Hon Bill English
Minister of Finance

27 January 2011
Media Statement

Govt to play its part in building national savings

Government financial statements for the five months ending 30 November show both revenue and spending broadly in line with forecasts in the Half-Year Update in December, Finance Minister Bill English says.

“While there were some overs and unders on the revenue side, overall the results were pretty much in line with those December forecasts,” Mr English says.

“But tax revenue still remained about $1 billion below forecasts issued with the Budget last May – mainly because of lower corporate tax and GST revenue.

“Treasury is forecasting a $15.6 billion cash deficit for the current financial year, which will add to New Zealand’s already large stock of overseas debt.

“Therefore, we need to continue managing the Government’s finances responsibly on behalf of taxpayers, reducing the rate of new spending and getting back into budget surplus as soon as possible.

“As the Prime Minister confirmed yesterday, the Government is taking steps on the operating side of its finances to get back to a meaningful surplus by 2014/15 – a year earlier than forecast.

“We are also considering options – such as extending the mixed-ownership model for four SOEs - for reducing borrowing to pay for substantial increases in Government assets in the next few years.

“New Zealand as a whole needs to save more, spend less and reduce its heavy reliance on foreign debt – and the Government is a crucial player in this,” Mr English says. “By playing its part in lifting national savings, this Government will help to keep interest rates low and build faster, ongoing economic growth.”

The Government accounts issued today show core Crown revenue at $22.4 billion in the five months to 30 November ($278 million below the December forecasts) and core Crown expenses at $27.5 billion ($272 million below forecast).

ENDS

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