Budget deficit lower than forecast, Treasury figures show

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The budget deficit for the five months ended November was about $1.1b lower than forecast.
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The new government inherited finances in better shape than expected, according to latest Treasury figures.

The budget deficit for the five months ended November was $2.8 billion, about $1.1b lower than forecast in the half-year financial update (HYEFU).

Tax revenue was $49.1b, more than half a billion dollars above forecast because of higher provisional and income tax, and tobacco, alcohol, and fuel duties.

“The September quarter labour market statistics showed lower employment levels but that average hourly earnings increased,” Treasury said in a statement.

Crown revenue was further lifted by an increase in interest earnings by the Reserve Bank.

Expenses were $300 million below forecast at $56.8b, reflecting marginally lower spending on community housing and welfare payments, which Treasury said was largely a matter of timing.

Net debt was $83.9b, $1.8b below forecast, and equating to 20.9 percent of the value of the economy, reflecting gains on investments held by the NZ Superannuation Fund and ACC.

The figures do not reflect the effect of any decisions by the new government, which had just just been formed at the end of November.

The HYEFU forecast a budget deficit of $9.3b for the year ended June, and at the time Finance Minister Nicola Willis said the government books were in a worse state than expected.

She has detailed a range of cost savings and new revenue totalling $7.5b over the next five years from axing clean car discounts, early childhood subsidies, and ending big projects. A Budget policy statement is due in March and will provide more detail on spending priorities.

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