The government’s finances ended the year in better than expected shape, but still deeply in deficit.
Treasury figures showed a deficit of $9.3 billion in year ended June, which was $533 million more than 2024, but $869m less than forecast in the May budget.
The deficit was based on the government’s new formula, which excluded the cost of the Accident Compensation Corporation (ACC).
Finance Minister Nicola Willis said the books showed the progress achieved in getting the government’s books back in order.
“This progress reflects the government’s ongoing work to restore fiscal discipline with cumulative savings of around $44 billion being delivered over the government’s first two Budgets.”
The savings had been spent on investment in health, education, police and defence, while also giving tax relief and funding the Investment Boost programme rolled out in the budget, she said.
“The government has resisted calls for sharper reductions in expenditure because international evidence is that reducing deficits is best done over the course of several years.”
The May budget forecast a gradual reduction in the deficit towards a surplus in 2028/29, but forecasts will be updated in the half year economic and fiscal update (HYEFU) on 16 December.
Tax take higher, expenses lower
Treasury said after a period of large deficits and debt rising sharply, many of the government’s key fiscal indicators were showing signs of improvement.
The tax take was $900m higher than forecast at $121b, with increased GST, corporate and provisional tax, and employee PAYE payments, although changes to tax thresholds offset some of the gains.
The three majority state-owned power companies – Genesis, Meridian, and Mercury – drove a $1b rise in Crown sales revenue because of high wholesale power prices.
Expenses rose nearly 2% to $183.5b on the previous year, but were about $610m below the budget forecast.
Much of the increase was because of superannuation and welfare costs, partly offset by lower spending in other areas.
Treasury said the increase in expenses was the lowest since 2021.
