The Government’s deficit grew $3.5 billion in the last financial year, with expenditure outpacing growth in revenue, including a higher tax take.
It’s the fifth deficit in a row.
Treasury opened the Government’s books today, publishing its financial statement for the Government for the 2023 / 2024 tax year.
Finance Minister Nicola Willis said the results underscored the need for the restoration of “discipline” to public spending.
She said it was clear the books were “not in great shape”.
That is the takeaway after the Government books were opened, with the Finance Minister admitting it’s “sobering” reading. (Source: 1News)
The period covers a mix of the last Labour Government and the current National-led coalition Government.
The statements showed both revenue and expenditure increased, but the growth in revenue was outpaced by the growth in total expenses, resulting in an operating balance before gains and losses (OBEGAL) deficit of $12.9 billion.
Government debt also increased, with net core Crown debt at $175.5 billion – 42.5% of GDP – an increase of $20.2 billion on the previous financial year, but $2.6 billion lower than forecast in Budget 2024 in May.
Crown net worth was stable at $191 billion, which was also higher than forecast in Budget 2024.
Revenue was $167.3 billion in the 2023 / 2024 tax year, $14.3 billion higher than the year before, and $2.3 billion higher than expected in May.
The statements showed the increase was predominantly due to an increase in tax revenue, particularly tax on wages and salaries, but other taxes, such as GST also saw an uplift in revenue.
Total expenses were $180.1 billion – $18.2 billion higher than the previous year and $4.4 billion higher than forecast on Budget Day.
Part of the increase in expenditure was on benefit increases, at a cost of $3.1 billion, due to indexation of most main benefit types. Superannuation payments also increased due to the ageing population.
The current Government’s decision to cease a project to replace inter-island ferries – the iReX project – also resulted in a cost of about half a billion dollars, the statements said.
Health NZ’s $800m deficit had also contributed.
Speaking at a briefing on the accounts at Treasury today, Willis said Government spending and debt had “skyrocketed” over the last six years, and the coalition Government was committed to find more value from Government spending, getting the books back in surplus and working to reduce net debt as a proportion of GDP.
“The accounts also show the corrosive impact of low growth and low productivity on the Government’s financial performance.”
She said the Government was also “determined” to drive economic growth, including lifting education and skills development, boosting trade and investment, investing in science and innovation, improving regulation and competition, and building an enduring infrastructure pipeline.
Willis said while the Government didn’t set the Budget for 2023 / 2024, it made decisions in the mini-Budget and Budget 2024 which “improved OBEGAL by $1.1b in the just-completed year”.
“We have already taken steps to improve the financial sustainability.
“We need to get the house back in order.”