Govt accounts closer to forecast in nine months

An improvement in revenue and firm spending control left the Government’s financial accounts closer to forecasts in the nine months to 31 March, Finance Minister Bill English says.

The operating deficit before gains and losses was $1.66 billion for the nine months – or $199 million larger than forecast in the Half-Year Update in December.

The deficit had been almost $900 million larger than forecast in the eight months to February.

“As the Budget will show next week, we remain on track to a small surplus next year and increasing surpluses in following years,” Mr English says. “This will give us choices about repaying debt, investing a bit more in priority public services and, eventually, resuming contributions to the New Zealand Superannuation Fund.

“But to meet this challenging target, we must remain focused on responsible fiscal policy and sensible economic policy that supports ongoing economic growth, more jobs and higher incomes.”

The Government’s financial statements for the nine months to 31 March show core Crown tax revenue was $2.6 billion or 6.3 per cent higher than at the same time last year, reflecting stronger growth in source deductions, GST and corporate tax.

Core Crown tax revenue was $829 million below forecasts in the Half-Year Update, although that gap narrowed from $1.1 billion in February as some timing factors with corporate tax and GST began to reverse.

Core Crown expenses for the nine months were $423 million below forecast. This was spread across a number of departments and also included lower Treaty of Waitangi expenses due to timing delays in finalising some settlements.

Continuing strength in equity markets saw gains of $3.2 billion on financial instruments, which was $1.5 billion ahead of forecast. As a result, the Government’s operating surplus at $3.3 billion was $1.3 billion higher than forecast.

“The track to surplus is just one indicator confirming the economy is heading in the right direction,” Mr English says.

“As the Budget will show, the Government’s economic programme is making good progress in supporting more jobs, higher incomes, increased business investment and better public services New Zealanders deserve.

“Now is certainly not the time to put that at risk through untried and convoluted experiments such as fiddling with monetary policy, nationalising the electricity industry or returning to bloated and inefficient government spending.”