The Government ended the last financial year to June 30 with a deficit of $9.2 billion – about half of what it was last year – but up from the $8.4 billion shortfall that was signalled in the May Budget.
The Treasury said the tax take was slightly higher than forecast and the Government’s core expenses were lower than forecast.
The write-off in the value of KiwRail by $1.4b on June 27 was not factored into the May Budget forecasts.
Excluding $1.9b in Christchurch earthquake costs, the operating balance would have been $7.3b, compared with $9.3b in the previous year, the Government said.
Tax revenues over forecast and crown expenses under forecast is where we want to be. The underlying deficit of $7.3 billion is $1,1 billion better than forecast. There are three years to hopefully get rid of it and get back into surplus.
The Kiwirail writeoff just confirms how badly the last Government got conned by Toll, in buying it. They still call it the sale of the century. Rail is viable when there is enough population to utilise the tracks frequently enough to cover the capital and maintenance.
That means some services such as Wellington metro trains are viable, as they are utilised scores of times a day.
But take the main North Island trunk. There is now only one passenger trip a day on it (used to be four). Sure you have some freight also, but it is not enough to be viable.
English said excluding the one-off effects of the KiwRail writedown, the books were better than forecast.
Tax revenue increased by $3.5b from the previous year and core government expenses fell by $1.4b.
Good. To have an actual decrease in expenses (not just a slowing in the increase) is quite an achievement. A necessary one. Recall we were facing a permanent structural deficit, which only ends in disaster.