The Government's short-term intentions and long-term objectives for fiscal policy remain unchanged from Budget 2022
The short-term intentions and long-term objectives remain fit for purpose, and have not changed since the Fiscal Strategy Report 2022. The Government's strategy for managing expenditure, assets, and liabilities is also unchanged from the Fiscal Strategy Report 2022.
Budget 2023 is expected to accord with our current short-term intentions and long-term objectives for fiscal policy by ensuring that OBEGAL returns to surplus in 2024/25 and thereafter maintains a surplus in the target range of 0 per cent to 2 per cent of GDP on average from 2024/25 onwards, while maintaining total debt such that net debt remains below the ceiling of 30 per cent of GDP.
Table 5 - Short-term intentions and long-term objectives for fiscal policy
| Short-term intention | Long-term objective | |
|---|---|---|
| Debt | Maintain total debt at prudent levels. Maintain net debt at below 30 per cent of GDP based on the new net debt measure including the New Zealand Superannuation Fund, subject to significant shocks. Gross debt is forecast to be 39.9 per cent of GDP at the end of the forecast period. Net debt is forecast to peak at 21.4 per cent of GDP in 2023/24 and reduce over the forecast period to 14.1 per cent of GDP in 2026/27. |
Maintain total debt at prudent levels. Maintain net debt at below 30 per cent of GDP based on the new net debt measure including the New Zealand Superannuation Fund, subject to significant shocks. |
| Operating balance | Our intention is to return to an operating surplus (before gains and losses) by 2024/25, subject to economic and fiscal conditions. The operating balance (before gains and losses) is forecast to be 0.4 per cent of GDP in 2024/25. The operating balance is forecast to be 3.3 per cent of GDP in 2026/27. |
Once the operating balance (before gains and losses) has returned to a surplus, our long-term objective is to maintain an average surplus in the range of 0 per cent to 2 per cent of GDP, subject to economic and fiscal conditions. This will ensure that, on average, over a reasonable period of time total operating expenses do not exceed total operating revenue. |
| Expenses | Our intention is to ensure expenses are consistent with the operating balance objective. Core Crown expenses are forecast to be 30.9 per cent of GDP in 2026/27. Total Crown expenses are forecast to be 39.4 per cent of GDP in 2026/27. |
The Government will ensure operating expenses support a responsible and proportionate role for the Government in maintaining a productive, sustainable, and inclusive economy, consistent with the debt and operating balance objectives. |
| Revenue | Our intention is to ensure revenue is consistent with the operating balance objective. Total Crown revenue is forecast to be 41.4 per cent of GDP in 2026/27. Core Crown revenue is forecast to be 33.4 per cent of GDP in 2026/27. Core Crown tax revenue is forecast to be 30.8 per cent of GDP in 2026/27. |
The Government will ensure a progressive taxation system that is fair, balanced, and promotes the long-term sustainability and productivity of the economy, consistent with the debt and operating balance objectives. |
| Net worth | Our intention is to maintain net worth consistent with the operating balance objective. Total net worth attributable to the Crown is forecast to be 42.9 per cent of GDP in 2026/27. Total Crown net worth is forecast to be 44.4 per cent of GDP in 2026/27. |
The Government will use the Crown's net worth to maintain a productive, sustainable, and inclusive economy, consistent with the debt and operating balance objectives. |