Sharechat Logo

NZ govt operating deficit bigger than expected as tax take lags

Tuesday 8th July 2014

Text too small?

The New Zealand government posted a bigger operating deficit than forecasts in the May Budget, as company tax and GST again lagged expectations.

The Crown's operating balance before gains and losses (obegal) was a deficit of $1.1 billion in the 11 months ended May 31, smaller than the $3.27 billion shortfall a year earlier, though more than the $767 million deficit forecast in the Budget economist and fiscal update. Core tax revenue was up 4.6 percent from a year earlier, though $459 million short of expectations at $56.5 billion, with goods and services tax was lower than forecast on more subdued domestic consumption. The company tax take was below forecast due to some large downward adjustments in end of financial year assessments.

"It is too early to determine the likely impact of these results on the current and future financial years as both downside and upside risks exist," acting chief government accountant Fergus Welsh said in a statement. The Treasury will update its forecasts in the pre-election economic and fiscal update on Aug 19.

In May, Finance Minister Bill English confirmed a return to Budget surplus in the 2015 fiscal year at $372 million, wider than the $86 million projected in the half year economic and fiscal update, with bigger surpluses projected after that as an accelerating economy helps bolster the government's books.

The accounts show Crown expenses were $36 million below forecast at $64.17 billion at the end of May, with underspending across a number of departments, the biggest of which was at the Ministry of Business, Innovation and Employment. Core spending was up from $63.74 billion a year earlier.

The residual cash deficit narrowed to $3.83 billion from $5.58 billion for the same 11 month period in 2013, though was $398 million below forecast due to the lagging tax take.

Net debt was $453 million ahead of forecast at $59.47 billion, or 26.2 percent of gross domestic product, while gross debt was below forecast at $82.15 billion, or 36.3 percent of GDP.

The operating balance, which includes movements in the Crown's investment portfolio, was a surplus of $4.33 billion, $165 million below forecast, and smaller than the $6.48 billion surplus at the same stage of the previous fiscal year. Gains in the value of its equity investments were offset by an increase in the Accident Compensation Corp's insurance liability.

 

 

BusinessDesk.co.nz

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Mercury points to peaking gains as FY production drops 10%
Asset Plus sells Heinz Watties distribution centre for $29.1 mln
18th July 2019 Morning Report
COMMENT: RBNZ's key political omission in its bank capital proposals
ANZ and Westpac credit rating outlooks downgraded to 'negative' outlook: Fitch
MARKET CLOSE: NZ shares edge higher in quiet trading; weaker currency buoys exporters
NZ dollar stalled amid uncertainty about US rate cuts
RBNZ a 'poor communicator' - CBL's Harris
Methane reduction target could be catastrophic - Fonterra Shareholders' Council
Greater role for gas in electrification of transport, industry

IRG See IRG research reports