Quake effects yet to show in Crown accounts

Government financial statements for the seven months to January 31 are broadly in line with forecast, but this will change significantly in the coming months as the impact of the Christchurch earthquake becomes clear, Finance Minister Bill English says.

While the latest accounts show spending and revenue consistent with forecasts in the Half-Year Update in December, tax revenue was still about 4 per cent behind Budget 2010 forecasts.

"This result reflects the relatively flat economy in the latter part of 2010 and reinforces the need for sound fiscal management as we tackle the effects of the Christchurch earthquake in the coming months," Mr English says.

"As I've previously said, the earthquake will have a significant impact on the Government’s finances and the wider New Zealand economy for years to come.

"The Government will pay for the rebuilding of Christchurch by borrowing more in the short term, but also by prioritising spending on Canterbury over some other Government spending.

"It's important we stick to our broader economic programme to reduce New Zealand’s vulnerability to foreign lenders, get the Government’s finances in order and build faster growth based on higher national savings and exports.

"We need to ensure we have the resources to rebuild Christchurch and support its residents. The best way to pay for that is through sound management of our finances and building a faster growing economy," Mr English says.