WELLINGTON: New Zealand's government will not achieve its goal of a budget surplus this year because of a slump in revenues, Finance Minister Bill English conceded Friday.
Speaking ahead of the annual budget on May 21, English said Treasury figures were expected to show a deficit of more than NZ$570 million (US$432 million) for 2014/15, rather than the NZ$372 million surplus forecast last year.
"While progress on surpluses is slower than expected, we are on track to surplus and repaying debt," English said.
"The surplus target is important. It has imposed a discipline on us and on government agencies to work hard on achieving value for money and providing new spending only where we can get better results."
The government's pledge to put the books back in the black for the first time in six years was a central plank of its election platform last year, when Prime Minister John Key won a third term.
English said a combination of low inflation and falling commodity prices, primarily dairy, meant revenues over the next four years would be down NZ$4.5 billion on the figures predicted in last year's budget.
Despite the setback, he said the government was likely to record a surplus in 2015/16, a year later than originally forecast.
"Last year, we were among the fastest growing developed economies in the world," he said.
"We remain on track for solid economic growth over the next few years, building on growth of almost three percent per year we've seen on average over the past four years."
English said the government remained confident the finances were improving, adding: "We will not be pursuing cuts in services or income support in a knee-jerk response to lower tax revenue."
The opposition Labour Party's finance spokesman Grant Robertson said failing to achieve a surplus was "the biggest broken promise ever".
He accused Key's conservative National-led government of misleading the electorate about its economic credentials in the November 2014 election.
"Surplus this year was the litmus test National set itself to show it was a good economic manager. They have failed their own test," he said.
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