Media statement

COVID-19 shows the importance of a strong government balance sheet

The Treasury’s 2022 Investment Statement: He Puna Hao Pātiki published today underlines how good management of the government balance sheet helped our COVID-19 response and is an important lever for lifting living standards, says Treasury Secretary Caralee McLiesh.

The Investment Statement describes and states the value of the government’s significant assets and liabilities, how this has changed from the past, and how this is expected to change in the future.

“The experience of the past two years has emphasised the importance of a resilient balance sheet in supporting living standards”, Caralee McLiesh says. “The strength of the government balance sheet prior to the COVID-19 pandemic allowed the Government to support the wellbeing of New Zealanders through an extraordinary shock. New Zealand’s fiscal response was large by international standards; this response has been critical in minimising unemployment, supporting a swift economic recovery, and preventing longer-lasting harm to living standards.”

The response to COVID-19 has seen net core Crown debt (net debt) increase significantly. Net debt was 19.0% of GDP prior to the pandemic and is forecast to peak at 40.1% in 2022/23. The Treasury considers that net debt continues to remain within prudent levels.

Even though net debt has increased significantly, the balance sheet remains resilient and government net worth has increased. The government’s Financial and Social assets have grown, leading to higher net worth of $157 billion. This is an increase in net worth of $40 billion since the 2018 Investment Statement. At the same time there has been an increase in the risk and complexity of the government balance sheet. The government has taken on new assets and liabilities as part of its COVID-19 response and the government’s exposure to interest rate risk has risen because of the Reserve Bank of New Zealand’s Large Scale Asset Purchase programme.  

He Puna Hao Pātiki focuses on the overall health of the balance sheet and hones in on the key differences and new challenges we have seen since the pandemic. In addition to COVID-19, the Statement examines changes in the macroeconomic context, such as low neutral interest rates, and evidence that New Zealand has an infrastructure ’gap’.

“COVID-19 has not only re-emphasised the importance of the balance sheet, it has also heightened the importance of good information and strong institutional settings. For the Treasury, these include striking the right balance between prudent debt and prudent investment, effective fiscal frameworks, and measuring and understanding wellbeing.”

The 2022 Investment Statement: He Puna Hao Pātiki is one of four reports within the Treasury’s broader suite of stewardship responsibilities. The others are the Long-term Fiscal Statement and Long-Term Insights Briefing published in September 2021, along with our first Wellbeing Report to be published later this year.

The 2022 Investment Statement: He Puna Hao Pātiki is available on the Treasury website.



Bryan McDaniel, Principal Communications Advisor

Telephone: (04) 917 6268
Email: [email protected]