The Crown Accounts for the six months to the end of last year reinforce then need to keep the government purse strings tight.
Lower Government spending has offset lower than expected tax revenue, helping keep the Government’s finances on track in the six months to 31 December 2011, Finance Minister Bill English says.
The Crown accounts show tax revenue was $400 million below forecast and revenue $743 million lower overall. However this was offset by lower core Crown expenses of $887 million, leaving the operating balance before gains and losses close to forecast.
“Lower tax revenue reinforces the need for the Government to be disciplined in its spending and stick to its plan to get back to surplus in 2014/15,” Mr English says.
“Balancing the books and returning to surplus is one of the most important things the Government can do to rebalance our economy towards savings and exports.
“That is why we have made it one of our four main priorities, alongside building a more productive and competitive economy, delivering better public services and rebuilding Canterbury.
“The economic update in the Budget Policy Statement last week shows growth will be slightly lower in the near term due to a weaker global outlook.
“That makes getting back to surplus an even bigger challenge, but we are committed to keeping a tight lid on spending and putting in place policies that make our economy more competitive. That will continue into the foreseeable future,” Mr English says.
Spending other people’s money was a major contributor to the imbalance in our economy and there is ample evidence from the trouble facing the PIGS – Portugal, Italy, Greece and Spain – to show governments can’t spend their way out of debt.