WELLINGTON: Tax cuts could be on the card for New Zealanders in next year’s budget, following the country recording a $1.8b surplus in the year to June. Treasury documents show the surplus – recorded as the country’s operating balance before gains and losses – came in $668m better than expected in the May budget, increasing by $1.42b from 2015.
The result has Finance Minister Bill English considering tax cuts in next year’s budget, which will be handed down months before the 2017 election. ‘We want to both incentivise people in the labour market and ensure everyone sees the benefits of growth on the one hand, on the other hand we want to make sure New Zealand as a whole is in a better position to weather the next shock with lower debt,’ Mr English said.
Debt came in at 24.6% of GDP, down from 25.1% last year. Bill English wouldn’t be drawn on whether tax cuts or paying down debt is more important – saying the aim was to get the balance right. ‘The outlook for the economy is positive, the government books are in good shape and we are addressing our toughest social problems,’ he said. ‘Now we are in better times we need to start repaying the debt we ran up in tougher times.’
Labour says the government should use the surplus to address the inequalities in New Zealand. ‘It’s all very well to have a surplus, but if there are people living in cars and garages, is that the right kind of thing for New Zealand,’ said Labour’s Finance spokesman, Grant Robertson.
‘What we need to see is much greater investment, in housing, in health, in education.’ Mr Robertson said Labour believes in maintaining a small surplus, spending more where it is needed. But the Greens, who have entered into an agreement to govern with Labour as a Coalition if they win the next year’s election, said they want to see a balanced budget. Greens Co-Leader and finance spokesperson James Shaw told reporters a budget surplus was actually ‘inefficient.’ ‘You’re actually taking money out of the economy, and so the idea is you want to run a budget that is close to balanced as possible,’ he said.
