Accounts reinforce need for careful management

Crown accounts issued today, showing core Crown spending and revenue slightly below forecast for the three months to 30 September, reinforce the need for careful financial management, Finance Minister Bill English says.

“The accounts confirm that the Government is keeping its spending under control, but that revenue can be affected by the uncertain global economic situation and its impact on New Zealand,” he says. “This effect will continue.

“As we work to reduce our deficits and meet our target of returning to surplus by 2014/15, we will need to remain prudent with new spending and ensure existing spending delivers better public services and good value for taxpayers.

“That’s important in a world where economic and financial market conditions remain difficult and unpredictable. We need to remain on top of the factors we can control, so we can minimise our debt and have a strong balance sheet.”

The operating deficit before gains and losses was $2.12 billion in the first three months of the financial year – or $449 million above Budget forecasts.

Core Crown tax revenue was $295 million below forecast, and core Crown interest revenue was $147 million lower than expected. This was partially offset by core Crown expenses being $201 million below forecast, including slightly lower than forecast welfare expenses, lower departmental expenses and lower finance costs.

Net debt at $54.93 billion was close to forecast at 26.9 per cent of gross domestic product.

“The Government is committed to getting back to surplus so we can start repaying debt, resume contributions to the New Zealand Superannuation Fund and target more investment at priority public services,” Mr English says. “We are making progress, but we will need to restrain our spending for some years to come, so we have those options when we return to surplus.”