Treasury says rise in Govt deficit misleading

Press, 4 August 1987, Page 1

Treasury says rise in Govt deficit misleading

Political reporter The 70 per cent increase in the Government deficit for the first three months of the current financial year is misleading, according to the Treasury. In a statement yesterday, the Treasury said this year’s figure could not be compared with last year’s because of public sector restructuring since March, 1987, and the effects of the tax reform package Introduced in October, 1986. The deficit for the first three months was $2.6 billion. For the first three months last year the Government had a deficit of $1.5 billion. The three-month deficit figure has assumed some political 1m-

portance after Opposition claims of a pre-election blow-out in Government spending. The Minister of Finance, Mr Douglas, said yesterday that the Treasury figure was in line with both the Budget of June 18 and Reserve Bank forecasts made on June 25. “The only blow-out here is in the credibility of the Opposition spokesman on finance, Michael Cox, who made another of his fabled wrong predictions based on impeccable sources,” said Mr Douglas. But Mr Cox has repeated claims that Mr Douglas has been “massaging” the economy before the election. “This deficit blow-out proves

my prediction made last week was totally correct when I stated that the net fiscal injections would approach $3 billion in the first quarter.” Mr Cox said the $2.6 billion figure did not include an equity injection of $250 million and other payments of $155 million to Postbank in April. Mr Douglas said the quarterly deficit figure did not affect his Budget prediction of a full year surplus, as there was no valid comparison between the figures for 1986 and 1987. More Government spending was falling early this financial year, while the main tax take would come, as\ usual, at the end of the financial year.