Government committed to ongoing discipline

The Government remains committed to sound management of its finances and ongoing fiscal discipline, Finance Minister Bill English says.

He was commenting on news today that lower than forecast spending and slightly higher revenue resulted in a better-than-expected $4.74 billion operating deficit before gains and losses in the 11 months to May 31.

Treasury expects revenue to come in close to forecasts for the full financial year ending June 30 and at least part of the lower spending track to be reversed in June.

“The Government has made good progress in keeping spending under control and delivering a faster-growing economy that will help grow our revenue.

“However, in many ways, restraint in the public sector is only just starting. We still have a significant medium-term challenge to get back to surplus as soon as possible. Budget forecasts show that will not happen until 2015/16 – but I would like us to be back into surplus sooner,” Mr English says.

“In our first two Budgets, the Government took early steps to bring deficits and government debt under control. We will build on that over the next few years by living within our $1.1 billion annual allowance for extra operating spending and weeding out lower priority spending.”

The operating deficit before gains and losses was almost $1.1 billion better than forecast in the 11 months to May 31 – mainly reflecting core Crown revenue coming in $200 million above forecast and expenses $560 million below forecast. In addition, ACC insurance expenses were $130 million lower than expected.

Once gains and losses are taken into account, the operating deficit at $2.16 billion was close to forecast. Net investment gains were $1.1 billion lower than expected on weaker world equity markets.

ENDS

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