Hon Bill English

Minister of Finance

6 May 2013 Media Statement

Restraint and Higher Revenue Boost Govt Books

The Government’s finances continue to improve with higher than forecast tax revenue contributing to the operating deficit now being lower than forecast in the Half-Year Update in December, Finance Minister Bill English says.

The operating deficit before gains and losses for the nine months to 31 March was $5 billion, or $273 million smaller than the $5.2 billion deficit forecast in December.

“The financial statements show that continued spending restraint is important as we remain on track to surplus in 2014/15, as the Budget next week will confirm,” Mr English says. “Ongoing spending control will allow the Government to build up sufficient surpluses to provide choices around repaying debt and investing more in priority public services.”

Overall, core Crown tax revenue was $535 million higher than forecast at $41.9 billion for the nine months. Tax on individuals’ income other than salary and wages was $406 million above forecast - a result of solid investment incomes driven by recent strength in sharemarkets. Source deductions were $187 million above forecast.

Compared with the nine months to March 2012, tax revenue increased by $2.1 billion, mainly reflecting wage growth, higher effective tax rates and a rise in GST revenue.

Core Crown expenses remain in line with forecasts set out in December’s Half-year Update, which showed a substantial $1.7 billion reduction in expenses compared with Budget 2012.

Higher than expected net gains from Government investment funds delivered a $2.5 billion operating surplus for the nine months, which was significantly better than the $2.0 billion forecast operating deficit.

ENDS

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