Minister defends spending record in high inflationary era

The Minister of Finance says the current level of his state spending is about right and most economists expect inflation to come down.

Wednesday, October 5th 2022, 1:23PM

by Eric Frykberg

The Government has been repeatedly criticised by opposition politicians for spending too much money and increasing demand for goods and services, which pushes up costs in the domestic economy.

This inflationary impact is responded to with high base interest rates from the Reserve Bank, which flow ultimately into higher interest rates for the would-be home buyer, and leaves mortgage advisers swimming into a swimming into a strong current.

Grant Robertson though did not accept this view, saying state spending had been worked out carefully and the increase in expenditure was largely to the pandemic

His comments came as he was presenting the Government record to the nation in Wellington Wednesday.

Those accounts, for the year to June 30 2022, showed a large operating deficit of $9.7 billion. It is however substantially less than was forecast in the budget just over four months ago.

Total Government income was $141.637b, three quarters of it from taxation. This total figure was an increase of 9.5%.

Expenses rose faster, by 12.9%, to $150.956b, mainly due to the costs of managing Covid 19.

Commenting on these figures, Robertson called them among the strongest economic results from anywhere in the world.

"We are in a better or similar position to the likes of Australia, the UK, the US and Canada," he said.

And he produced figures that showed many economic indicators performed far better during the Covid crisis compared with the Global Financial Crisis of 2008 to 2009.

The Government has been repeatedly assailed for its spending during an inflationary era.

But Robertson produced figures showing the level of state spending relative to the economy was broadly consistent with averages over several decades.

He also answered arguments noting that the mood in the boardroom was gloomy, by saying corporate profits were high and corporate taxes had risen by $4.1b.

Tags: inflation