Government deficit $543 million less than forecast

Finance Minister Grant Robertson: "We will carefully prioritise our spending to maintain the balance between short-term needs and long-term requirements." Photo / Mark Mitchell

By RNZ

The Government's finances are in much better shape than expected as strong domestic spending and company earnings underpin the tax take.

Official figures show a deficit of $4.3 billion for the five months ended November, $546 million less than forecast in the December fiscal update.

The lift in consumer spending continued, but at a slower rate, with GST revenue $400m above forecast.

Income and corporate tax revenue were also $300m higher than expected.

"This indicates that the 2020 income tax year was not as adversely affected by the Covid-19 pandemic as was expected, which the Treasury said showed companies had not been as hard hit by Covid-19 as expected," Treasury said.

The net debt level grew to $98.9b, 30.9 per cent of the value of the economy compared to a forecast 31.1 per cent.

The December update forecast a budget deficit of $21.6b for the year ended June.

"The country is in a stronger fiscal position compared with other developed nations, and we will carefully prioritise our spending to maintain the balance between short-term needs and long-term requirements," Finance Minister Grant Robertson said.

"This year our focus is on continuing that momentum, while also tackling some of the long-term challenges facing New Zealand: housing, climate change and child poverty."

- RNZ