Budget 2017: Goverment forecast surpluses narrow on family package, capital spending
The government now expects a wider surplus in the year to June than it previously forecast but then tipped narrower surpluses over the forecast period in its latest budget as a new family incomes package and infrastructure spending bites into core crown revenue.
Finance Minister Steven Joyce announced the family incomes package in the 2017 budget. The package - which will come into effect April 1, 2018 - is expected to benefit around 1.3 million families in New Zealand by, on average, $26 per week. It is also expected to reduce core crown tax revenue by $6.3 billion over the forecast period, although there are some "clawback" effects through higher goods and services tax. Treasury is forecasting those effects will total $1. 5 billion across the forecast period.
As a result, Treasury forecasts the surplus will be $1.6 billion in the year to June 2017 versus a prior forecast of $473 million it made in December, as tax receipts have been higher than expected. However, in the following year the surplus is $2.86 billion versus a prior forecast of $3.34 billion. In the year to June 2019 the surplus is forecast to hit $4.05 billion versus a prior forecast of $5.4 billion. It's around $700 million lower in the year to June 2020 and $1.2 billion lower in the year to June 2021.
The impact of the family incomes package also means that net debt forecasts are higher than they were in December, Treasury said. Net core crown debt is forecast to reach $64.2 billion in the year to June 2020 versus a prior forecast of $62.1 billion. In the following year it reaches $62.8 billion versus a prior forecast of $59.6 billion.
Regarding core crown residual cash, it is now forecast to be a deficit of $1.6 billion in the year to June 2019 versus a prior forecast for a $1.4 billion surplus. It is tipped to be a $1.7 billion surplus in the year to 2021, well down from the $3 billion surplus it forecast in December. In the year to June 2021 Treasury is expecting a $1.4 billion surplus versus a previously forecast $2.6 billion surplus.