Govt spending up ‘markedly’

Press, 13 March 1987, Page 4

Govt spending up ‘markedly’

By

BRENDON BURNS

in Wellington

Government spending increased markedly in all but one sector in the first 10 months of the financial year, leading to a deficit of $4.3 billion. The effect of GST on Government expenditure is given by the Minister of Finance, Mr Douglas, as the primary explanation for the rise in expenditure.

The net Government expenditure and revenue figures for the 10 months ended January 31, 1987, given last evening, show

double-figure increases in all areas of Government spending apart from an 8.8 per cent fall in transport and communications. The biggest increases, over the same period to the end of January, 1986, were in development of industry (up 42 per cent) and Government administration, an increase of 38.4 per cent. Individual income tax compared with the same period last year was up 18.8 per cent, but company tax fell 12.7 per cent. GST collected $519.1

million in the first four months since it was introduced. The deficit before borrowing was up 27.9 per cent on the same period a year ago to $4,367 billion, which compares with Mr Douglas’s Budget prediction for the full financial year of $2.45 billion. Borrowing overseas was $9.1 billion for the 10 months, as against $2.5 billion in January, 1986. Internal borrowing rose from $2.8 billion to $5 billion. Mr Douglas said the

figures showed the deficit before borrowing to be tracking well against the end-of-year forecast. He said spending was about what was expected, while revenue was slightly ahead of forecast. The effect of GST made direct comparisons with last year’s figures misleading, he said, because Government spending attracts GST. “This inflates departmental expenditure figures but is offset by a corresponding decrease in GST revenue,” Mr Douglas said.