AAP FactCheck Investigation: Did Labour turn a $6 billion surplus into a $1 billion deficit in two years prior to the emergence of COVID-19?
The Statement
“Can they (Labour) really get on top of the debt when they took, I think it was a $6 billion surplus to a billion-dollar deficit in only two years before COVID happened.”
David Seymour, ACT Party leader, October 11, 2020.
The Analysis
ACT Party leader David Seymour has been buoyed by positive polling in the days leading up the New Zealand general election, claiming Labour’s handling of the economy pre-COVID-19 might trigger a swing to his party.
Mr Seymour told TVNZ Q+A host Jack Tame on October 11 (video mark 3min 42sec) that voters are questioning whether Labour can rebuild the country given that before the COVID-19 pandemic hit earlier this year the government oversaw the reversal of a big surplus in just two years.
In response to a question about ACT’s path to power, Mr Seymour characterised voters as saying, “‘These are the guys that gave us KiwiBuild, can they really rebuild our country out of this? Can they really get on top of the debt when they took, I think it was a $6 billion surplus to a billion dollar deficit in only two years before COVID happened?'”
AAP FactCheck analysed Mr Seymour’s claim that a $6 billion surplus had been reduced to a $1 billion deficit in the space of two years pre-COVID-19.
The total Crown operating balance before gains and losses (OBEGAL) can be found in the Half Year Economic and Fiscal Update reports from Treasury.
According to the 2018 report, the government recorded a surplus of $5.5 billion in the financial year ending 30 June, $500 million less than Mr Seymour’s figure of $6 billion (page 22, table 2.1 – fiscal indicators). The following year’s surplus was $7.3 billion, according to the 2019 report (page 24, table 2.1 – fiscal indicators).
In the same report, Treasury provides the projected deficit for 2020 as $0.9 billion, close to the $1 billion deficit highlighted by Mr Seymour.
The forecast doesn’t take into account the unforeseen impact of the COVID-19 pandemic, which pushed the actual 2020 deficit out to $23.4 billion, according to unaudited Treasury figures from September.
In explaining the pre-pandemic budget turnaround, Treasury said: “In the past two years the Government has run surpluses of $5.5 billion and $7.3 billion. The Treasury forecasts a small OBEGAL (operating balance before gains and losses) deficit in 2019/20.
“This is owing to increased investment at recent Budgets and the temporary effects of the global headwinds … flowing through the New Zealand economy.”
The Verdict
While there are minor inaccuracies in the numbers he quoted, Mr Seymour’s comments were broadly in line with budget figures reported by New Zealand Treasury.
The New Zealand government recorded an operating surplus, before gains and losses, of $5.5 billion in 2018. It was expected to record a deficit of $0.9 billion two years later, before the impact of COVID-19.
Mostly True – The claim is mostly accurate but there is a minor error or problem.
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