Nicola Willis hails progress getting country’s books ‘back in order’

Thursday, 9 October 2025

The Government’s annual accounts released on Thursday show its operating deficit and net debt are lower than had been forecast in the May Budget.

The audited accounts do nothing to change the medium-term outlook for significant deficits and historically high levels of government debt.

But Finance Minister Nicola Willis said they did show progress was being made “getting the country’s books back in order”.

The operating deficit for the year to the end of June climbed by $1.1 billion to $14b, but was $767m lower than had been forecast in the Budget.

The deficit was $9.3b if ACC’s contribution to the ongoing blow-out was excluded.

Net core Crown debt stood at $182b on June 30, up 3.8% over the year but almost $3.5b lower than the Budget forecast.

It was 41.8% as a percentage of GDP, unchanged on last year.

The Treasury said most key fiscal indicators were “showing some signs of recovery” following a period of sharply rising debt.

“The year-on-year growth in total expenses was the lowest it has been since 2021,” it noted.

“Consequently, total expenses as a percentage of GDP declined from 42.9% of GDP last year to 42.1% of GDP for 2024-25.”

Tax revenues were $900m higher, and expenses $600m lower, than the Budget forecast.

However, the tax gain was largely offset by lower-than-forecast revenues from the sale of carbon credits through Emission Trade Scheme auctions managed by the Environment Ministry.

Willis said “the financial discipline” would continue but the Government had resisted calls for sharper reductions in expenditure “because international evidence is that reducing deficits is best done over the course of several years”.

Labour finance spokesperson Barbara Edmonds declined to endorse the Treasury’s broadly positive take.

“Treasury has a job to do. They've provided their commentary on it”, but the Government was borrowing more to keep the lights on, she said.