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Finance Minister Grant Robertson says government's strong financial position provides 'the space for further opportunities to strengthen our economy as is necessary'

Finance Minister Grant Robertson says government's strong financial position provides 'the space for further opportunities to strengthen our economy as is necessary'

The Government has reported a $7.5 billion annual surplus with Finance Minister Grant Robertson saying this provides the space for further opportunities to strengthen the economy as is necessary.

The operating balance before gains and losses (OBEGAL) came in at a surplus of $7.5 billion, an increase of $2 billion from 2017/18. This is $4 billion ahead of the OBEGAL position forecast at the time of May's Budget, and the biggest surplus since 2008. However Robertson says the big increase on the forecast is largely due to one-off factors that are not expected to continue, including $2.6 billion from the revaluation of rail assets.

Core Crown tax revenue of $86.5 billion was $6.2 billion, or 8%, more than last year and was $1.8 billion higher than the Budget 2019 forecast. Core Crown expenses were $6.4 billion higher than last year, but $300 million less than Budget 2019 forecast.

According to Treasury the increase in core Crown tax revenue was primarily due to more people in employment, increases in average wages, additional domestic spending, and higher corporate and individual profits. Additionally the Inland Revenue Department's recent transition to the new Simplified Tax and Revenue Technology (START) system used to calculate tax revenue was also a factor. Treasury says START has improved the way tax revenue is recognised as estimates are based on the most recently-available data for each individual and corporate taxpayer. The previous process relied on the forecast of provisional tax revenue.

"This change in process has resulted in bringing forward the recognition of some tax revenue for the 2018/19 year [although] cash has not changed," Treasury says.

Total Crown other revenue was $32.8 billion, an increase of $3.1 billion. Other revenue includes fees and levies such as ACC levies, revenue from operations of Crown entities and State Owned Enterprises, interest revenue and dividend revenue.

Total Crown expenses increased $7.4 billion, or 7%, year-on-year to $111.4 billion. A core Crown expenses increase of $6.4 billion is the largest year-on-year increase since 2011, with the expenditure, as a share of the economy higher than the previous year at 29% of GDP.

"The largest drivers of growth in core Crown expenditure were the Government’s 100-Day Plan, Budget 2018 and Budget 2019 decisions. On announcement, the combination of these decisions were expected to increase core Crown expenses, by around $4.7 billion in 2018/19," Treasury says.

Net debt up $200 million

Net core Crown debt came in at $57.7 billion, $0.2 billion higher than for 2017/18. In GDP terms, net core Crown debt fell from 19.9% in 2017/18 to 19.2% this year.

"All together these accounts represent a sound and resilient position, as recognised by international observers and ratings agencies. As a country we are well positioned to deal with a slowing global economy in the tail end of the economic cycle. The government will deliver our investments to deal with the long-standing issues in our economy and society. We are delivering new infrastructure investment, lifting productivity, mitigating and adapting to climate change, improving child wellbeing and addressing the other social deficits this Government inherited," says Robertson.

“Our strong position gives us the space for further opportunities to strengthen our economy as is necessary," Robertson adds.

In contrast National Party Economic Development spokesperson Todd McClay says Robertson’s "fat pockets have come at the expense of hard-working New Zealanders who have been taxed to the eyeballs." McClay says National would index tax thresholds to inflation so "New Zealanders aren’t taxed more by stealth every year because of the rising cost of living."

NZTA facing $352 mln lawsuit

The Crown accounts also reveal that the New Zealand Transport Agency (NZTA) received a legal claim for $352 million from the Wellington Gateway Partnership in relation to the $850 million Transmission Gully motorway public-private partnership in February. The claim stems from delays in work starting on the project, with $352 million representing this claim and other contractual disputes.

The Wellington Gateway Partnership is the consortium chosen by NZTA in 2013 to deliver the Transmission Gully project. It's led by Leighton Contractors Pty Ltd, and also includes HEB Construction Ltd, InfraRed Infrastructure General Partner Ltd,  The Bank of Tokyo–Mitsubishi UFJ, Ltd, and the Accident Compensation Corporation. Transmission Gully is the the first state highway project in New Zealand being built as a public-private partnership.

Here's Robertson's full statement. And here are the June year financial statements from Treasury.   

A strong surplus and low debt show the economy is performing well, and means the Government is in a good position to meet the challenges of global economic uncertainty.

“The surplus and low levels of debt show the economy is in good shape. This allows the Government to spend more on infrastructure and make record investments in health and education,” Grant Robertson says.

The Crown accounts for the year to June 2019 show a $7.5 billion surplus. This is due to the stronger economy, and also includes a number of one-off factors including revaluation of the country’s rail assets.

Net debt has fallen further to sit at 19.2% of GDP, down from 19.9% a year ago and below the 20% target in the Budget Responsibility Rules.

Corporate profits, employment and wage growth were higher than expected in the May Budget. This contributed to tax revenue coming in 2.1% above forecast.

“The results show businesses are investing, employing more workers and paying higher wages, while at the same time reporting stronger profits,” Grant Robertson says. 

“This is a timely reminder that the underlying fundamentals of the New Zealand economy are solid. We are growing faster than the likes of Australia, the UK, Canada and the EU, which is being recognised by international investors and agencies like the IMF and Moody’s.

“It’s important that we don’t talk ourselves into a downturn just because it suits some people’s negative narrative. Unemployment, interest rates and Government debt are all low, giving the economy a solid platform to keep growing and face any global headwinds.”

The accounts show the Coalition Government continues to increase investment in areas that were neglected by the previous Government. Capital investment, including in new hospital buildings, classrooms, roads and rail and the Super Fund was up 13.7% over the year.

“New Zealand is well positioned for this point in the economic cycle and any global shocks that may come our way. Fiscal policy has a part to play alongside monetary policy as we manage these challenging global economic conditions. At Budget 2019, we increased infrastructure investment and boosted spending in key areas like health, education and research and development.

“Our strong position gives us the space for further opportunities to strengthen our economy as is necessary,” Grant Robertson says.

“The accounts show that we have the balance right. We are tackling long-term challenges by investing in hospitals, schools and transport infrastructure while managing the books responsibly. We are making our economy stronger to make sure we remain resilient and have room to move to support New Zealand through any further challenges ahead.”

And here's a statement from National Party Economic Development spokesman Todd McClay

The Finance Minister’s fat pockets have come at the expense of hard-working New Zealanders who have been taxed to the eyeballs by this Government, National’s Economic Development spokesperson Todd McClay says.

“The Government should be looking to stimulate the economy by letting New Zealanders keep more of what they earn.

“Instead, it has piled on more and more taxes to the point where Grant Robertson is sitting on a big surplus while those living outside Wellington’s beltway struggle with rising living costs.

“One of the reasons debt is lower than forecast is because the Government is failing to invest in the infrastructure New Zealand needs.

“It has cancelled or delayed a dozen major new roading projects right across the country and replaced them with projects that weren’t ready, and won’t be ready for some time yet.

“Meanwhile, the Government has been piling on taxes. It has legislated to milk an extra $1.7 billion from motorists through fuel tax hikes and extra GST, while its misguided housing policies have pushed up rents and burdened landlords with extra costs and regulation.

“National legislated for tax relief that would have put more than $1000 a year extra into the back pockets of New Zealanders. This Government cancelled that.

“We will index tax thresholds to inflation so that New Zealanders aren’t taxed more by stealth every year because of the rising cost of living.”

Crown financial results

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The 'OBEGAL annual' chart will be drawn here.
NZ$ mil. monthly
Source: Treasury
The 'Operating balance annual' chart will be drawn here.
NZ$ mil. monthly
Source: Treasury
The 'OBEGAL monthly' chart will be drawn here.
NZ$ mil. annual
Source: Treasury
The 'Operating balance monthly' chart will be drawn here.
NZ$ ml. annual
Source: Treasury

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Translation from Robbo to Citoyen:

"A strong surplus and low debt show the economy is performing well" is rendered as:
"Our extensive range of New Taxes are working well, and we're Keeping 'em".

Yeah now there is money to spend on things that should have been spent on by the previous government, like hospitals and teachers, finally NZ is getting things like good cancer drugs, which wasn't happening when the Nats were in, the Nats policy was to just run everything down to the ground, and now we have to play catch up.

A very concerning aspect that provided the large bulk of the unexpected surplus was the revaluation of the railway system, from $1.3B to $6.3B, althouigh the railway remained unchanged during the year. They added $5B to the accounts via a stroke of an accountant pen, with no fundamental underlying changes. I'm rather uncertain that one should claim this $5B as a surplus. The railway didn't increase in value, they just decided to value it via a different manner. It is rather surprising to me that this aspect isn't being covered more critically. This is a shell game surplus, similar to the change in US corporation "profit" announcements that are now commonly outside of what used to be normal accounting standards.

From what I read Kiwirail was revalued to add 2.3 billion to the surplus, not 5 billion, where is the 5 billion figure from?
But yes I agree that has been largely ignored, especially from the likes of Bridges are using the figure to call for a tax cut lolly scramble.

The headline kinda captures the topic. I may have been off by $0.3B...

Hmm ok not sure what the reason for the difference is, but the other articles I've been reading said the Kiwirail revalue accounted for just over 2billion of the surplus.

I'd recommend reading the article for the details.

Copied from a post downstream:

From the article linked above:

Table 6 - Increase in the rail freight network valuation
Increase in the rail freight network value $5.3B
Reflected through:
Reversal of prior year impairments that impacts OBEGAL $2.6B
Reversal in the revaluation reserves that impacts net worth $2.3B
Other movements (eg, additions and disposals) $0.4B
Total increase in net worth $5.3B

There is a real valuation delta of $0.4B, the rest is accounting sleight of hand numeric changes unrelated to any real change in value. I'd compromise and say that $4.9B is accounting changes and $0.4B is an actual change in value if I was reading Table 6 correctly.

Yeah I'm not sure why it's being reported on so differently, might need an accountant for that one, even a Labour political opposite, Don Brash referred to it as around 2 billion of the surplus.

At the end of the day the Nats did far worse in my opinion, selling off at least 4.7 billion of income producing assets, and yet still could only make a surplus 2 out of 9 attempts.

Was waiting for the "but they did this" argument... I'm less than impressed, just because one person may have done a wrong doesn't mean that one shouldn't call out another that does a wrong.

I'm less than pleased with partisan behavior, regardless of which side it comes from. Discuss the issues, not the opposition.


Now's a great time to index the tax brackets. Or they could just give every Kiwi Household $5000.


I prefer making the first 10K or whatever level tax free,


Agree - make is $15K while your at it

And use it to buy correct grammar

agree. An easy and efficient option.
every income earner benefits

repealing secondary tax entirely would be a good start, reinstate the children's tax credit that nasty old Peter Dunne cancelled back in 2012 to pay for the upper bracket tax cuts that same year...would only ever happen under a National Govt of course...

Removing the secondary tax code will most likely result in a big tax bill to the person at the end of the year.


Secondary tax does not work the way I think you think it works. Secondary does not generate any extra revenue only ensures that people do not underpay for the year.

It is on it's way out anyway, thanks to the IRD computer system upgrade.

Wait, what children's tax credit? You mean the childcare tax credit that was essentially underwriting massive blowouts in ECE fees?

The tax credit that children under the age of 15 were able to claim, aka the "paperboy tax" that John Key presided over while he was PM.

Lets be fair , it costs money to feed , clothe and take care of kids , now that all of ours are independent , we are able to save $50,000 a year , which we did not save when they were teenagers

Lots of commentators on this website tend to favour tax cuts as a means to grow the economy. I believe such a sugar rush generally lasts for a couple of quarters at the most and, in our case, would leave us worse off.
In the absence of productivity growth, increase in nationwide spending from tax cuts could either force the government to reopen migration floodgates due to lack of economic capacity to service this additional demand or face runaway inflation.

Other countries that have recently gone down the tax cut path aren't witnessing any significant wage growth, again due to lack of corresponding productivity growth, but corporate profits grew under the increased economic activity.


Adjusting brackets for inflation is NOT a tax cut. Not adjusting income tax brackets for inflation is increasing tax. Will you please refrain from using misleading terms? Say that you are for increasing income tax. But do not say that adjusting brackets for inflation is a tax cut. Do not create alternative facts.

I was talking more so about the 5k sweetener to Kiwi households. Should've made that clear.

You pay less tax on the same amount of income after adjusting the marginal rates up. Looks like a tax cut.

If you are making the same amount of income, then either your income isn't keeping up with inflation, or there is no inflation and no marginal rates change.

In real $, inflation adjusted tax brackets is revenue neutral due to inflation.

Maybe we should use the tax tables from 1970 instead as your position suggests that one shouldn't factor inflation into tax tables? Hint, the top tax bracket starts at well below the current poverty threshold.

Same income amount but less tax = less government revenue. That's not neutral.

If everyone makes the same year after year, then the tax table doesn't change. Revenue neutral. Do you understand what inflation is? It is the devaluation of money. If inflation is 2% and my income increases by 2%, my income is unchanged. My tax should also be unchanged, which requires inflation adjusted brackets.

Your buying power of your income may be unchanged but your income has increased 2%. If someone says did you get a pay rise and you say no, when in fact your pay went from $100 to $105 then that would be incorrect even if inflation for the same period was 5%. The correct answer is "yes", I got a pay rise but it was negated by inflation. The OP said calling it a tax cut by increasing marginal rates was misleading. It is not. Your point about real spending power is off point to the original discussion and confuses calling something a tax cut as opposed to justifying why you believe tax should be cut at the rate of inflation.

For example. If there was a flat tax rate of say 30% and a person earned gross $100 in 2017 ($70 in the hand), in 2018 they earned $100 but inflation was 5% should their new tax rate be 26.5% to maintain $70 + 5% in buying power (e.g. $73.50 in the hand now)? I presume this example achieves your desired outcome (correct me if I am wrong). However it also clearly highlights that a tax cut is required to achieve this outcome (I presume dropping the tax rate is accepted as meeting the literal definition).

The idea is to tax at the same effective rate, indexed on inflation. The tax % remains unchanged, which requires thatthe $ value for the brackets should adjust each year based on inflation (or have a tax cut which is less desirable as it reduces the progressive aspect of a tiered income tax system) . If you want to get fancy, maybe define the brackets such that the expected tax revenue remains constant (after factoring in inflation!). The current non-indexed tax bracket system provides a stealth tax increase each year due to the effects of inflation. The end result over sufficient time will result in your example becoming true, that is, a flat tax excepting the first few $ earned as the highest marginal tax rate becomes an ever lower percentage of the median income instead of being above the median income.

Add: the OP called for indexing the tax tables (presumably to inflation as that is the usual index method). Nothing was said about tax cuts.

Let's try this, marginal tax rates are 10% for the first $50 and 20% above $50. John earns $100 in 2018 and pays $15 tax. In 2019 the marginal rate is moved so first $100 is taxed at 10% and any above is taxed at 20%. Inflation for 2019 is 0%. Johns earns $100 in 2019 and pays $10 tax. Has he received a tax cut?

Unrelated example... if inflation is 0% then the bracket shouldn't shift.

If the bracket hasn't changed for a couple of decades while there was a cumulative 100% inflation, then your example might be pertinent.

And if the bracket does shift (despite 0% inflation) is that a tax cut in your definition?

Hint: You know it is but cannot bring yourself to say it;)

I already said that by inference. I'll state it directly. Moving the brackets without any inflation is a tax cut. Not moving the tax brackets when there is inflation is a tax hike. Two sides of the same coin.

Now we are getting somewhere. The marginal rates are just getting in the way so a flat rate is a better at highlighting the issue you have is that tax rates are not inflation adjusted.

In regard to your tax hike argument. If the tax rate is 30% in 2018 and in 2019 there is inflation of 5% do you think:
(a) Leaving the tax rate at 30% in the 2019 year would be a tax hike?
(b) Reducing the tax rate to 26.5% (which ensures spending power of $70 in 2018 remains the same in 2019 at $73.50 despite 5% inflation) in 2019 would be a tax cut?

Ummm... you are missing the point.

It isn't the tax rate that needs adjusting for inflation, but instead the bracket definition that needs adjusting.

I'm not playing multiple choice, we should instead be talking substantively.

Shifting the bracket with inflation is NOT changing the tax rate, but changing the amount at which the tax bracket applies. For example, the 33% tax bracket was originally set in 2010 to $70,000. According to the inflation since then has been 15.1%. An indexed tax bracket would have seen that $70,000 change to $80,570. Assuming that wages have kept up with inflation, this would be revenue neutral. According to the median household income has increased 30.6% during that same time period so the median income would have still seen an increased tax burden even with an inflation indexed tax table due to the increase in wages as compared to inflation. This is a good thing as it indicates an improving standard of living.

If you have no brackets e.g. a flat tax rate, then the only way to adjust is to move the rate.

The effect of your bracket shift is the same in that you are changing the tax rate which applies to income (albeit income in a certain bracket). To the extent income in a bracket is now subject to a lower tax rate that is a tax cut. That is why you won't answer my previous question as it is clear that a change in the marginal rates is a tax cut, irrespective of whether they are changed by reference to inflation.

You may justify this movement in the brackets by reference to inflation but by refusing to acknowledge it as a tax cut is dishonest (that was the original claim to which I responded to in my first post).

As to your definition of "revenue neutral" you appear to be referring to the real spending power of a person (if you provided an example it would assist). Using your figures I understand your revenue neutral reference as follows:

Assume John earned $100k in 2010 and has remained on that income in 2019 and that the tax rate for income below the level where the top rate kicked in is 10%. In 2010 John would have paid tax of (70k x 10% + 30k at 33%) = $16,900 leaving him $83,100 in the hand. Now using your inflation adjusted tax threshold for 2019 John would have paid tax of ($80,570 x 10% + $19,430 x 33) = $14,468.90 leaving him $85,531.10. given inflation was 15.1% over this period for John to have maintained his spending power he would need a take home pay of $83,100 (his 2010 take home) plus 15.1% being $95,648.10. I would have thought this is (i.e. $95,648.10) the revenue neutral amount from John's perspective as he is not better or worse off between 2010 and 2019 as the inflation component would have been negated. To achieve this result would require a tax rate of 4.35% in 2019. I don't understand why you have introduced the median household income figure into the mix.

If my example above is wrong please provide an example of how you would calculate a revenue neutral marginal rate change.

Again, none of this detracts from the fact that there has been a tax cut (which is at odds with the OP's claim there is no tax cut where the brackets are moved upwards - that's simply wrong).

First point, we don't have a flat tax, and at present, nobody credible is suggesting we adopt one. Why keep bringing that up?

To do your example correctly, one needs to do the appropriate maths. Don't just throw some haphazard numbers up... do the maths correctly. For example, use the tax rates and brackets as set in 2010, and assume a $100k income in 2010. That income will get a tax of $23,920, which is a tax payment of 23.9% of the income. Nine years later, if this income increased by the inflation rate, it would be $115,100, and would be generate a tax of $28,903, which is a tax payment of 25.1% of the income. Without any changes to the tax bracket, this person would lose about 1.6% of their after tax purchasing power due to the effects of inflation.

Now adjust the tax brackets by the 15.1% inflation that occurred between 2010 and 2019. That $115,100 would get a tax of $27,532, which is a tax payment of 23.9% of their income. Note carefully that the $100k income in 2010 pays 23.9% of their income in tax, and the same income when inflation adjusted would pay the same percent of tax if the tax brackets were adjusted with inflation.

Adjusting tax brackets for inflation is NOT a tax cut. It is keeping the tax the same in constant year dollars. Yes, the tax paid goes up via the number, but the purchasing value of that tax take remains the same after inflation. The tax payer also keeps the same purchasing power. This is preferable to the current system where the typical wage earner is paying an increasing percentage of their income to IRD every year due to the effects of inflation.

By increasing the income and the tax rate by the same percentage of course the result will be the same net tax take. What are the numbers though for the person whose income remains at $100k (as you calculated below). You mention the monetary impact ($1,371 less tax) but not the effective percentage rate of tax. I am picking it is less than 23.9%.

Point seriously missed. You do not understand the basics of inflation, and how it affects income, taxation, and spending.

Yes, it is painfully obvious to the most sophomoric dilettante that with a declining real income that ones tax burden will decline with an inflation adjusted tax system. That is given with a declining income. I'm pretty sure that I would be far less than happy with a top 1% income from 50 years ago if I was given the same # of $ (or #) as they earned a half century ago. That income is poverty level now due to inflation. If we used the tax brackets of a half century ago, we would have essentially a flat tax at the highest marginal rate. This is what is the end result of a lack of inflation indexing.

Why keep focusing on a constant $ income when there is inflation that erodes the value of money, and wages continue to increase? What is your point in this exercise, other than to continue to demonstrate either your ignorance or an OCD fixation on a fixed number?

All you have proved is that if you multiply the numerator and denominator by the same amount the percentage stays the same. If you weren't so clearly lost I would think you were taking the p***.

Nuanced discussion is evidently lost on you.

The reason for shifting the tax brackets is to keep a progressive tax system. Changing the tax rate instead of indexing the tax rate reduces the progressive nature and gives more benefit to higher incomes.

I now understand your handle on this website... although a slightly more apt variant would have been DenseG.

You can lower each marginal rate and maintain a progressive tax system and achieve the same outcome. Resorting to name calling is a clear sign you have lost the debate.

Ummm... I would say that you initiated the name calling previously.

You cannot lower each marginal rate and maintain the same progressive tax system while achieving the same outcome when there is inflation. This is simple maths. I've provided your requested example demonstrating the validity of my point, and provided quantitative analysis invalidating your point. You are rather good at goal-post shifting and avoiding the crux of the discussion.

A side comment... tax rate is unchanged in my examples. Instead the bracket is changed.

But you can get the same result by reducing the tax rates and leaving the bands as is. Your point has no relevance.

Entirely wrong. See above for clarification. Changing brackets keeps same result for all incomes, changing tax rate gives more benefit to higher incomes.

The same percentage is only maintained if the income and effective tax rate change (achieved by you through movement of the marginal bands) is identical (in your example 15.1%). You have conceded this point already.

This is why one should index the tax brackets with inflation. It does NOT result in a tax cut, which you had stated previously and admit implicitly your above statement.

Define what you call a "tax cut". This is probably the best way to explain it to you.

You were the one that claimed that indexing tax brackets with inflation is a tax cut, you provide your definition of a tax cut.

I've provided an example of how indexing tax brackets is revenue neutral if incomes increase at the same rate as inflation, therefore it would not be a tax cut. I've also provided data that shows that indexing tax brackets with inflation would actually have been revenue positive, due to household income increasing greater than inflation since the last time the tax tables were updated back in 2010. What part of increasing real revenues (not to mention the even higher increase in tax revenues in $#) can be called a tax cut?

A tax cut occurs where a person pays less tax on the same amount of income.

e.g. a person who earned $100 pays $30 of tax, after a tax cut that person now pays $25 in tax.

A tax cut (i.e. a person paying less tax on the same amount of income) can be achieved in a number of different ways including:
(1) Reducing the tax rate or rates that apply to an income amount or different portions of an income amount (e.g. rate cut); or
(2) Applying a lower tax rate to an income or portion of income (e.g. band movement).

When National proposed to move the income bands for marginal rates in 2017 it was referred to as a "tax cut" (see: No tax rates were actually being cut by National, there was merely a movement in the income bands to which the existing rates applied.

A movement in income bands up is a tax cut under my definition and appears to be accepted by others (assuming the herald and every other commentators are indicative of general acceptance).

What's your definition?

I'll let your "definitive" source speak to the issue without further commentary by me.

One aspect of your example needs to be highlighted. That is, your assumption that $100k in 2010 is the same income as $100k in 2019. You know very well that just because the number is the same does not mean that the spending power is the same. That $100k 9 years ago would buy 15% more stuff than it does today. It should attract a higher tax back in 2010 than it does currently. Sadly, that sad $100k earner that hasn't had a raise in 9 years continues to pay the same tax even though her/his effective wage has reduced. He/she has lost 13% in purchasing power in 9 years due to inflation induced loss of wages, and lack of a inflation indexed tax bracket. If there was inflation indexing, that purchasing power would have improved by $1,371 for 2019 as the tax would have been reduced commensurate with the effective reduction in income due to inflation.

Why would the marginal rate move if Inflation is 0% when the Tax Rates are indexed to inflation?

They aren't. But if the marginal rates are moved to higher brackets when there is no inflation is that a tax cut?

If the income remains the same $ number when there is inflation, is the result that the earner has less spending power, therefore less effective income?

Yep, however, that does not mean that a movement to maintain the same effective spending power is not a tax cut. Furthermore, your position is a movement of the marginal bands in line with inflation which would not secure the same spending power (although it would ameliorate any spending power loss). However all this is irrelevant to the claim that a movement in the marginal bands is not a tax cut. As discussed above it is under my definition (paying less tax on the same income number).

Not answering the question again. SMH

None of those articles you refer to mention a person paying more tax on their same income (e.g. tax increase). They all talk about bracket creep which is real, they also talk about a "stealth tax". Show me where they define tax cut, or a tax increase. I provided my definition of a "tax cut" before referring to the NZ Herald. Why don't you?...

I will even define a "tax increase" for you, "a tax increase occurs when a person pays more tax on the same amount of income e.g. $100 income pays $25 tax, after the tax increase $100 income pays $30 tax."

Now your turn to dodge the question again.

I would use the same definition in essence, although the values would be changed by inflation for each year. That is, if inflation is 5%, then last years income of $100 would be $105 this year. I think I have been consistent in this regard. If the tax paid is constant in real $, after adjusting for inflation for a constant real income, then there is no tax increase.

Your definition is silly as there has virtually always been inflation and ignoring the effects of inflation is inane. You've gone way past tungsten, approaching neutronium.

In 2017 you are paid $100 a year for your job, in 2018 your boss agrees to pay you $105 a year, inflation in 2018 is 10%.

In 2019 a friend asks "did you get a pay raise in 2018"?

What's your answer?

My answer, I'm not even keeping up with inflation and I need to find a decent job.

Yes, in nominal numbers, I got a pay raise. In real terms, I had a pay cut. The latter is the important one to pay attention to. Thinking anything else is the path to poverty.

Lend me $100, I'll pay you $101 next year. You'll be making money!!! Lend me as much as you want, you have found your path to riches!!!!

I never said you couldn't elaborate on your answer "e.g. yes I got a 5% pay rise but as inflation was 10% I am worse off in real terms." Everyone can see that.

However, if your answer is "no, I did not receive a pay rise" then I do not agree with that answer. It appears your definition is different to mine.

As to your example of "Lend me $100, I'll pay you $101 next year. You'll be making money!!! Lend me as much as you want, you have found your path to riches!!!". Do you think you would be required to return the $1 in income to IRD on the basis you had derived income? You seem to be saying that as the $1 is less than inflation (assume 2%) there is not income so you would not need to pay tax. You should try that on with IRD sometime and see if they agree with your definition of income e.g. "only a return on investment that exceeds inflation". Let me know how that goes.

Yet another example as to how inflation steals from people. One gets taxed on nominal gains, even if the return is below inflation. One is also getting penalized via the tax tables not being adjusted to inflation, resulting in increasing tax payments every year. And the RBNZ targets 2% inflation... thereby stealing 2% from everyone's savings each year.

Thanks for helping to make an important point.

It's not an important point, it's a fact. The point is any interest earned = income. And you saying it is not income because the interest is less than inflation is just wrong. You're just defining words to fit your inflation adjusted narative:
(1) pay rise - an increase in pay is not a pay rise if it is less than inflation.
(2) Interest income - interest derived on a term deposit is not income if it less than inflation.
(3) Tax cut - paying less tax on the same income is not a tax cut where the tax rate is reduced to compensate for inflation.
(4) Theft - inflation is theft.

You're just making up your own language. Knock yourself out but you're just wasting my time.

You are amusing, although quite wrong and getting even more erroneous with further posting.

I am assuming that the typical pay increases with inflation, and subsequently provided data that shows that this increase has been in fact greater than inflation over the last decade. You can play word games about fixed pay in an inflationary world all you want. I'd rather stay in the real world.

I've never stated that interest income isn't income if it is less than inflation. You are making $#it up to suit your narrative.

I've never suggested a reduced tax rate. More making silly stuff up.

The last item, inflation is definitely theft. I'm guessing that you do not understand what happens to saved money when there is inflation. It is a fact that money becomes less worthwhile when there is inflation, that is inherent in the definition. Guess who benefits with inflation? Hint, it isn't the public... it is the entity that sets inflation. That entity that adds money into the economy to dilute the existing money (AKA inflation), which effectively takes money from the saving public. Maybe you wish to call it something else. I'd be quite curious as to what you would call this monetary exchange.

Another from your beloved NZHerald calling the lack of indexing a tax increase:

No it doesn't. You need to read it again.

What do you call it when people pay a higher percentage of their income in tax in each succeeding year? I call that tax hikes. We have had a decade of tax hikes, which the Tax Working Group called a "stealth" tax hike. Nothing stealthy about it, the maths are quite simple.

To pay a higher percentage they must have passed into a higher tax bracket and to do that from the previous year they must be earning more money. Earn more money pay more tax - I call that "move on people, nothing to see here".


If inflation was 2% and I made $50k last year and $51k this year to match inflation, I would still be in the same tax bracket, and will have paid not only a higher amount of tax but also a higher % tax. I would be poorer this year than last year, even with a raise that keeps up with inflation. This is the failure of not indexing tax brackets with inflation.

You have also earned more income. More income = more tax.

Your methodology ends eventually with virtually everyone paying 33% tax.

Well it won't be worse that cutting the cash rate, which is pretty pointless and does not assist the economy


it sounds good but there are so many areas of underspending for the last nine years while we increased the population by 500k that need addressing that we will not have enough.
auckland needs a whole new hospital just to handle the population growth not to mention new schools,
what about transport to get around Auckland Hamilton Wellington and Tauranga to name some of the worst places
then you need a house building program all over the country to house those that will never be able to afford to buy or are struggling to meet rents now otherwise you will have a much much bigger problem in the future.


@ Sharetrader

Agree 100%

Lets spend some money on national infrastructure that we desperately need....the cost and benefits of which are spread over multiple generations (like, didn't we used to do that??)

From my own backyard - Auckland's motorways, schools and hospitals are groaning under the extra people flooded in over the last 10 years to juice the books.

Aucklands motorways need a huge investment in a decent rail network. Huge areas (North Shore, East Auckland, parts of west and south) have zero access to rail. A loop from say Airport to Manukau to Howick/Botany then connecting back at Panmure, a north shore line that goes to Albany, and also links across upper harbour to Hobsonville, Te Atatu and connects with existing rail at henderson(?). With local bus services to get them to/from the local stations.

How many people could then realistically leave the car parked for the Monday to Friday commute, and with decent signalling you can scale the services to every 5 mins as the population grows.

Heavy rail is far more expensive and space-intensive for commuter travel than it needs to be, plus it doesn't play nice with gradients unless you want to spend mega dollars on tunnels. Where there is no heavy industry, rapid deployment of light rail will be far cheaper and far easier. Very few areas you listed would justify the extra spend to go from light rail to heavy rail. Even if we have to go down the Sky Train route in places to get it built, it will still be far easier than a huge, surface-based heavy rail system in areas where there is no industry to justify it.

I'd be building the key corridors you mentioned as well as starting to rebuild the Auckland tram network torn up in the 1950s. Whatever they do do, they do need to get the hell on with it.

it could be argued that simply opting to ADEQUATELY MAINTAIN what scant infrastructure we actually have instead of treating it as an asset to sweat AKA National Government style would be HIGHLY beneficial for the internal economy, however it would seem that too much privatisation has removed so many assets from public hands that it might not actually be possible.

yip - we battle to maintain the stuff we have and yet everyone wants new goodies

whilst all true, those projects would all be considerably further down the line, even if planning started today and not to mention the availability within the construction industry.

Far better to stimulate right now with extending out the tax brackets or reducing the % of tax within the brackets

you're probably correct on that point, we don't even have the capacity to ORGANISE the construction sector let alone staff any ramp up in capacity. What a shambles, thats neoliberalism for ya!

We could use the surplus money to invest in long-term productivity outcomes around the country.
Some ideas from some highly-productive countries are: innovation and research grants, industrial training and apprenticeships grants, tax incentives for enterprises willing to train interns and graduates in STEM fields, faster depreciation for cutting-edge manufacturing equipment, etc.

Invest in productivity...thats something a big chunk of NZ inc could learn about although it won't have to because the clap trap provincial firms that won the recent immigration visa bonanza will simply put more low cost immigrants to work using their obsolete equipment....

No - you will have to wait untill the last boomer is dead and buried before any meaningfull national infrastucture is built - let the millienials pay for it themselves - lazy little buggers.

sounds like a strong case to under fund health care ;)

Well...the population has increased and more boomers will be falling off their unaffordable insurance, straight after they've been campaigning for lower taxes over and over. These things unfortunately will most likely affect the quiet, just-getting-by folk more than the folk who have made the biggest noise (e.g. Tax Avoiders Union style folk).

Although, it may not come as a surprise that having asked for lower taxes for themselves some are now asking for younger Kiwis to fund their private health insurance:

Staggering level of entitlement.

Yeah that's a bit on the nose, you wouldn't mind if the boomer generation had voted for governments that actually saved for their retirement, like they did a lot more in Australia than NZ, but in NZ all they did was pay for the much smaller current pool of retirees pensions at the time, and didn't worry about the much bigger pool that would be required in the coming years for their generation (boomers) to retire.

I have a serious issue with Auckland calling for central Government to fund their transport infrastructure. in the late 70's and 80's Sir Dove Meyer Robinson (Robbie) the then Mayor made himself highly unpopular by telling the then Jaffas they needed to do something about it, and ultimately got forced out of office because he persisted. The Jaffas claimed their rates were too high and didn't want to pay more. I lived in Auckland (temporary Jaffa, and loved it!) for a period in the 80's and moved back to Wangavegas and was shocked to learn our rates down here were 30% higher than those in Auckland! Even now when i reconnect with friends i understand that although the gap may have shifted, we still pay significantly more! It is time for the Aucklanders to pay for their own infrastructure and stop being a blight on the rest of the country!

Cool. Let's make it an even split then. Just repay us for the money we paid to rebuild Wellington and Christchurch after their respective quakes. You can also throw in a third of any centrally-funded project in a provincial backwater that doesn't have the population to actively fund it - so that'd be most schools, hospitals etc. Is every man, woman and child in Dunedin chipping in $33K for that new $1b hospital of theirs? Didn't think so.

Because the reason Auckland has such a massive transport shortfall isn't driven by rates - that's small beer money - it's that central funding for infrastructure has flowed out of Auckland disproportionately until relatively recently. Now Aucklanders are expected to mop up the immigration foisted on it by other regions (Wellington), expected to pay for their basics through a regional fuel tax that no one else has to pay, and then has to sit back and watch other regions get things funded at a far higher rate of central govt. contribution than Auckland projects do. Guess who's paying a third of those costs too? Still, don't let pesky things like facts get in the way of a little backwards-ass provincialism.

I do think Auckland is due more infrastructure spending but don't think that Christchurch got a generous rebuild deal from Wellington. So it shouldn't be used as a reason for why Auckland needs infrastructure spending. Auckland can make a better argument than that. The biggest funder of the rebuild was the insurance companies not the government. And the government got its share of paye and gst taxes from all that insurance work.

Christchurch got a shit end of the stick, they arguably didn't even get a rebuild and it definitely represented a missed opportunity to actually make the city better in terms of transport. But if the argument against giving Aucklanders the transport they need to support the population central govt is foisting upon them based on what happened fifty years ago then there's not really much of a high bar there.

NZ made massive transport mistakes in Auckland post WW2. Basically the city only got half a transport system. If NZ had invested in a proper commuter rail system 60 years ago it would have saved so much money because retro fitting it is expensive. But it needs to be done... So the country has to pay for it.
The same argument applies to Christchurch. Constructing a CBD rail loop as part of the rebuild would have been the logical time to do it. But rail is still needed to prevent the city from making Auckland's transport mistakes... so the country will have to pay (fortunately it isn't that expensive).

The National party in Canterbury want to double down on their only invest in motorways transport policy. They want to build a motorway to Ashburton before restarting commuter rail for Greater Christchurch. They just don't see the madness of investing in only one mode of transport. Even though they have 60 years experience in NZ showing that by only investing in motorways means roads very quickly get congested. Not to mention how stupid it is for climate change.

Agreed. Downtown Christchurch should have been rebuilt based on proven European city designs that allow for rapid transit. Even if you wanted to wait until the aftershocks died down, you could still provision the space for it. Somehow they've managed to do neither?

Yes it is accepted opinion down here that it was a missed opportunity. Even as you say, at a bare minimum the corridors could have been created allowing it to be easier to build mass transit later. All the underground services were being rebuilt anyway so it would have been easy.

I've got to get it off my chest sometime: some of us in Auckland do think Christchurch is a bit "Gothic".
They certainly have some weird murders down there.
Some people attribute this to the incessant peculiar winds that blow through Christchurch at times.
I think it has more to do with the deeply entrenched class system down there; you know, the old original farming aristocracy whose stifling presence disturbs the minds of those from the lower strata. Just a bit weird.
But taking nothing away from the suffering caused by the earthquake.

Maybe. It has a different culture than Auckland. It isn't as commercial or self-entitled as the north but maybe it is more class oriented.

That and you have Skinheads down there as well although a lot of them these days don’t have shaved heads. If they’re not smoking meth they’re drinking meths filtered through a loaf of bread.

So you are an extremist then. Are you saying you want Auckland to be totally self funding? Most of the regions are closer to it than Auckland. What I said was that effectively Aucklanders chose to stick their heads in the sand, bluntly refusing to address infrastructure problems at a time when they were much more affordable and less pressing than they are now, even when their Mayor was telling them there was no way to avoid it, and it would only get worse. And now much like a petulant teenager, they are crying poverty and want the rest of the country to pay for it.

It is time to pay the piper.

Out of interest, do you pay a separate water bill? Our household pays $1200 a year in water in Auckland, relatives further down the island get it free.

When living in Auckland I did pay a water bill, but combined with my rates the total was around 30% less than what my rates were when we returned to Wangavegas. I admit that for you lot this has got much worse since, but then again that is about the council and Government attracting growth beyond what the resources available locally can cope with. This is a point that PDK makes regularly, unconstrained growth in a finite world has its costs. As for do we pay for water here. No - but it is coming.

And Auckland gets cheaper fuel with Gull, its swings & roundabouts no one in NZ gets the best of all worlds, unfortunately.

It has reached a point in Auckland where (if you have the space) it is cheaper to install a couple of big rain water collection tanks hooked up to your roof than use Council supplied water.


Shall we spend it building more pointless roads like Soyaman and his blueshirt brigade would have us believe is good for the country and his road building brothers? Orr...shall we do something that will send a useful fiscal impulse through the economy? Helicopter money is always welcome...or maybe buying an electricity company or three back from the clutches of greedy private capital so we can actually afford to warm those newly insulated rentals... maybe fund the restablishment of the Ministry Of Works and dissolve the RMA while you're at it so we can get some proper coordinated national planning underway again and the jobs that will follow with the projects that planning facilitates....brighter future?

Re-establish the Ministry of Works please!

Actually, first priority should be building a new wing on the parliament building to house the reformed upper house. The house of reps has made worse and worse legislation ever since we lost our bi carmel legislature...who's aye for that?

Can I please order a salted bi-carmel latte to go?

Disappointing that Grant neither mentions infrastructure investment needed to address the housing crisis that his government promised to transform or infrastructure investment for a just climate change transition. So a continuation of the vague waffle from Robertson.

Bernard Hickey will not be happy. His article today (paywalled) was all about re-engineering our cities to lower housing costs and climate change emissions.


We dont have a housing crisis, we have an immigration crisis!

True in a sense but people are not a problem. We are a nation of immigrants we should be better at coping with this growth -it should not be a crisis. We have increased number of immigrant workers paying income and gst taxes which is good for Grant's numbers but it creates an infrastructure deficit wrt to houses, roads, pipes, rail, hospitals, schools etc. The surplus needs to be spent on infrastructure...

More people= more ecoterrorism

My gut feel is the taxes paid by immigrants and their families are much less than the costs of their education, health and other social costs, so future immigration needs to be targeted at those who add value, integrate and become real Kiwis living among st the general population and accepted by them and not Ghettoize certain areas which become undesirable.

good numbers and no leaks this time,hopefully he will give some of our money back so we can decide what is important to spend it on instead of sprinkling it around various good causes.

There a greater chance of Helen Clark becoming next queen of England than grant using any surplus in a beneficial way to those who paid their taxes.

Wow. Tax cut or Helicopter Money, we want, we want, soonest.

Yes! because "Crown debt of $57.7 billion, $0.2 billion higher than at 2017/18" doesn't matter. Someone else - our children - get to pay that off, or maybe they will do what we want to do? Saddle their children with it....

Well, Capitalism works like that.
Socialism kills the present, Capitalism kills the future.
Fascism kills the neighbours.
Communism kills everyone.

Looks like the election bribes will be massive this time around.

Given their track record can we trust their promises or bribes?


- deliver almost no campaign promises
- make no inroads in major social issues or infrastructure deficits highlighted in opposition
- demolish business confidence
- encounter no major disasters during your tenure to otherwise prioritise spending on.
- post record surplus
- pretend like you are some sort of economic wizard

Only in New Zealand.

"Only in New Zealand" - I think we are very lucky with our main political parties being very similar and central. Look how a few bad eggs have transformed UK to being completly dysfunctional.

Shouldn't we get back to the fiscal position we were in before the last downturn before spraying more money around?

National must come to the next election with a massive tax package. I suspect Labour may well come up with their own tax cut scheme (no matter what they try and call it).

That's going to backfire on Boomers reaching retirement, isn't it? Longer waiting lists as National once more elects to run up an infrastructural deficit, just when private health insurance becomes less affordable.

Either pay of debt or give it back. I know some would say infrastructure spending but given how well Kiwibuild went I don't these guys can organise it.

Not that much to talk about really?!
"A change in the way the national rail network is valued means the Government has increased the carrying value for the rail freight network by a whopping $5.3 billion to $6.3 billion."

The best out come - tax cuts to the bottom and middle buy lifting the tax brackets to stimulate growth. Introducing the first 10 - 15 k tax free for low income earners, compensating for the bracket creep. This will help to address poverty too.

Until you calculate how pathetic the tax cut would be. For example $20 a week x 4 million taxpayers x 52 weeks = $4 billion a year. That's probably less than most people throw away on Lotto a week.
Now if instead they spent an extra $4 billion a year on infrastructure, that could make a huge difference...

Canterbury is approximately 1/8 the population of NZ. If the region received $500m/year in capital spending that would be huge.

It could do a lot; more infrastructure (pipes etc) for better more affordable housing (especially social and affordable housing for low income earners), mass transit could be started, hospitals could be properly rebuilt, pot-holed roads finally fixed, waterways protected, training and education improved, anchor projects finished, staff recruitment and retention resolved....

Auckland would get about $1.3 billion a year. Could build a new Waterview / CRL / Light rail line / etc every couple of years instead of every 10 years. And without the need for the fuel tax.

That's what you need in Auckland too. Especially if it opens up a lot of transit oriented development opportunities that makes it feasible for the government to invest in building affordable housing. That would correct so many problems wrt inequality, productivity (staff recruitment and retention) and the environment.

I am sure they could SPEND 1.3 billion a year in Auckland - on consultation , working groups , council salaries . No way in hell they would actually BUILD anything from your list.

If you do not want a tax cut do not take it ; I would prefer mine ( however "small") to any amount of silly promises that will not be met.

That’s not true, there are lots of good projects pretty much ready to start if they got funding. AT pretty much had light rail ready to go but Twyford decided to go with PPP and NZTA.

“The surplus and low levels of debt show the economy is in good shape. This allows the Government to spend more on infrastructure and make record investments in health and education,” Grant Robertson says.

Show the citizens the, as yet, unpublished off balance sheet government liabilities for future Public Private Partnership and Special Purpose Vehicle payments before next year's election, otherwise voters will not believe or trust this government

$0.2 billion increase in debt =a $7.5 billion surplus in new math

Debt doesn't matter if GDP is growing. GDP growth ~$6 billion in last year, against which $0.2 billion is insignificant. Surplus is a good result, though would be better if the money were in hands where it would contribute more to our economy - taxpayers pockets or infrastructure build.

The government issued $3.1 billion new debt in the 1st quarter (3rd calendar qtr) of the new 2019/20 financial year.

Furthermore, $1.910 billion of the 3.0% 15/04/20 notes were repurchased in the 4th quarter of the financial year ending 2018/19.

And $9.637 billion of the 5.0% 15/03/19 notes expired in the 3rd quarter of the financial year ending 2018/19.

Outstanding Treasury Bill issuance also fell $730 million over the latest financial year ending 30 June 2019.

The tax paying citizens really do need the government to reveal the future off balance liabilities that have accrued in respect of Public Private Partnerships and Special Purpose Vehicles, including Housing New Zealand's recent debt offers if they are not included in Crown debt disclosures.

I, in my great and unmatched wisdom, declare the "surplus" a hoax!!

Genesis, Mercury and Meridian have huge debts which are really off balance Govt borrowing; as the Govt has 51% of the debt.These companies are borrowing to pay dividends, 51% to the Govt...

it would be 10 billions surplus if they implemented stamp duty for investors..

We could use these duties to fund housing or public infrastructure projects undertaken by the likes of CIP, HNZ, PGF, etc.

From Steven Joyces 11.7 billion dollar hole to a 7.5 billion dollar surplus...quite a turn around !!

he is still digging that hole needs to big enough to hide him away from us

Revalue Kiwi Rail up by 5B a year once a year - job done.

My vote would be infrastructure spending. Hospitals, Rail, Port relocation, Policing on gangs/meth, 2nd harbor crossing, take control off and boost ferry services in Auckland, 2nd Auckland Airport for domestic flights (Whenuapai), continued road upgrades, regional hospital upgrades, promoting solar energy, support farmers to keep cleaning up dairy effluent.

Agree with all except Whenuapai, Sydney has one airport for a population of 4.624 mill spread over approx 12,367 sq km,where as AKl has 1.65 mil spread over 4,894...improved rail / road connections are whats needed to the airport.
You will open Whenuapai and constantly read about the only low cost flight available will be from there and everyone in South Akl regions having to travel an hour and a half to get there,or unwitting foreign tourists landing there from overseas and finding no transport to get them to where they want from there.

As a domestic airport only. Have edited above.

So, there was no justification for cancelling National's tax cuts.

It was just spiteful and mean-spirited.

Good one. We should start a hui demanding tax cuts and March to Wellington.

My kids probably consider me mean spirited when I choose to pay the mortgage instead of lolly scrambles

I think Jimbo's comment below covers yours nicely :

by JimboJones | 8th Oct 19, 3:29pm
Until you calculate how pathetic the tax cut would be. For example $20 a week x 4 million taxpayers x 52 weeks = $4 billion a year. That's probably less than most people throw away on Lotto a week.
Now if instead they spent an extra $4 billion a year on infrastructure, that could make a huge difference...

Betting agencies will soon double or even triple the payout for National Govt in 2020..

They won't take any bets on National.
All bets off...

Agree. Had labour started infrastructure spending a year ago, National would have to cancel projects to give a tax cut and it may have lost more votes than it gained. But instead we will have national promising tax cuts and labour promising what they didn’t deliver this term.

They better hide some of that surplus for a potential bank bail out. Coming any day to our shores, starting with ANZ, most likely.

Net debt up $200 million

So your saying roughly the Kiwibuild fiasco ? Oh that was $270M wasted.

Looks like the 16% petrol taxes have worked to some extent though, more tax taken.

Don't spend it Grant. Reduce government debt.

So if our government is "saving" by receiving more than giving and the foreign sector is saving due to our current account deficit, what is happening to the private domestic sector? How is ourr weak growth being sustained? Who is dissaving?

Choice of a mountain bike or road bike of your choice upto the value of $7k.
So I love mtbing, and I'm feeling generous to Roadies.

So how far out was Steven Joyce?, just at least 18 billion out in your math's Steven, plus 5 billion from last year, at least 23 billion, and then also whatever the surplus is next year as well.
Wow who would trust a guy like Joyce so obviously bad at working things out as Joyce, at running the countries finances ever again, no wonder that Nats borrowed about 60 odd billion in government debt during their time.

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Heavy duty gymnastic mats

Heavy Duty Gymnastic Mats? Cool!

Great targeting of an audience there!.

Heavy Duty Gymnastic Mats? Cool!

There are no free lunches. This doesn't feel like a magic result. It feels more like an indication of deferred investment and maintenance. However if it came down to a choice between handouts for all, or NZ inc getting a break from selling off our stuff to overseas interests, I'd happily forgo the handouts for the moment.

Hows Teachers, Nurses and other related professions getting a decent well overdue payrise deferred investment? or finally putting some money back into Kiwirail so it can help reduce congestion and gets some cars and trucks off the roads, reducing road maintenance costs.

More money needs to be spent on transport for sure. Light rail appears to be dead, they are already running trackless trams in Australia at a fraction of the cost of light rail. Cannot build roads fast enough in Auckland and a 100% dedicated bus lane all the way through to Albany was needed years ago. This is not enough and they also need to start building multi-level parking buildings instead of sprawling on the ground only park and ride carparks.

If they dont need the money ............... and clearly they dont , then they can give it back to us .

It defies all logic that the Government should take more in taxes than it is spending

To me the big story here was the disastrous public-private partnership. And politicians keep saying that this is the way of the future! Bulleffluent.

Why are so many transfixed by the thought of spending this magic pot of gold, like all magic it is just more smoke and mirrors. There is no cash, just a bookkeeping exercise revaluing a fixed asset and magically gaining $2.5B, there is no real money, so lets not pretend it can be spent on anything useful. One commentator came closer to the truth i believe, in that having revalued an existing asset to a substantially higher figure overnight there is case to be made for greater borrowing against it just as a corporate might do before an IPO to inflate their net worth.
Or as may be closer to the mark, to inflate ones own ledger while negotiating a joint share position in a new asset that might be located at the Northern end and substantially reliant on your asset to make it work, so your asset becomes leveraged with both greater value and importance as a share in the joint venture, at no cost to yourself.

The poor National party and Simon Bridges are so confused, they can't work out whether the current government are drastically overspending or drastically underspending, it depends which week it is and which National party member you talk to, but it alternates between both arguments on a regular basis.

The objective data suggests that they are slightly over-spending. Why did they have a surplus despite over-spending? Well, the sleight of hand revaluation of the rail system from $1.3B to 6.3B added $5B to the surplus, despite no real change in the rail system or its underlying value. They changed the valuation method instead to get a one-off mythical $5B gain.

Didn't Kiwirail only account for 2.3 billion?
Yes that can't be repeated, but not sure if I'd call it slight of hand, the Nats seemed to be chopping Kiwirail left right and centre and completely undervalued the benefit kiwirail can provide the economy, not in the least that it can remove some congestion and get some of the expensive road damaging trucks off the road.
The roads that trucks damage are largely subsidized by car drivers, which do almost no damage to roads at all, but pay for a big part of maintaining repairing the damage.

The headline states the delta in valuation. Details inside the article.

BTW, agreed about the damage trucks do, and the benefits that rail provides. I was quite happy to see the rail line north of Napier reopen. As to road wear, the wear is non-linear with weight, more like weight^2 if not weight ^3. I need to research this to get the correct exponent.

Add: I should use the correct values, which is that in 2018 the valuation was $1.2B and in 2019 the valuation was 6.4B. This is a $5.2B (plus a wee bit) gain, not $5B which was an error of mine due to a faulty memory.

I haven't got time to look for it now, but I have seen an interesting article on how much more damage a truck does to roads than cars, cars do almost no damage at all to roads, and when you take the comparison of how much damage big trucks do compared to cars and the maintenance costs that causes, car drivers are seriously subsidizing trucks.
There is also some formula like when the heavier trucks were allowed on the roads, I think it was worked out that for a quarter percentage increase in the weight of a truck, the damage to the road doubled.

Here is some quantitative data:

The classic relation is weight^4, which means that adding 25% weight would result in 2.44 times the wear. From the pdf, the exponent is strongly dependent on the type of road material and substrate, and can be above 10 or below 2 depending on the road construction and drainage. Wow... now I understand better as to why the road between Gisborne and Napier got damages so quickly after the railway was damaged...

From the article linked above:

Table 6 - Increase in the rail freight network valuation
Increase in the rail freight network value $5.3B
Reflected through:
Reversal of prior year impairments that impacts OBEGAL $2.6B
Reversal in the revaluation reserves that impacts net worth $2.3B
Other movements (eg, additions and disposals) $0.4B
Total increase in net worth $5.3B

There is a real valuation delta of $0.4B, the rest is accounting sleight of hand numeric changes unrelated to any real change in value. I'd compromise and say that $4.9B is accounting changes and $0.4B is an actual change in value if I was reading Table 6 correctly.