Books better than forecast

The government books are in a better state than expected:

Higher than forecast tax revenue continues to underpin an improvement in the Government’s finances, compared to the Half-Year Update in December, Finance Minister Bill English says.

The operating deficit before gains and losses for the eight months to 28 February was $3 billion, or $556 million smaller than the $3.6 billion deficit forecast in December.

“The other pleasing aspect of the financial statements is that government spending remains under control,” Mr English says. “That is important as we remain on track to surplus in 2014/15.

“It will remain important beyond then, because we will need to build up sufficient surpluses to provide choices around repaying debt and investing more in priority public services.”

Overall, core Crown tax revenue was $719 million higher than forecast at $37.6 billion for the eight months. Source deductions were $266 million above forecast due to a higher effective tax rate paid by those in the workforce, and tax from other individuals came in $326 million above forecast.

Compared with the eight months to February 2012, tax revenue has increased by $2.2 billion, mainly reflecting wage growth, higher effective tax rates and a rise in GST receipts due to growth in nominal consumption and residential investment.

Core Crown expenses were $370 million below forecast, reflecting broad-based spending control and delays in Treaty of Waitangi settlements.

Higher than expected net gains from Government investment funds delivered a $4.3 billion operating surplus for the eight months, which was significantly better than the $481 million forecast operating deficit.

There is still along way to go but the changes the government has made has New Zealand heading in the right direction again.

Had we had a Labour/Green government after the 2008 and 2011 elections the books would be in a far worse state..

New Zealand was in recession before the global financial crisis because of the Labour led government’s high tax, high spending and debt-fuelled consumption.

The policies it and its potential coalition partner, the Green Party, have championed since the 2008 election show no understanding of what contributed to our problems and the changes needed to solve them.

They’ve opposed every move National has made to reduce spending and promote sustainable, export-led growth.

They continue to promote polices which would take the country back to higher taxes, higher spending and lower growth showing they are still far better fitted for opposition than government.

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