Disciplined Budget will rein in deficit

The Budget later this month will confirm the path back to surplus in 2014/15, despite lower than forecast tax revenue in the Government financial statements in the nine months to 31 March, Finance Minister Bill English says.

Core Crown tax revenue was $1.6 billion below the Pre-Election Economic and Fiscal Update forecast and overall revenue was lower by $1.8 billion. However this was offset by lower core Crown expenses of about $1.8 billion.

The operating balance before gains and losses was about $800 million below forecast – mostly due to EQC recognising costs from the 23 December earthquake.

“These statements are consistent with preliminary Budget forecasts which show a $1 billion deterioration since the Budget Policy Statement in February,” Mr English says.

“The Government is committed to returning to surplus in 2014/15 and the Budget will confirm that. But we shouldn’t underestimate the challenge – returning to surplus will require tight spending control for the foreseeable future.

“Returning to surplus is important because New Zealand is one of the most indebted countries in the world as measured by our net international investment position.

“We need to start rebuilding a buffer for when the next global crisis comes. Surpluses give us choices we simply don’t have while we’re running deficits.

“But while we’re making some challenging decisions to get back to surplus, we will continue with the same balanced approach we’ve adopted for the previous three Budgets.

“We’re keeping up entitlements to welfare and superannuation and we’ll be investing more in health, education and law and order,” Mr English says.