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Budget 2016 Home Page Fiscal Strategy Report - Budget 2016

Summary

The Crown's books are in good shape and the outlook for the economy is positive.

The operating balance before gains and losses (OBEGAL) is broadly in balance and is expected to grow significantly over the next few years. Net debt peaks as a percentage of gross domestic product (GDP) next year before falling to around 20 per cent of GDP in 2020 and around 8 per cent of GDP in 2026. Core Crown expenses fall to 29.7 per cent of GDP in 2015/16 and continue to decline over the forecast and projection periods. This outlook is consistent with the Government’s short-term intentions and long-term objectives.

The operating allowance for Budget 2016 has been raised to $1.6 billion, which is more than offset by a reduction in the Budget 2017 allowance to $1.5 billion.

Budget 2016 provides for a significant increase in capital spending, although much of this will be funded through reprioritisation within the Crown's balance sheet.

Overall, the adjustments to the operating and capital allowances ensure the Government remains on track to achieve its debt objective.

While focused on responsible fiscal management, the Government will continue to invest in public services to get better results for New Zealanders, meet its net capital requirements and invest in infrastructure.

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