New Zealand Finance Minister Steven Joyce unveiled the 2017 budget in the election year, giving priority to family income and investment.
In his first budget speech on Thursday, Joyce said the fiscal position continues to improve.
The budget is set to log a NZ$1.6 billion surplus this year and NZ$2.9 billion surplus in the year to June 2018, he said.
The surplus is expected to increase further to NZ$7.2 billion by 2020/21. At the same time, net core crown debt is forecast to fall to 19.3 percent by 2020/21.
Real GDP is projected to grow 3.1 percent on average over the next five years.
The budget raised the income tax thresholds to help lower-income families and improve incomes for those with high housing costs.
The Family Incomes Package that cost NZ$2 billion to the government will benefit 1,340,000 families, Joyce said.
Joyce said the government created over 200,000 more jobs over the last three years and another 215,000 expected by 2021.
The government plans to invest NZ$4 billion to build the public infrastructure needed to support growth.
The government's total investment in new infrastructure over the next four years will be NZ$32.5 billion. This includes NZ$9.2 billion in new State Highways and NZ$2.7 billion in housing, the minister said.
The economy has been growing at a firm pace in recent years, Michael Gordon, acting chief economist at Westpac said. However, some of the current drivers will fade over time.
The economist observed that the housing market, in particular, is undergoing a slowdown.
"In that sense, the initiatives in today's Budget are a welcome development in that they will help to brace the economy as other drivers of growth moderate," said Gordon.
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