God creates both good and evil. Evil in its positive form, is God being a strict judge. The world would not long endure if it had only justice so mercy became its handmaiden. This is the good side of God as a loving parent, concerned with but never indifferent to human welfare. We need both qualities to overcome our limitations just as God and the laws of nature assure that chaos will never overwhelm the ordained order that ensures the world will continue to exist. Maybe the next world will be perfect; but as long as we are mortal, we can see only part of the picture in front of us - never the whole of it.
Good and evil are issues of morality. Satan has a policy of evil in counterfeiting God's plans in an effort to substitute himself for God and also in an attempt to overturn the immutable judgment of God.
Evil in the since of chaos was created by God, but not all good and evil is God breathed. On the contrary, most good and evil works made by man are counterfeit to His plan and will. Accordingly, they will simply be burned up upon divine judgment.
The words for good in reference to mercy might be better translated as 'kind'. His judgment is perfect. His Holiness is composed of His perfect Righteousness and His Perfect Judgment. Wherever He encounters unrighteousness, His perfect righeousness demands perfect judgment.