12 Oct 2021

Govt books: 2020 / 2021 financial statements show deficit of $4.6 billion

5:20 pm on 12 October 2021

A surging economy has delivered strong tax revenue, lower expenses, and less debt to the government ahead of the latest Covid-19 outbreak.

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Photo: RNZ / Samuel Rillstone

Final accounts for the year ended June show a deficit of $4.6 billion compared with forecasts in May of a deficit of more than $15b, and the previous year's $29.6b shortfall.

Finance Minister Grant Robertson said the current outbreak was casting a shadow over the strong fiscal position, but by most measures the economy has performed better than forecast.

"It shows a strong rebound from the first lockdown in 2020, and bodes well for emerging from the current outbreak.

"This shows we have the ability to bounce back and bounce back strongly."

The tax take was $6.4b above forecasts in the May budget, driven by higher income tax from more people being in work, increased household spending lifting GST returns, and better company profits.

Government expenses were also $3b lower than forecast, with lower spending on the wage subsidy largely mopped up by increased health spending.

The net debt level was also below forecast at just over 30 percent of the value of the economy against forecasts of 34 percent, which Robertson said he was comfortable with and well below most developed economies..

Robertson said government measures had protected the economy, which continued to show strength and resilience.

"I am reasonably comfortable that the consumer side of the economy will stay robust."

"These books show the budget can return to surplus," he said, acknowledging current forecasts are for a surplus in 2026.

The budget operating balance, which includes investment gains from the NZ Super Fund and ACC, was a surplus of $16.2b compared with forecasts of a $1.3b surplus.

The government's net worth, the value of all assets, surged on the back of higher values for government properties to $157.23b.

Robertson said the half year economic and fiscal update and budget policy statement would be on December 15, with special attention likely on climate change policies and spending.

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