The New Zealand government believes it will return to surplus in 2023/24, releasing an optimistic set of books including billions of new health and climate change spending.
Treasury released its Half Year Economic and Fiscal Update on Wednesday, which shows a widening deficit of $NZ20.8 billion ($A19.7 billion) this year.
However, Finance Minister Grant Robertson trumpeted a budget heading back into the black – where it was before the arrival of COVID-19 – ahead of the previously forecasted 2026/27 timetable.
“This is a document that shows the resilience of the New Zealand economy,” he said.
“While the Treasury is forecasting a decline in GDP in the September quarter, the outlook is positive with a forecast bounce back in the December quarter of 3.7 per cent.
“We are in a strong position to be able to come out this side of this second wave of COVID, the Delta outbreak.”
Treasury forecasts GDP growth of 4.9 per cent in 2023, and more than two per cent each year beyond.
It predicts low unemployment of 3.4 per cent to fall even further to 3.1 per cent early next year.
With that improved outlook, Mr Robertson has given himself a $NZ6 billion ($A5.7 billion) boost to next year’s operating allowance, earmarked for major health reforms.
A further $NZ4.5 billion ($A4.3 billion) Climate Emergency Response Fund has also been created.
“We’ve got some big areas we need to invest in,” he said.
Debt is forecast to hit 40.1 per cent of GDP in 2022/23 before falling to 30.2 per cent in 2026/27.
The return to surplus is due to land in time for the 2023 election, though Mr Robertson said he was not getting ahead of himself.
“That’s what the forecast says, but obviously, there’s quite a lot of water to go under the bridge between now and then,” he said.
“I’m confident that we’re on track. But as we’ve seen in the last few years, you have to be a bit careful about predictions like that.”
Prime Minister Jacinda Ardern denied an opposition claim that her government was addicted to spending.
“Our finance minister is totally focused on looking after the wellbeing of New Zealanders,” she said.