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Budget 2017 Home Page Budget Speech - Budget 2017

Fiscal Outlook

Treasury's economic projections flow through to increased tax revenues. These are expected to grow slightly more than forecast in last year's budget, even after the changes I am announcing today.

Included in the tax forecast is $250 million over the forecast period in additional revenue from the Government's work to halt multi-national tax avoidance.

The Government has taken the decision to increase the operating allowance in this budget to $1.8 billion a year, $300 million more than was previously allocated. This will allow us to invest more in the public services necessary for a growing country. As previously signalled the pay equity settlement for care and support workers is being treated as separate to the allowances.

We have also increased future operating allowances. Next year's allowance will be $1.7 billion and subsequent years will be adjusted upwards by 2 per cent each year.

The OBEGAL surplus for the 2017/18 year is predicted to be $2.9 billion, rising to $7.2 billion by 2020/21.

These surpluses are significant, but they will be needed to meet the cost of the very large new capital investment the Government has committed to over the next four Budgets.

The Government's capital spend over the next four years uses virtually all the cash generated from the operating surpluses. When added together, core Crown residual cash over the forecast period is almost exactly nil.

As a result of our responsible fiscal management, net debt peaked at 25.5 per cent of GDP and is projected to fall to 19.3 per cent of GDP by 2020/21.

New Zealand Superannuation Fund contributions are expected to resume as scheduled in that year.

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