The New Zealand government more than doubled its budget surplus forecast this year but cut growth, flagging that the country's next government will have less spare cash. The Treasury raised its budget surplus forecast for 2016/17 to NZ$3.706 billion ($2.3 billion), boosted by a spike in corporate tax revenues, well above the NZ$1.62 billion surplus it forecast in May. It reduced its economic growth calculation for the year to June to 2.6 percent from 3.2 percent previously, and cut its growth projection to 3.5 percent in the year to June 2018 from 3.7 percent in the May budget update.
This announcement comes a month before New Zealand goes to the polls on Sept. 23 to elect a new government. Labour Party has surged in the polls since 37-year-old Jacinda Ardern took the party leadership in a gamble aimed at energizing its campaign to unseat Prime Minister Bill English and his National Party-led coalition.
"Those looking for Treasury to announce that there was money to burn ... will be very disappointed," according to a note of BNZ Head of Research Stephen Toplis."There were many who had assumed that the recent windfall gains that were flowing into tax revenues would provide the base for a much stronger future revenue track: They didn't."