The Treasury will delay Government's return to surplus by another year, ANZ tips

Tuesday, 6 December 2022

The deteriorating economic outlook will probably force the Government to delay it’s expected return to surplus for a second time this year, the country’s biggest bank has forecast.

In its Budget forecasts, the Treasury delayed the date by which it expected the Government would get its books back in balance by a year, to the year ending June 2025.

But ANZ said that the Treasury would probably push that back again, to the year ending June 2026, when it updated its half-year economic forecasts (Hyefu) on Thursday week.

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A spokesperson for Finance Minister Grant Robertson last week declined to comment on that possibility, ahead of the Treasury’s statement.

ANZ said the Treasury’s Hyefu forecasts would probably have been finalised before the Reserve Bank announced on November 23 that it expected the country to slip into a recession next year.

That meant the economic outlook could be worse than the picture the Hyefu would paint.

But ANZ said the impact of higher-than-expected inflation on the Government accounts could be “ambiguous”, as inflation raised both tax revenues and the Government’s expenses.

Robertson told TV1 on Sunday that the Government did not intend to do things that would exacerbate inflation as it recognised that was “the immediate issue in front of New Zealanders”.

However, he did not rule out some sort of extension to the current temporary tax relief on fuel.

It was looking to return government expenditure to about 30% GDP, he said.

That would make for a very tight Budget next year, he said.

“It's going to be a Budget that is largely about getting the basics right managing New Zealand through a really tricky period of time.”