Government crashes the books

The National Government's poor budget management has led to a widening budget deficit with no good news in sight, the Green Party said.

Treasury numbers out today show that the operating deficit for the first eight months of the financial year was $5.5 billion (excluding losses and gains). This is $395 million worse than Treasury forecast six months ago. Core Crown tax revenue was $825 million lower than forecast. This shortfall is primarily due to weaker than expected income tax and corporate tax returns, and a below forecast GST take.

"The Government has crashed the revenue side of the Budget," said Green Party Co-leader Dr Russel Norman.

"The tax take continues to be lower than expected throwing its books deeper into deficit.

"The National Government are failing the basic task of fiscal prudence; it is like watching a slow moving train wreck.

"Tax revenues have been hit heavily due to the Government's tax policy changes, weak economic activity, and on-going earthquake-related costs.

"John Key's dismissal of a temporary earthquake levy has left him with few options when it comes to funding the spiralling cost of the Canterbury rebuild.

"The Government's 2010 tax switch has done nothing to boost economic activity; it's simply left a $1.1 billion hole (at least) in their books for no apparent gain.

"John Key's insistence that his tax changes are 'fiscally neutral' is now starting to sound desperate."

Inland Revenue's Briefing to the Incoming Minister has highlighted that current Government policy was largely responsible for a dramatic 4.1 percent decline in tax revenues as a percentage of GDP.

"The National Government's centrepiece tax shift isn't delivering the kind of resilient economy they'd promised," said Dr Norman.

"The evidence for this is sharply declining tax revenues from businesses and workers."

"The Green Party has set out a clear alternative plan to get the Government's books back into surplus through a mix of reprioritised spending and new revenue streams.

"We can manage the government's books in a fiscally responsible way without having to sell valuable assets or raise debt."

Financial Statements of the Government of New Zealand for the Eight Months Ended 31 December 2011:http://www.treasury.govt.nz/government/financialstatements/monthend/pdfs/fsgnz-8mths-feb12.pdf

IRD Briefing to the Incoming Minister:  http://www.ird.govt.nz/aboutir/reports/briefing/briefing-2011

The Green Party's alternative plan for our economy: http://www.greens.org.nz/greenjobs