Well, the Kiwis might have a troubled dairy sector (though it seems to be on the improve) and a house price boom (especially in Auckland) that could destabilise the financial system if it gets out of control, but their economy is doing better than our’s and yesterday that the government had run its second budget surplus in a row.
The economy grew a seasonally adjusted 0.9% in the three months to June for an annual rate of 3.6% – around half a per cent stronger than Australia’s.
And the Key (Prime Minister John) government’s annual financial statement yesterday for the year to June 30, showed a surplus of $NZ 1.83 billion, up from $NZ414m in for 2014-15.
The surplus before gains and losses compares to the $NZ176 million surplus forecast in the 2015 Budget and $NZ668 million tipped at the time of the May Budget this year.
Tax income was up $NZ1.6 billion on the 2015 forecast (unlike Australia where there was a shortfall) or 5.7% year-on-year to $NZ70.4 billion, while expenses at $NZ73.9 billion, were $NZ600 million lower than expected.
And the government said net debt had stabilised at 24.6% of GDP, or $US61.9 billion.
New Zealand Finance Minister Bill English held out the prospect of tax cuts, saying in a statement.
"If there is any further fiscal headroom, we may have the opportunity to reduce debt faster and as we’ve always said, if economic and fiscal conditions allow, we will begin to reduce income taxes.
"The outlook for the economy is positive, the Government’s books are in good shape and we are addressing our toughest social problems. However, we also need to bear in mind that there are a lot of risks globally and that is why it is important to get our debt levels down,” he said.
Mr English said the NZ economy had made “significant progress” over the last eight years.
"Government surpluses are rising and debt is falling as a percentage of GDP, which puts us in a position to be able to make some real choices for New Zealanders," he said.
The emphasis, he said, in coming years would shift from managing deficits to managing surpluses and the Government was committed to maintaining rising surpluses and cutting debt to 20% of GDP by 2020.
"Now we are in better times we need to start repaying the debt we ran up in tougher times," he said.
"If there is any further fiscal headroom we may have the opportunity to reduce debt faster and as we’ve always said, if economic and fiscal conditions allow we will begin to reduce income taxes."
He said the 2017 Budget would make "positive long-term choices" to strengthen the economy and communities.
Over 2015-16 wages and employment grew by 2%, and an influx of nearly 70,000 migrants helped the population grow by 2% as well, helping produce the solid rise in GDP and tax revenues.
