Treasury data revealed a deficit of $9.3 billion for the year ending in June, which was $533 million higher than in 2024 but $869 million lower than the forecast made in the May budget.
This financial position was said to be better than anticipated, although it remained in deficit.
The deficit calculation used the government’s revised method, which does not include the costs associated with the Accident Compensation Corporation (ACC).
Finance Minister Nicola Willis said the financial statements reflect the progress made in restoring order to the government’s finances.
“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.”
Willis said the savings were allocated to investments in health, education, police, and defence, alongside providing tax relief and financing the Investment Boost programme introduced in the budget.
“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 projected a steady decrease in the deficit, aiming for a surplus by 2028/29, although these projections will be revised in the half-year economic and fiscal update scheduled for 16 December.
After a period marked by deficits and rapidly increasing debt, the Treasury noted that many of the government’s primary fiscal indicators are now showing signs of recovery and improvement.
Tax revenue exceeded forecasts by $900 million, driven by higher GST, corporate and provisional taxes, and employee PAYE contributions, although some of these gains were offset by adjustments to tax thresholds.
The $1 billion increase in Crown sales revenue was driven by the three major state-owned power companies—Genesis, Meridian, and Mercury—benefiting from elevated wholesale electricity prices.
Expenses increased by nearly 2% from the previous year, reaching $183.5 billion, but remained approximately $610 million under the budgeted forecast.
The rise in expenses was largely due to higher superannuation and welfare costs, which were partially balanced by reduced spending in other areas. According to the Treasury, this was the smallest increase in expenses since 2021.