5 Oct 2022

Treasury reports smaller than forecast budget deficit of $9.7 billion

3:47 pm on 5 October 2022
Close-up of New Zealand fifty dollar banknotes

(File photo) Photo: 123RF

A strong rise in tax revenue and slower growth in spending has delivered the government a much better financial position than expected.

Final accounts for the year ended June show a deficit of $9.7 billion compared with forecasts in May of a deficit of more than $19b, and the previous year's $4.6b shortfall.

Finance Minister Grant Robertson said the government had taken a balanced approach and managed its finances carefully, helping the economy to perform better than forecast.

"In a volatile global environment, it's critical the fundamentals of the economy are strong, and they are," Robertson said.

"The government's strong finances allow us to focus on investing what matters most."

The tax take was $10.5b 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 $3.9b lower than forecast, with less spent on emergency measures.

The net debt level was also slightly above forecast at just over 17 percent of the value of the economy.

Robertson said the better financial position did not mean extra resources for future spending.

"I'm going to take a balanced and cautious approach."

He laid emphasis on the uncertain and volatile global outlook, which he said would inevitably weigh on New Zealand, and would be reflected in Treasury forecasts.

Robinson took a swipe at the National Party's policy of future tax cuts.

"Now is not the time to fritter away on tax cuts for the wealthy and property speculators."

He said he would take an "incredibly rigourous" approach to future spending with the "cloth cut" to spend and invest where it mattered.

National said the government should find room for tax relief, following the release of the Financial statements.

Responding to comments from Robertson, Nicola Willis National's finance spokesperson said a prudent finance minister would be able to deliver both tax cuts and good results on its spending.

The budget operating balance, which includes investment movements from the NZ Super Fund and ACC, was a deficit of $16.9b compared with the previous year's $16.1b surplus, but below the budget forecast of a $27.9b deficit.

The government's net worth, the value of all assets, surged on the back of higher values for government properties to $174.3b.

Robertson said the half-year economic and fiscal update and budget policy statement would be on 14 December.

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