Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ govt sees wider deficit in 2014 on ACC levy cut

NZ govt sees wider deficit in 2014 on ACC levy cut, lower SOE profits

By Paul McBeth

Dec. 17 (BusinessDesk) – The New Zealand government faces a wider operating deficit in the current financial year than previously predicted due to cuts to Accident Compensation Corp levies and smaller returns from state-owned enterprises, though its wafer-thin 2015 surplus is seen as getting a smidgeon bigger.

The Half Year Economic and Fiscal Update forecasts a wider shortfall in the operating balance before gains and losses (obegal) in the 2014 financial year of $2.3 billion, compared to $2 billion predicted in the May budget, before posting a surplus of $86 million the following year, a touch more than the $75 million previously forecast.

The larger deficit for the year ending June 30, 2014 stems from some $350 million in cuts to ACC levies, foregone profits from the partially privatised power companies and lower interest income from the New Zealand Superannuation Fund.

“We remain on track to surplus in 2014/15, although it will still be a challenge to actually reach surplus in that financial year,” Finance Minister Bill English said at a media briefing in Wellington.

Still, tax revenue growth is forecast to accelerate faster than predicted in the May budget as an expanding labour market provides higher income tax and rising incomes are caught in the fiscal drag of individuals rising to higher tax brackets.

Beyond the next two years bigger operating surpluses are forecast, with the obegal seen rising to $1.7 billion in the 2016 financial year, then $3.1 billion and $5.6 billion the following years. That compares to the May forecast surpluses of $800 million and $2.6 billion in 2016 and 2017.

Tax revenue is seen as growing at an annual rate of 5.8 percent over the forecast period, with the bulk of the increases likely to come from personal income tax and Goods and Service Tax.

The Crown expects to return to a residual cash surplus of $1.2 billion by the 2017 financial year, after which the government anticipates reducing its debt, a year earlier than predicted in the May Budget.

That’s in spite of the government to raise less from its partial privatisation programme than previously thought, after coal miner Solid Energy was taken off the list and an Opposition policy to overhaul the electricity market raised fears about the value of the power companies.

Treasury estimates total proceeds of between $4.6 billion and $5 billion from the programme, down from the past forecast of between $5 billion to $7 billion.

Net debt is seen as peaking in 2016 at $64.5 billion, or 25.8 percent of gross domestic product, falling to $60.4 billion, or 22.3 percent of GDP, by 2018.

English wants to reduce that to 20 percent before resuming contributions to the NZ Super Fund, which sees to help fund the retirement of the ‘baby boomer’ generation.

The government’s operating balance including value movements in financial instruments is forecast to be in surplus of $6.93 billion in the 2014 year due to actuarial gains, falling to $1.64 billion in 2015, before rising steadily to $8.95 billion by 2018.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>

ALSO:

Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>

ALSO:

Prices Up, Volume Down: March NZ House Sales Drop 10% As Loan Curbs Bite

New Zealand house sales dropped 10 percent in March from a year earlier as the Reserve Bank’s restrictions on low-equity mortgages continue to weigh on sales of cheaper property. More>>

ALSO:

Scoop Business: Chorus To Appeal Copper Pricing Judgment

Chorus will appeal a High Court ruling upholding the Commerce Commission’s determination setting the regulated prices on the telecommunications network operator’s copper lines. More>>

ALSO:

Earlier:

Cars: Precautionary Recalls Announced For Toyota Vehicles

Toyota advises that a number of its New Zealand vehicles are affected by a series of precautionary global recalls. Toyota New Zealand General Manager Customer Services Spencer Morris stressed that the recalls are precautionary. More>>

ALSO:

'Gardening Club': Air Freight Cartel Nets Almost $12 Million In Penalties

The High Court in Auckland has today ordered Swiss company Kuehne + Nagel International AG to pay a penalty of $3.1 million plus costs for breaches of the Commerce Act. Kuehne + Nagel’s penalty brings the total penalties ordered in this case to $11.95 million ... More>>

ALSO:

Crown Accounts: Revenue Below Projections

Core Crown tax revenue has increased by $1.9 billion (or 5.0%) compared to the same time last year. However this was $1.1 billion less than expected and is reflected across most tax types, continuing the pattern of recent months. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news