Budget to rein in deficit, says English

Tuesday 10th May 2011

Next week's Budget will set a path back to budget surplus, after Government financial statements today confirmed a $10.2 billion operating deficit before gains and losses for the nine months to March 31, said Finance Minister Bill English.

The deficit includes the Earthquake Commission's $1.5 billion estimated share of the costs for the February Christchurch earthquake, though it does not include the government’s support package for AMI, signed after March 31.

"Compared to the December forecasts, the accounts for March were broadly in line with February's results," English said.

"The Budget next week will confirm a very large deficit for the current year, including the immediate costs of rebuilding Christchurch.

"But it will also confirm significant improvements in the fiscal position over the next few years, before we return to surplus and start repaying debt. To achieve that, the Government has completed a careful and balanced review of its spending priorities, which we will outline in the Budget.

"It's essential that the government gets its own finances in order as quickly as possible, so it can join households and businesses in lifting national savings and reducing New Zealand's vulnerability to foreign lenders."

Government accounts for the nine months to March show a $10.2 billion operating deficit before gains and losses compared with an $8.9 billion deficit forecast in the half year update in December. EQCs costs for the February earthquake accounted for most of the difference.

At $3.3 billion, the operating deficit included gains and losses was $3.8 billion better than forecast, mainly reflecting gains from share investments by the New Zealand Super Fund and ACC, along with actuarial gains on ACC and Government Super fund liabilities.

The cash deficit was close to forecast at $12.4 billion for the nine months.

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