Government deficit and debt higher than expected in new financial year
Thursday, 7 November 2024
The Government has run up a higher deficit and more debt in the first three months of its new financial year than Treasury forecast in the May Budget.
Crown accounts posted by the Treasury reported the operating (Obegal) deficit in the three months to the end of September at just over $4.2 billion.
That was $669m higher than its Budget forecast.
Net core Crown debt – the Government’s preferred measure of its debt – totalled just over $177b on September 30, or 43% of GDP, which was $656m higher than forecast in May.
The Treasury said the higher-than-expected deficit was mainly due to below-forecast results from Crown entities “in particular Health New Zealand”.
The accounts extend the recent trend of Budget misses.
Treasury reported in October that the annual operating deficit in the year to the end of June blew out to nearly $12.9 billion, up $3.4b on the prior year and $1.8b more than forecast in the May Budget.
Finance Minister Nicola Willis described those results as “sobering” and said they showed the Government's books were not in great shape, blaming misses from state-owned enterprises and Crown entities including ACC.
The new three-monthly figures reinforce “the need to continue exercising fiscal restraint, get better value for money and drive growth,”, she said.
“They also highlight the uncertainty and potential risks associated with forecasting,” she said.
Willis warned there were “downside risks to the forecasts going forward”.
“The results show that we have slowed the growth of government expenditure, however, it is going to take time to repair the damage caused by the previous government’s financial mismanagement.”
Today is the only time in the year when the Treasury offloads three months of accounting data in one hit.
For the rest of the year it updates its unaudited accounts monthly, before publishing the full-year results at the beginning of October.
Tax revenue in the three months to the end of September came in fractionally under target at $28.7b, $91m short of forecasts.
It can give an indication of the state of the economy, but can also be subject to unexpected timing variations relating to when tax is paid, while core Crown expenses were also close to the Budget prediction of $34.9b.