Finance Minister Grant Robertson says 'timing issues' caused lower than expected surplus

Finance inister Grant Robertson talks about the Government’s books.

The Treasury is expecting the Government's 2019 surplus to be $2 billion less than it had previously been forecast due to "timing issues".

It today released its Half Yearly Economic and Fiscal Update (HYEFU), which showed the surplus was expected to be $1.7b in 2019.

At the May budget, the Treasury was expecting next year's surplus to be $3.7b.

But the less-than-expected surplus is not a surprise, given Finance Minister Grant Robertson had said he expected "timing issues" to affect the size of the surplus.

These timing issues were because some government departments, such as the Ministry of Transport, had deferred some spending, which made this year's surplus higher than expected, but next year's lower.

Robertson said just over $1b of expenditure was carried forward.

Although less than had been expected next year, the Treasury is forecasting the surplus to shoot up in the coming years, rising to $8.4b by 2023.

"Our careful management of the government books gives us the ability to make important investments in public services for all New Zealanders," Robertson said.

The HYEFU numbers also show the Government is well on track to deliver on its Budget Responsibility Rules (BRR), especially in terms of getting its debt to 20 per cent of GDP by 2021/22.

The Treasury is now expecting net core Crown debt to fall to 19 per cent by that time.

But National Finance Spokeswoman Amy Adams said today's numbers show that $17.7 billion more in tax would be paid by 2022 than would have been under a National Government.

That figure is made up of adding all extra taxes the Government had implement – for example the Amazon Tax, the extension of the bright line, petrol taxes – as well as factoring in the cancellation of National's planned tax cuts, and comparing that with the books when National was in Government.

Adams said this is not fair on New Zealanders, give Treasury had revised down its GDP expectations when compared with this year's budget.

It is expecting net debt to fall even further in the following year to 17.4 per cent.

However, he said this figure was likely to change closer to the time.

Meanwhile, Robertson said HYEFU showed the economy was in healthy shape and the Government was "managing the books carefully".

"This is important given the warnings of growing risks around the volatility of the international growth outlook, which could feed through to the New Zealand economy."

One particular risk, outlined by Treasury Secretary Gabriel Makhlouf, was the potential fall out of a bad Brexit.

Despite this, GDP growth was still expected to remain relatively healthy, remaining at roughly 3 per cent over the next five years.

This had been revised down since May's budget.

But that figure could fall if global trade tensions become worse than anticipated.

The Treasury's forecasts also showed there would be positive labour productively growth – this follows five years of negative growth.

Wages are expected to increase by more than 3.3 per cent over the next half decade and unemployment is forecast to stay at roughly 4 per cent.

Also released today was the Budget Policy Statement, which reaffirmed an operating allowance – the amount of money for new spending – of $2.4b per year over the next four budgets.

It also confirmed the five priorities for next year's Budget, which were leaked to the National Party earlier this week.

These are the building blocks of the so-called Wellbeing Budget, Robertson said.

Speaking at the HYEFU, he called the Government's approach to its Wellbeing Budget "groundbreaking".