Finance Minister Grant Robertson said New Zealand's debt levels compared favourably to other advanced economies. Photo / Mark Mitchell
Finance Minister Grant Robertson said New Zealand's debt levels compared favourably to other advanced economies. Photo / Mark Mitchell
Strong consumer spending has boosted the tax take, meaning the Government is running a smaller than expected deficit.
On Tuesday morning the Treasury released the financial statements for the Government of New Zealand for the three months to September 30, showing core Crown tax revenue of $22 billion, $2.1b above what was forecast in May's Budget.
Most of the better than expected tax take was due to higher GST of $6.2b, $1.2b above forecasts. Source deductions were also stronger than expected, from higher taxes on wage and salary earners.
An unexpected drop in tobacco excise, which was 27.7 per cent or $123 million below forecast, was partially offset by excise on alcohol, which was 30 per cent or $75m stronger than forecast.
Core Crown expenses, meanwhile, were $27b, just over $1b below forecast, mainly due to a lower than expected take-up of the wage subsidy scheme.
The operating balance, before gains and losses, showed a deficit of $3.2b for the first three months of the financial year, however, this was less than half of the $6.5b Treasury expected.
Finance Minister Grant Robertson said New Zealand's debt levels compared favourably to other advanced economies. Photo / Mark Mitchell
Despite the stronger performance, the accounts reveal New Zealand's net debt continues to climb by several billion dollars a month.
By the end of September, net core Crown debt had jumped to $94b, or 30.5 per cent of gross domestic product.
The last time Treasury published New Zealand's net debt level, in July (for the period up until May), net debt was $78.7b, or just over 25 per cent of GDP.
Treasury was forecasting for net debt to $97.6b by the end of September, and to continue to climb to $130b by the end of the fiscal year to June 30, 2021.
Finance Minister Grant Robertson said New Zealand's debt levels compared favourably to other advanced economies
"The Government's decision that the best economic response to the Covid-19 pandemic was a strong health response has proved time and again to be the right one," Robertson said in a statement.
"There was no playbook for this health crisis, and we acted swiftly as the situation unfolded to support our businesses and workers. Those decisions helped us keep Kiwis in jobs and mean we are now in a strong position to drive the economic recovery."
