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NZ $100 notes - Source: ONE News -
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Lower than expected tax revenue has pushed the Government's books into the red by $4.48 billion in the five months to the end of November, $252 million worse than expected in the run up to the election.
Treasury's chief financial officer Fergus Welsh said core Crown revenue was $498m, or 2.3%, lower than expected.
Finance Minister Bill English says the figures show that now is
the time for restraint.
"The Government is committed to reducing its deficits over the next
two years and
returning to surplus in 2014/15," he said.
"This won't be easy, particularly with ongoing debt problems in
Europe reducing forecasts for global growth".
English said returning to surplus and repaying debt are among the
most important things the Government can do to make sure New
Zealand can "build a more competitive economy based on exports and
new jobs".
Expenses were $399m or 1.4% lower than forecast.
The tax breakdown shows GST was $309m or 5.1% lower than expected while corporate tax was 7.1% or $210m above forecast and source deductions were down $394m on forecast.
While corporate tax revenue was above forecast, due to higher-than-expected corporate profitability, lower third-quarter growth, compared to the pre-election economic and fiscal update, suggested corporate profitability may be lower than forecast by year end.
"So overall, there is a downside risk to tax revenue for the current year," he said.
The operating balance before gains and losses was $4.48b.
The operating deficit including gains and losses at $9.92 billion was $2.83 billion or 39.9% higher than forecast due to actuarial losses on the GSF of $1.04b and ACC liabilities of $898m, as well as higher-than-forecast investment losses of $588m.
Gross debt at $72.35b - or 35.6% of GDP - was $888m lower than forecast but net debt came in close to forecast at $47.63b, or 23.4% of GDP.
Prime Minister John Key yesterday warned the expected surplus in 2014-15 was now expected to be between $300m and $500m, down from the $1.5b forecast in the pre-election update.
