4 Apr 2012

Govt stands by decision to cap new spending

4:23 pm on 4 April 2012

The Government is standing by its decision to cap the allowance for new spending in this year's Budget, despite an improvement in the deficit in the past month.

Including gains and losses on the Government's investments, the deficit for the eight months to the end of February was $8.8 billion.

That is 16% worse than the pre-election forecast.

But the Council of Trade Unions says it is better than the previous month's accounts.

The prime minister promised six weeks ago not to cut $800 million of new spending unless there was a dramatic economic meltdown.

However, Minister of Finance Bill English says a zero Budget round is to ensure the Government achieves its target for balancing the books.

Once gains and losses on the Government's investment portfolios are excluded, the deficit was $5.5 billion, compared to the forecast of $5.1 billion.

Tax revenue was $35.3 billion, 2.3% lower than forecast.

Net debt was lower than forecast.