Early signs of progress in reining in deficit - English
The Government's financial statements for the 11 months to 31 May show some early signs of progress in getting the deficit under control, Finance Minister Bill English says.
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The Government’s financial statements for the 11 months to 31 May show some early signs of progress in getting the deficit under control, Finance Minister Bill English says.
Accounts released this morning show the operating deficit before gains and losses was $10.8 billion for the 11 months - $1.3 billion below forecasts due to higher than expected tax revenue and lower core Crown expenses.
“Assuming the Government’s share of the Canterbury earthquake costs for the current fiscal year are close to forecast, the OBEGAL deficit of $16.7 billion set out in the budget is now expected to come closer to $16 billion for the year to 30 June,” Mr English said.
“This is still extremely large and needs to be reduced. That’s why the Government has set out a credible and faster path back to budget surplus by 2014/15, when we will start repaying debt. If possible, we would like to do even better than that by continuing to manage our costs and building a faster-growing economy.”
In the 11 months to 31 May, GST made the largest contribution to the higher revenue, coming in $512 million or 4.2 per cent above forecast.
“Retail sales rose more than expected in the March quarter and more recent retail data suggests this pick up will continue,” Mr English says. “In addition, GST refunds were $260 million lower than expected – although this appears to be largely a timing issue that will reverse in coming months.
On the other side of the ledger, core Crown expenses were $770 million – or 1.2 per cent – below forecasts. This reflected mainly Treaty of Waitangi settlements, Working for Families tax credits, the Emissions Trading Scheme, the Canterbury earthquake welfare support package and early childhood education.
“Overall, the Treasury now expects tax revenue for the full year to be in line with – or even stronger than – forecast, and expenses to remain below forecast for the full year,” Mr English said.
NBR staff
Wed, 06 Jul 2011
Wed, 06 Jul 2011
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Early signs of progress in reining in deficit - English
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