5 Dec 2012

Govt books deeper in red, but 'on track' for surplus

5:56 pm on 5 December 2012

Finance Minister Bill English says the Government is still on track to achieve its surplus target despite another deterioration in its monthly accounts.

A lower tax take than forecast in May's Budget is pushing the Government's books deeper into the red, even as the clamp continued on spending.

The operating deficit before gains and losses was $2.9 billion in the four months to the end of October, up from the $2.1 billion shortfall in the three months to September and $170 million worse than forecast in the Budget.

The Government took in $17.9 billion in taxes, $290 million less than forecast in the Budget.

Government spending of $22.9 billion was $340 million less than predicted due to lower spending on health, welfare, education, and interest payments.

Once gains and losses on the Government's investments are included, the deficit was $34 million compared with a predicted shortfall of nearly $2 billion.

Labour Party finance spokesperson David Parker says the Government is now at risk of not achieving its target of getting back to surplus by 2014/15.

But Bill English rejects that and also dismissed claims that government spending cuts are pushing up unemployment.

Mr English says Crown debt has grown rapidly and spending has to be tackled at some point if that debt is to come down.