Govt books bleed more red ink
Plus a warning that worse may come.
The government accounts continue to run below forecasts and the latest figures include a warning worse may come.
Data for the seven months to January, released by the Treasury this morning, shows a deficit of $4.3 billion, $473 million (excluding gains and losses) higher than forecast.
The gap is due to another unexpected earthquake-related outflow from the Earthquake Commission following the December 23 shocks in Christchurch, worth $290 million; along with lower tax revenue in all main categories and investment losses on government financial operations.
Offsetting this to some degree is the fact that government spending is $1.2 billion below forecast.
The tax revenue shortfall is primarily due to a lower-than-forecast performing economy.
Source deductions (mostly PAYE tax) were down $383 million (3.0%) below the pre-election forecasts, and GST revenue was $345 million (4.0%) below forecast.
Worse may follow.
The Treasury’s update which accompanied the figures notes that last month’s Budget Policy Statement, released by Minister of Finance Bill English, include a deficit (excluding gains and losses) $1.3 billion lower than in the pre-election economic and fiscal update.
Even that may turn out to be too optimistic.
“January tax data was in line with the BPS assessment although weaker labour market conditions now apparent conditions now apparent suggest some downside risk to the full year source deductions forecast,” the Treasury’s chief financial officer, Fergus Welsh said.
Rob Hosking
Tue, 06 Mar 2012
Tue, 06 Mar 2012
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Govt books bleed more red ink
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