The fiscal rectitude imposed on government departments is one of the major contributors to the fiscal deficit being lower than forecast.
Finance Minister Bill English said:
“Despite underlying tax revenue coming in almost $700 million below forecast, the operating deficit before gains and losses was lower than the forecast $5.1 billion deficit – due ongoing control over spending and some one-off factors.
Lower than forecast isn’t low enough, but it’s a long way better than it would have been had the government not been resolute about cutting the fat from the public service and demanding better value for the money it spends.
Lower tax revenue than expected is a reflection of the recession and a large part of the shortfall will have been from farmers.
Farm accounts for the last financial year are generally pretty gloomy.
The improved milk payout ought to make this year’s books brighter for dairy farmers. But sheep and beef returns are still unimpressive, crop prices haven’t been spectacular and the drought in the North Island and dry conditions further south will be taking its toll too.