Hon Bill English
Minister of Finance

14 October 2015

Government posts full year operating surplus

The Government has reported an operating surplus in the fiscal year that ended on 30 June, meeting a target set in 2011 following the Canterbury earthquakes and the international financial crisis, says Finance Minister Bill English.

The OBEGAL surplus of $414 million in the year to 30 June 2015 is equal to 0.2 per cent of GDP and the Government’s operating balance inclusive of gains and losses was a surplus of $5.8 billion or equal to 2.4 percent of GDP.

While core Crown expenses grew by $1.2 billion (1.7 per cent), the increase in spending was lower than the pace of growth in the economy, resulting in expenses easing to 30.1 per cent of GDP, compared with over 34 per cent of GDP four years ago.

“Returning to surplus in 2014/15 is a significant milestone. I’m proud of the steps taken across the wider public service to help deliver the surplus target while also improving the quality of social services delivered to New Zealanders,” Mr English says.

“The Government is committed to continued prudent management of the public finances, including ongoing attention to operating spending and the underlying drivers of demand for public services. The Government supports reprioritisation of spending that is not delivering results and rigorous management of the Crown balance sheet.

“Our focus must remain on steady and ongoing reductions in public debt over the medium term. That is the most prudent approach to take in a still uncertain global environment,” Mr English says.

“The economy is growing. It recently registered its 18th consecutive quarter of expansion to deliver annual growth of 2.4 per cent in June 2015.

“The Government's programme to build a more productive economy is delivering dividends in the form of higher living standards and better quality essential services. And it is also delivering returns in terms of the health of the Crown’s finances.

“What today’s figures from Treasury indicate is the Crown’s overall finances have been radically turned around in the years since they had to absorb cumulative shocks outside of the control of any government,” Mr English says.

In the wake of those shocks, the Crown’s annual operating balance excluding gains and losses (OBEGAL) was a deficit of $18.4 billion – that’s equivalent to around nine per cent of national income or GDP in that year.

“It has required very careful stewardship over day-to-day expenses to permit the Government to chip away at the size of the OBEGAL deficits year after year and, in 2014/15, to return to surplus and deliver on the target first set in 2011,” Mr English says.

“Our focus must remain on steady and ongoing reductions in public debt over the medium term. That is the most prudent approach to take in a still uncertain global environment,” Mr English says.

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