The government appears cautiously optimistic following the release of official figures that indicate the budget deficit has been kept lower than anticipated. The operating balance before gains and losses was sustained at $3.6 billion for the 11 months ending in May 2021. This is more than 40% less than what was forecasted in the Budget. Budget forecasts estimated the deficit would reach $9.4 billion for the same period, rising to an estimated $15 billion by June 30.
This performance has been attributed to the $4.1 billion extra tax revenue collected and efforts by the government to minimize their expenses. Core Crown expenses were reported to be about $900 million less than was predicted. The net debt level was found to also be 31.2% of the value of the economy.
The government’s overall finances were also found to be in better shape thanks to increased investments, a strong financial market, and lowered forecasts of future liabilities for certain government agencies including the ACC and the Super Fund. The finances were estimated at $14.7 billion against a prediction of $6.1 billion. Treasury confirmed that almost all key metrics performed better than what was estimated in the Budget. The full-year accounts will become available in several months’ time.
Finance Minister Grant Robertson has termed the report as positive but recognises that the pandemic outlook remains uncertain. He pointed out recent reports of an Aussie traveller who was in Wellington testing positive for Covid-19 at a time when Australia appeared to be facing new outbreaks across the country. The man’s partner who accompanied him on the trip later tested positive for the Delta variant, indicating that he may have been infectious prior to leaving Wellington.
Chief government accountant, Paul Helm, highlighted corporate tax, GST, and source deductions like PAYE as being key contributors and reflected better economic conditions. He also noted that stronger consumption was the driving force for improved GST revenues, with the improved labour market conditions having had a strong influence on consumer spending.
Robertson further warned that though the economy was resilient, recovery remained uneven in some sectors and regions of the country, with supply chain problems still lingering. He however affirmed the government’s resolve to keep a lid on debt while continuing to provide support where it was most needed to boost recovery. He also said that long-standing issues like housing, climate change and child wellbeing would also be a priority.