Annual Budget Release

What is Annual Budget Release?

The Annual Budget Release, officially Budget [year] such as Budget 2024, is New Zealand's yearly plan for government taxes, spending, borrowing and investment. The Treasury prepares the documents for the Minister of Finance, who delivers the Budget Speech and tables them in the House of Representatives (parliament). It covers the Total Crown (the whole government) for the year ending 30 June, with multi year forecasts, not final results. It does not set interest rates (the Reserve Bank of New Zealand's job), report final results or cover household and business finances.

When is it released and what happens each release?

Budget Day falls on a Thursday in May under normal parliamentary timing, with contents embargoed until 2:00 pm Wellington time (NZST, UTC+12). The Minister opens the Budget debate with the Speech, tabling the BEFU (Budget Economic and Fiscal Update, the Treasury forecast) and estimates the same day. It authorises spending for the year ending 30 June ahead, based on forecasts closed weeks before Budget Day. Timing shifts with elections, December and 31 March updates replace each prior forecast, with in year changes via Supplementary Estimates and interim Imprest Supply.

What moves Annual Budget Release?

Markets judge each Budget on OBEGAL (the underlying surplus or deficit) and net debt as % of GDP (gross domestic product).

• Budget Economic and Fiscal Update (BEFU): Treasury forecasts for growth, jobs, prices, tax, OBEGAL and debt.
• Fiscal Strategy Report: Government targets for surplus, debt, spending and assets, reset with each update, with projections beyond 10 years.
• Budget Speech: Minister's statement of priorities and fiscal position opening the Budget debate.
• Estimates of Appropriations: Detailed spending authority sought for the year ending 30 June ahead.
• Appropriation Bill and Supplementary Estimates: Legal cover for new year plans and revised current year spending.
• Summaries and models: Budget at a Glance, Tax at a Glance, Summary of Initiatives, Child Poverty Report, accounting policies and published projection models.

Budget 2024, released 30 May 2024, forecast Total Crown OBEGAL deficits of $11.1bn (2.7% of GDP) in 2023/24 and $13.4bn (3.1%) in 2024/25. Surplus of $1.5bn came a year later, after forecast tax fell over $28bn on weaker growth, policy shifts and soft business taxes. Allowance cuts of $4.4bn, benefit savings of $3.2bn and $2.1bn lower finance costs partly offset this, while net debt of $178.1bn (43.1%) peaked at 43.5%. Debt falls below 40% only late in the decade, showing tax relief plus lower spending can still widen deficits when growth undershoots.

How is Annual Budget Release calculated?

1. OBEGAL: It equals total Crown revenue minus total Crown expenses, excluding minority interests and market gains or losses on liabilities. For example, $150bn revenue minus $158bn expenses gives an $8bn deficit.
2. Operating balance: It equals OBEGAL plus gains minus losses. For example, a $4bn market loss turns that $8bn deficit into a $12bn deficit.
3. Cyclically adjusted balance (CAB): It is OBEGAL adjusted for actual GDP around potential GDP, an estimate of underlying fiscal health.
4. Net core Crown debt: It equals gross issued debt (GSID) minus core Crown financial assets, excluding advances and NZ Superannuation Fund assets. For example, $200bn minus $25bn equals $175bn, or 35% of a $500bn GDP.
5. Ratios: OBEGAL, revenue, expenses and net debt are read as % of GDP, so an $8bn deficit in a $500bn economy is 1.6%.
6. Allowances: Each Budget sets operating allowances capping new spending, with tax changes managed against them.

Key point: Budget Day surplus and deficit figures are forecasts closed weeks before Budget Day, not final results. Judge stewardship by OBEGAL, which strips market swings, not by the total operating balance.