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Government debt going up instead of down

14 December 2017

Government debt going up instead of down

Today’s half yearly accounts from Treasury have confirmed that Government debt will be going up instead of dropping over the next five years after just 49 days of the new Coalition Government, National Party Finance Spokesman Steven Joyce says.

“The previous Government left the books in very good order. Treasury’s Pre-Election Fiscal Update had net Crown debt reducing to $56 billion by 2022 from $59 billion at the start of this financial year,” Mr Joyce says.

“After just seven weeks with Grant Robertson as Finance Minister, this has turned around to an expectation of net debt growing to $69 billion by 2020 despite significant growth in tax revenues.

“And this is just the beginning. The Coalition has set up very tight operating allowances for their future spending and have left very little room for dealing with the ongoing spending pressures that any Government faces.

“Most of their big spending promises are yet to be included in these accounts.

“Their additional health and education spending, the provincial growth fund and increased police numbers and salaries must all come out of their tight operating allowance.

“The other notable change in the Government accounts is Treasury’s expectation for growth to soften over the short to medium term. This is underlined by recent business confidence surveys which show small and medium sized Kiwi businesses are concerned about the economic direction of this Government and how it will affect their competitiveness.

“The Government needs to focus on restoring business confidence quickly or the growth forecasts in these accounts could also turn out to be too optimistic.

“Now is not the time to be increasing Government debt. With New Zealand’s high level of private debt, the Government should be looking to reduce its own debt at this stage of the economic cycle so that we are ready as a country for the next rainy day.”

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