Treasury figures showed a budget deficit of $3.85 billion for the four months ended October. Photo: 123rf
Government finances are marginally better than expected, but remain in a sizeable deficit, while debt levels have risen as the new government prepares to outline its immediate spending plans in a mini-Budget.
Treasury figures showed a budget deficit of $3.85 billion for the four months ended October, $91 million higher than the forecast in the pre-election update.
Tax revenue was $38.6b, just above forecast as strong employment and wages meant higher income tax payments, inflation lifted GST returns, and higher interest rates increased investment tax returns, which offset lower tobacco and alcohol duties.
"It is likely that increasing prices have suppressed demand for tobacco products and alcoholic beverages by more than was assumed in the forecasts," the Treasury commentary said.
Core government expenses were just below forecast at $44.7b, $400m below forecast, as lower health, and transport spending was partly offset by higher education costs caused by wage settlements.
For the year ended October tax revenue was 6.6 percent higher than the month before, while expenses were 7.1 percent higher.
Treasury said the under and over spends were often issues of timing, which would even out over the course of the financial year.
However, net debt was more than $8b above forecast at $84.9b, equating to 21.5 percent of the value of the economy.
The increase was attributed to lower cashflows from government enterprises, and changes in the value of investments held by the Superannuation Fund and ACC caused by volatile financial markets.
Minister of Finance Nicola Willis had described the government books as being in worse shape than expected because of long term policies funded only in the short term, and a variety of "clever workarounds" designed to make the books better than they were.
Former Finance Minister Grant Robertson disputed the claims, saying they showed Willis had not read the Budget and was diverting attention away from not being able to fund the new government's tax package.
The half year economic and fiscal update (HYEFU) and a mini-budget will be unveiled on 20 December.
