2. PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this
to the Minister of Finance
What reports has he received on the Government’s financial position?
Hon BILL ENGLISH (Minister of Finance) Link to this
This morning we released the Government’s financial statements for the 11 months to 31 May of the financial year. The operating deficit was $10.8 billion, about 1.3 billion below forecast due to higher than expected tax revenue and lower core Crown expenses.
Peseta Sam Lotu-Iiga Link to this
What impact are these early signs of progress in reducing the deficit likely to have on the Government’s finances for the full year ended 30 June 2011?
It could be a small positive impact. The forecast now looks like the deficit could be $16 billion for the year, down from $16.7 billion. But $16 billion is still a very large deficit, and it simply underlines the need for good fiscal management, good expenditure control, and sound policy that will promote the growth of the economy and the growth of tax revenue.
Peseta Sam Lotu-Iiga Link to this
How did Budget 2011 improve the outlook for Government debt and deficits over the next few years?
As a result of the measures in the Budget the Government now expects a surplus by 2014-15, and will borrow considerably less over the next 3 or 4 years—possibly up to about $10 billion less borrowing than was forecast in the 2010 Budget. The Government debt is expected to peak at under 30 percent of GDP, compared with 34 percent of GDP without the decisions of Budget 2011.
Peseta Sam Lotu-Iiga Link to this
How does the improved fiscal and debt outlook in Budget 2011 compare with the position that the Government inherited in late 2008?
It is much healthier. The pre-election update in 2008 showed a decade of deficits and ever-rising debt. That was because New Zealand went into recession in early 2008, 9 months before the global financial crisis. Net debt in December 2008 was forecast to soar to 50 percent of GDP and never fall. The last Labour Government left a fiscal mess, and by making careful and considered decisions, this Government has tidied it up.