Government accounts in 'good shape' to meet cyclone challenges despite debt rise

Thursday, 16 February 2023

Finance Minister Grant Robertson says the likely cost of Cyclone Gabrielle is not yet known, but the Government was in a strong financial position to support people and businesses.

Finance Minister Grant Robertson says the Treasury’s latest accounts show the Government’s books are in good shape to respond to the challenges of Cyclone Gabrielle and cost of living pressures.

That was despite the Government’s net debt for the six months to the end of December coming in a little higher than the Treasury had forecast in its half-year economic and fiscal update (HYEFU) just before Christmas.

The accounts showed government net debt at 21.6% of GDP, versus the 21.3% HYEFU forecast.

Government revenues, include tax revenue, for the six-month period were $411m below forecast at just under $60.5b and expenses were $287m higher than forecast at just over $62b, with net debt just over $1b above forecast at $80.5b.

In the months before being elected Prime Minister, National leader Christopher Luxon said Cyclone Gabrielle was a wake up call on climate change.

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Robertson said the extreme weather that New Zealand had experienced was putting families and businesses “under even more pressure, with some losing their homes and livelihoods”.

“The impacts of flooding in Auckland in late January and now Cyclone Gabrielle have yet to be fully known and the Treasury is currently accessing the economic and fiscal impact,” he said.

But he said the Government was committed to continuing to support families and businesses “through these difficult times” and was in a strong financial position to do so.

The cyclone had affected the country’s roads, bridges and energy networks and it would have a sizeable impact on the economy, he said.

“Insurance will cover significant elements of the event, but the Government will need to step up with significant resources to fix broken infrastructure.

“This will affect the Government’s operating and capital spending plans in the current year and subsequent years and is being factored into planning for the Budget,” he said.

National Party finance spokesperson Nicola Willis said Robertson had “already pre-committed” more than half of the new spending put aside for this year’s Budget and had dipped into funds meant for Covid recovery.

“This leaves precious little to meet significant impending bills for disaster recovery and infrastructure,” she said.

“The Government must respond to Cyclone Gabrielle with a focus on delivering targeted support and rebuilding critical infrastructure in a timely manner.

“The Labour government‘s track-record suggests it will struggle to meet those challenges,” she said.