6 Dec 2012

Surplus target 'unlikely without tweaking budget'

9:07 am on 6 December 2012

An economist says the Government is unlikely to reach its target of getting the books back into black by 2015 without tweaking next year's budget.

The Government's operating deficit before gains and losses was $2.9 billion in the four months to the end of October, up from $2.1 billion for the three months to the end of September, and $170 million worse than forecast.

The Government's tax-take was 17.9 billion, $290 million less than forecast in the Budget, which it put down to weaker than forecast consumption and wage growth.

Infometric economist Benje Patterson says this depicts what's happening in the economy at the moment.

He says GST tax revenue is lower than forecast as consumption has been growing at a slower pace and inflation lower than expected. More goods are also being purchased overseas so are not attracting GST.

The Government spent $22.9 billion - $340 million less than predicted - due to lower spending on health, welfare, education, and interest.

Mr Patterson says 2016 is a more realistic surplus target for the Government.

He says the numbers show the Government is continuing to narrow its deficit, but the pace is much slower than originally thought.

Mr Patterson says if the Government remains committed to getting a budget surplus in 2015, it will have to do some tinkering in the upcoming budget next year.