Faster Government spending

Press, 12 August 1986, Page 8

Faster Government spending

By

MARTIN FREETH

in Wellington

Government spending grew faster in the three months ended in June than the Budget forecast for the full 1986-87 year.-

Treasury figures released yesterday showed that net Government expenditure in the first quarter, at $4,837 billion, was 21.8 per cent up on the corresponding period last year, and well ahead of the 15.9 per cent increase forecast for the full year. However, this spending growth partly reflected some one-off payments in backpay for teachers,

nurses, and medical officers.

In addition, the quarter’s expenditure was only 23.6 per cent of the total forecast for the year, suggesting that the spending pattern this year will differ markedly from 1985-86.

Loans for Post Office capital development were a big item for the Government in the three months, and expenditure in that area was 107 per cent ahead of last year. . • > -

The Government’s takeover of the New Zealand Steel project debt also contributed to the expenditure rise.

However, growth in the two largest single items of expenditure was moderate. Social services spending was up 12.2 per cent on the.- previous corresponding quarter, and that on servicing debt, just 5.1 per cent The Government’s fiscal deficit before borrowing was $1,527 billion on June 30, 18 per cent higher than a year before.

On the other side of the accounts revenue for the first, quarter was up 23.6 per cent on the previous corresponding quarter, to $3.3 billion. ...

That was also well ahead of the Budget’s forecast for the full year,

but patterns of tax collection are expected to differ markedly from last year also.

/In particular, the Government’s income will dip after the October cuts to personal income tax and the introduction of the goods and services tax. , •* In the first quarter, income from customs duty was down 23.6 per cent on the year before because of cuts in the rates, of .duty made - by the last December,.,.:! Sales-tax receipts; however, jumped 32 per cent, apparently because collections made in March were carried forward for

banking in the new financial year. , ( Income tax ; revenue was up by a’ simillar

amount, reflecting higher incomes received by wage and salary earners ,£nd the lack of any corresponding adjustment upwards of the tax scale. Commenting,■ on ithe figures, the Minister) of Finance, Mr Douglas, suggested that no trend in income and expenditure for 1986-87 could, be.fdiscerned yet ’• Mr Douglas noted rjalso that costs associated;-with the $7.2 billion “think/blg” and producer board ..debt restructuring would show up only later in the year.