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

 


NZ govt deficit bigger than expected at 5 month mark

NZ govt operating deficit bigger than expected on lower corporate tax take, GST

By Paul McBeth

Jan. 24 (BusinessDesk) - The New Zealand government’s operating deficit was bigger than expected in the first five months of the financial year after it reported a smaller take in corporate taxes and goods and services tax than it anticipated a month ago in its updated forecasts.

The Crown’s operating balance before gains and losses (obegal) was a deficit of $2.34 billion in the five months ended Nov. 30, more than the $1.93 billion forecast in its Dec. 17 half-year economic and fiscal update, and down from $3.03 billion a year earlier.

“At this stage, our assessment is that the majority of this variance is timing in nature and will reverse out in coming months,” Treasury chief financial officer Fergus Welsh said in a statement.

Core Crown tax revenue was 2.1 percent lower than forecast at $23.88 billion, with corporate taxes $259 million below expectation with “a few large taxpayers revising down their current year provisional tax assessment” and GST $174 million short of the forecast due to earthquake related refunds, the Treasury said in commentary accompanying the accounts.

The government is forecast to post an obegal deficit of $2.3 billion in the current financial year ending June 30 before returning a surplus of $86 million the following year. Treasury officials are picking accelerating tax revenue growth as an expanding labour market provides more income tax, and as rising wages get caught in the fiscal drag of people entering a higher tax bracket.

Expenditure was in line with forecast at $29.16 billion, with higher than expected defence of $72 million offset by reduced costs across a range of departments.

The Crown’s core residual cash deficit was $4.01 billion in the five-month period, a bigger shortfall than the $3.79 billion forecast, and is forecast to return to surplus in 2017, after which the government plans to start reducing debt.

The period includes the government’s $365 million sell down of its Air New Zealand holding, on which it recognised a gain of $52 million.

The government’s net debt at $59.59 billion, or 27.6 percent of gross domestic product, was slightly lower than forecast, and gross debt of $83.21 billion, or 38.5 percent of GDP, was in line with expectations.

The operating balance, which includes movements in its investment portfolios and actuarial adjustments, was a surplus of $2.26 billion, $1.6 billion ahead of the December forecast due to net gains from the New Zealand Superannuation Fund. That compares to a surplus of $706 million a year earlier.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fruitful Endeavours: Kiwifruit Exports Reach Record Levels

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). More>>

ALSO:

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Sparks Fly: Gordon Campbell On China Steel Dumping Allegations

No doubt, officials on the China desk at MFAT have prided themselves on fashioning a niche position for New Zealand right in between the US and China – and leveraging off both of them! Well, as the Aussies would say, of MFAT: tell ‘em they’re dreaming. More>>

ALSO:

Loan Sharks: Finance Companies Found Guilty Of Breaching Fair Trading Act

Finance companies Budget Loans and Evolution Finance, run by former 1980s corporate high-flyer Allan Hawkins, have been found guilty of 106 charges of breaching the Fair Trading Act for misleading 21 borrowers while enforcing loan contracts. More>>

ALSO:

Post Panama Papers: Govt To Adopt Shewan's Foreign Trust Recommendations

The government will adopt all of the recommendations from former PwC chairman John Shewan to increase disclosure and introduce a register for foreign trusts with new legislation to be introduced next month. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news