New Zealand’s new government has raised its spending on infrastructure and social services and upgraded its budget surplus projections on robust revenues.
In the Budget 2018, Finance Minister Grant Robertson focused on social services like education, health and housing.
The government forecast operating surplus of NZ$3.1 billion for 2017/18 compared to previous projection of NZ$2.5 billion. The surplus is expected to rise to NZ$3.7 billion in 2018/19.
The operating surplus is estimated to reach NZ$7.3 billion by 2022.
The government plans to cut core crown debt to 20 percent of GDP within five years of taking office.
“Responsible fiscal management and a strong economy give us the space to increase the new operating spending allowance from the Half Year Economic and Fiscal Update to NZ$2.8 billion for this year, and the new capital investment allowance to NZ$3.8 billion,” Robertson said.
All together this means that over the next four years planned investment in infrastructure and social services will be about $24 billion more than the previous government had estimated, finance minister added.
The new spending announced today was enabled by more tax revenue than previously forecast, he said.
The treasury forecasts economic growth of about 3 percent per annum on average over the next four years.
Annual average growth is forecast to pick up from 2.8 percent in the June quarter 2018 to a peak of 3.6 percent in the December 2019 quarter. Growth is expected to slow to 2.5 percent by June 2022 as net migration inflows ease, and interest rates rise.
Further, inflation is expected to reach 2 percent by 2022. Wages are projected to climb by an average of 3.1 percent over the forecast period, with real terms average wage increases in each year.