The difference six years makes

The latest Crown financial statements have just been published so let’s look at the annual crown financial statements for 2023/24 compared to 2017/18.

• Crown revenue $110b to $167.3b
• Crown revenue 38% to 40.5% of GDP
• Core crown revenue 86.8b to $129.3b
• Core crown revenue 30.0% to 32.2%
• Tax revenue $80.2b to $119.9b
• Tax revenue 27.7% to 29.2%
• Crown expenditure $104b to $180.1b
• Crown expenditure 36.0% to 43.6%
• Core crown expenses $80.6b to $139b
• Core crown expenses 27.9% to 33.6%
• OBEGAL surplus $5.5b to -$12.8b
• OBEGAL surplus 1.9% to -3.1%
• Residual cash 1.3b to -$19.3b
• Residual cash 0.5% to -4.7%
• Operating balance $8.4b to -$8.4b
• Operating balance 2.9% to -2.0%
• Core crown gross debt $88.1b to $176b
• Core crown gross debt 30.4% of GDP to 42.6% of GDP
• Core crown net debt $57.5b to $175.5b
• Core crown net debt 19.9% of GDP to 42.5%

So what did Labour achieve in six years

Revenue

• Crown revenue increased by $57.3 billion (over $1 billion a week) or 52%. As a share of the economy it went up 2.5 percentage points
• Core crown revenue increased by $42.5 billion or 49%. As a share of the economy it went up 2.2 percentage points
• Core crown tax revenue increased by $39.7 billion or 50%. As a share of the economy it went up 1.5 percentage points

Expenditure

• Crown expenses increased by $76.1 billion (around $1.5 billion a week) or 73%. As a share of the economy crown spending went up 7.6 percentage points
• Core crown expenditure increased by $58.4 billion or 72%. As a share of the economy it went up 7.6 percentage points

Surpluses

• The OBEGAL surplus went from a surplus of $5.5b to a deficit of $12.8b – an $18.3b deterioration. As a percentage of GDP it went from +1.9% to -3.1% so a 5.0 percentage point change as a share of the economy
• The operating balance went from a surplus of $8.4b to a deficit of $8.4b – an $16.8b deterioration. As a percentage of GDP it went from +2.9% to -2.0% so a 4.9 percentage point change as a share of the economy
• The cash surplus went from a surplus of $1.3b to a deficit of $19.3b – an $20.6b deterioration. As a percentage of GDP it went from +0.5% to -4.7% so a 5.2 percentage point change as a share of the economy

Debt

• Core crown gross debt increased by $87.9 billion or 100%. As a share of the economy it went up 12.2 percentage points
• Core crown net debt increased by $118b billion or 200%. As a share of the economy it went up 22.6 percentage points

Now defenders of the indefensible will cry “Covid” but that has minimal impact on income, expenditure or the surplus in 2023/24. Any temporary expenditure around Covid should have ended a couple of years ago.

The Government has increased its spending as a share of the economy by a massive 7.6 percentage points. This is arguably the largest expansion of the state since WWII. But it didn’t result in better schools, better hospitals or less poverty – just better waste!

NZers are now paying $800 million a week more in tax than six years ago.

We have gone from a healthy surplus to a structural deficit that will take years of fiscal restraint to undo. The deficit is not because income didn’t rise enough – it is because of an unprecedented increase in untargeted state spending.

And finally debt has gone up $118b or $59,000 per household. Now some of that is due to the temporary Covid spending needed to get us through lockdowns etc, but most of it is not.

Labour’s six years in office can only be seen as fiscal vandalism of the worst kind. The $76b a year extra spending represents $38,000 a household. Is your household getting $38,000 a year of value from Labour’s extra spending?