Govt crashes the books even further

The National Government's poor fiscal management and, in particular, its very expensive 2010 tax cut package, has driven the Government's books even further into the red, the Green Party said today.

Treasury numbers out today show that the operating deficit for the first nine months of the financial year was $6.13 billion (before losses and gains). This is now $787 million worse than Treasury forecast six months ago. Core Crown tax revenue was $1.57 billion lower than forecast. This shortfall is primarily due to weaker than expected income tax and corporate tax returns, and a below forecast GST take.

"The National Government has crashed the revenue side of the Budget, and it's largely a result of their poor fiscal management," said Green Party Co-leader Dr Russel Norman.

"National's 2010 tax cut package has come with a high fiscal price tag, throwing the Government's books into the red.

"This revenue crisis is of their own making.

"The National Government is failing the basic economic task of fiscal prudence, ensuring there is enough revenue to cover Government expenditure."

Tax revenues have been hit heavily due to the Government's tax policy changes, weak economic activity, and on-going earthquake-related costs.

"The Government's signature economic policy - its 2010 tax switch - has done nothing to boost economic activity; it's simply left a $1.1 billion hole in their books," Dr Norman said.

"The tax shift isn't delivering the kind of resilient economy they'd promised.

"The evidence for this is sharply declining tax revenues from businesses, GST, and workers."

"The Green Party has set out a clear alternative plan to get the Government's books back into surplus through a mix of reprioritised spending and new revenue streams, like an earthquake levy.

"John Key's dismissal of a temporary earthquake levy has left him with few options when it comes to funding the rising and still uncertain cost of the Canterbury rebuild.

"We can manage the government's books in a fiscally responsible way without having to sell valuable assets or raise debt."

Financial Statements of the Government of New Zealand for the Nine Months Ended 31 March 2012:
http://www.treasury.govt.nz/releases/2012-05-08f

The Green Party's alternative plan for our economy:
http://www.greens.org.nz/greenjobs