Sharechat Logo

NZ operating deficit greater than forecast

Friday 27th January 2012

Text too small?

New Zealand’s operating deficit was wider than forecast in the first five months of the government’s fiscal year as personal income tax continued to come up short of the Treasury’s expectations.

The operating balance before gains and losses (OBEGAL) was a deficit of $4.48 billion in the five months ended Nov. 30, some $252 million, or 6 percent, less than expected in the pre-election fiscal and economic update (PREFU). Accrued individual taxes were $428 million short of forecasts at $9.45 billion, though the corporate tax take beat expectations by $187 million at $2.97 billion. The net accrued goods and service tax take was $5.76 billion, $309 million below forecast.

“While corporate tax revenue was above forecast, which appears to be due to higher than expected profitability, lower third-quarter GDP (gross domestic product) compared to the PREFU forecast suggests that corporate profitability may be lower than forecast by the year end,” Treasury chief financial officer Fergus Welsh said in his commentary. “There is a downside risk to tax revenue for the current year.”

The operating deficit was exaggerated by bigger than expected actuarial losses for the Government Superannuation Fund and Accident Compensation Corporation’s liabilities by $1.04 billion and $898 million respectively. The Crown also booked bigger investment losses on ACC’s investment portfolio, the New Zealand Superannuation Fund and the Earthquake Commission by $588 million.

As at Nov. 30, the Treasury flagged the government’s insurance liability on AMI Insurance at $2.1 billion, some $28 million below forecast, but noted the swarm of quakes in December “are expected to result in increased insurance expenses and to weaken the Crown’s fiscal position.”

Core Crown expenses were $399 million below forecast at $28.84 billion in the five month period, and the government’s residual cash deficit was $7.48 billion, $some $280 million bigger than expected.

The government’s net debt was $47.63 billion, or 23.4 percent of GDP, as at Nov. 30, close to the $47.42 billion forecast in the PREFU.

Today’s financial statements come a day after Prime Minister John Key outlined the government’s outlook on the year, and said the projected surplus for 2014/15 would likely be between $300 million and $500 million rather than the $1.4 billion previously forecast.

(BusinessDesk)

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:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report