Hon Dr Michael Cullen
Minister of Finance

4 May 2006 Media Statement

Net debt free status reflects wise fiscal management

Finance Minister Michael Cullen used his traditional pre-Budget speech to the Canterbury Manufacturers' Association today to announce that the government has become a net saver.

"I am delighted to reveal that the government's net debt, including the New Zealand Superannuation Fund, is in the black for the first time since records on net debt began to be kept in 1972."

The information is contained in the detailed Crown financial statements for the nine months of the financial year to be issued tomorrow.

"The hallmark of this government has been wise fiscal management. We have enjoyed strong economic growth and strong revenue streams as a result. But we have spent and invested wisely, built up assets like the New Zealand Superannuation Fund (currently $9.2 billion) and repaid debt to the extent that we can now celebrate an enviable status among developed nations.

"New Zealand is now one of just seven countries in the OECD to be in a positive net financial asset position. As at 31 March net financial assets totalled $0.4 billion.

"We got there earlier than expected thanks to higher than expected returns by the New Zealand Superannuation Fund and foreign exchange gains. Budget 2006 will show the net financial asset position continuing to improve over the four year forecast horizon.

"We have buried the legacy of imprudent spending of the Think Big era which saw government debt surge to unhealthy levels.

In his speech today the Finance Minister said Budget 2006 delivers on Labour's election promises and maintains a steady hand on the fiscal purse.

"With the economy taking a breather, it is now more important than ever that Budget 2006 continues our prudent approach. But our wise fiscal management means we are still able to take sensible measures to help speed the transformation of the New Zealand economy."

ENDS

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