Finance Minister Grant Robertson unwrapped a $9.3 billion surprise today, revealing the Government's books were nearly $10b closer to surplus than forecast in May, helped by a tax take that topped $100b for the first time.
The bonus was partly thanks to healthy year for corporate profits, with companies paying 26.2 per cent more in tax on their earnings than last year - an increase of $4.1b.
Workers had a good year too, as rising wages and low unemployment pushed the tax take from individuals up by 11.2 per cent, about $4.3b.
The accounts cover the fiscal year from 1 July 2021 to 30 June 2022.
Robertson was blunt about whether he'd spend his $9.3b surprise on tax cuts or new spending in the election year.
"Whether it is on tax cuts or anything else - it has already been banked, accounted for, and we have moved on from it," Robertson said.
"I am going to be taking a balanced and cautious approach."
At the Budget in May, Treasury reckoned the Government would post a $19b deficit (measured by operating balance before gains and losses), as Covid wrought havoc on the Government's books.
As it happened, the deficit was $9.7b, expenses were lower and revenue was higher.
The figure accelerates the Government's pathway to surplus, currently forecast to be $2.6b in 2025 - although a looming international recession may scupper these plans.
Expenses were also up on last year, but by less than forecast. Core Crown expenses were $125.6b, well up on $107.7b last year, but $2.8b lower than forecast.
Robertson took a swipe at the National Party and at businesses unveiling the figures.
He took time in his speech to "call out" the National Party for criticising Covid spending that it had once supported, and he made a veiled reference to the NZ Herald's Mood of the Boardroom survey, noting that while "there are some 'mood' surveys that say one thing", corporate profits told a different story.
Robertson finished his speech with another dig at National.
"Now is not the time to fritter it away on tax cuts for the wealthiest New Zealanders and property speculators," he said, referencing National's tax cut policy.
Robertson was more evasive about whether the Government would itself promise tax cuts targetted at middle and low income earners. He suggested this might not come at Budget 2023, but Labour might take such a policy to the election next year.
"We're not making major tax changes this term," Robertson said.
He said each party would have a revenue policy at the election, but he would not disclose Labour's.
Anybody thinking about significant changes to the tax system needs to be able to make it add up," Robertson said.
National's finance spokeswoman Nicola Willis said the accounts made a strong case for tax cuts.
""In just five years, tax revenue has skyrocketed 43 per cent from $76 billion to $108 billion – an average of $15,000 more in tax for every household in the country. But even though the Government's coffers are awash in incoming cash, Grant Robertson won't make room for tax relief because his Government is addicted to spending," Willis said.
Willis turned the heat back on Robertson saying the Government did not have an income problem, but a spending problem, and that there was room for tax cuts at the same time as boosting spenidng.
"A careful Finance Minister would find room for prudent tax relief while investing in public services – just as Steven Joyce, Bill English, and Michael Cullen did when they were in the role," she said.
Act leader David Seymour agreed Government spending was "out of control".
"Last year Labour spent $9b more than they taxed, even though taxes were up $9.9b, or 10 per cent from last year," he said
"The Government has abandoned any pretence of being a careful economic manager," he said.
The Government's books were a real best of times, worst of times affair, with the books largely surviving the worst of the Covid-19 pandemic, but still posting a large deficit and debt increase.
Net debt was 17.2 per cent of GDP, or $61.8b, up slightly on the $62.1b or 16.9 per cent of GDP forecast in the budget.
The Government earned $42.4b from source deductions, the tax paid by ordinary income earners, $4.3b more than last year.
Corporate taxes were $19.9b, up from $15.8b last year - an increase of $4.1b.
Total tax revenue hit $107.8b, up on $97.3b last year.
Robertson announced the Budget Policy Statement, when he announces how much new money will be spent in the 2023 Budget, will be announced on December 14 of this year.
He signalled a restrained 2023 Budget, with a fiscal policy dubbed "cutting our cloth".