Delta and Omicron". The Government put in place significant financial support for New Zealanders through those outbreaks, including the wage subsidy and leave support scheme.
But Ardern said while there were "challenges", New Zealand's current economic position is "strong".
"Our economy is now 5 percent larger than before COVID. Unemployment is considerably lower than it was at the comparable period after the Global Financial Crisis, and we've managed to achieve this with a similar debt level to what National took on as a percentage of GDP during the GFC. That is despite the COVID economic crisis being even more severe."
The Government's been trying to make a "case for optimism" when it comes to the economy as New Zealanders continue to face the pain of sky-high inflation and rising interest rates.
In a speech in September, Finance Minister Grant Robertson acknowledged the "hardship for many", which he said has been driven primarily by international factors. However, he said there is opportunity for the economy to take advantage of.
"We are a country that is in demand, even more so following our people-first COVID response," the minister said. "Our goods exports are near record highs, because, even though the global economy is struggling, what we offer to the world is something the world needs."
He promised a move away from the significant Government spending seen during the pandemic. The operating allowance, which is new spending, for the 2023 Budget is currently set at $4.5 billion, down from $5.9 billion in Budget 2022.
"As we move to implement our plan, future investments will obviously not be at the same scale as during COVID. As with all of you, with the emergency COVID response behind us now, we will enter a period of more targeted spending," he said.
"This tighter period will require some tough choices. At a broad level, my focus will continue to be on making sure New Zealand maintains responsible debt levels, and ensuring our path back to surplus."
He said this wouldn't be achieved through "austerity cuts to spending" as that would "do more damage than any problem we are trying to solve".
"What it does mean is targeting our investments to where they are needed the most and where they can get the most bang for buck for New Zealand as a country."
In May, when revealing a set of new fiscal rules, Robertson said that once a surplus had been reached, it was the Government's commitment to maintain a surplus in the range of zero to 2 percent of GDP over time
"That means as we enter the new normal, the spending required to operate government services won't be adding to Government debt," Robertson at the time.
"There will be allowances for significant shocks, and it is an average percentage so as to allow additional investment in a particular year if required. The surplus target will also be the primary rule that controls our spending decisions and will require a careful and balanced approach."
