NZ govt posts surprise budget surplus in first 9 months
By Jonathan Underhill
May 10 (BusinessDesk) - The New Zealand government posted a budget surplus in the first nine months of the financial year, against a Treasury forecast for a deficit, reflecting tax revenue that rose faster than Crown expenses.
The operating balance before gains and losses (obegal) was a surplus $167 million in the nine months ended March 31, compared with a forecast deficit of exactly the same amount, $167 million, in the half-year economic and fiscal update, the government's financial statements show.
Finance Minister Bill English is scheduled to release his eighth budget on May 26 and based on the Treasury's forecasts back in December, is facing an obegal deficit of $400 million in the year ending June 30. The Treasury had previously projected a surplus of $200 million, but with little inflation, income tax, GST and resident withholding tax are down against historical trends. Still the better-than-forecast nine-month figures mark the third straight month that the cumulative data has exceeded expectations.
“Budget 2016 will reflect this government’s continued commitment to responsible fiscal management," said English in a statement accompanying the Crown accounts release. "At the same time, it will build on the good progress we’ve made over the previous seven Budgets, with further investment in a growing economy and public services."
Core Crown revenue was $54.2 billion in the nine-month period or $206 million more than forecast. The variance reflected tax revenue that was $702 million, or 1.4 percent above forecast, and interest and dividend revenue that was $456 million below forecast, the Treasury said. The higher tax take was made up of source deductions (1.5 percent above forecast), GST (1.8 percent above) and customs and excise duty (2.9 percent above).
By contrast, core Crown expenses were just $134 million, or 0.2 percent above the Treasury's projection at $54.7 billion. The Treasury said this reflected a $170 million undershoot for the Ministry of Justice related to timing issues with Treaty settlements, delays in spending on land acquisition and anchor projects related to the Christchurch rebuild of $154 million, education expenses that were $127 million below forecast, some $88 million of timing differences in grants and benefits, and delays in the start of projects because of unfavourable weather, which accounted for $88 million.
The operating balance, a measure that includes non-cash balance sheet items, was a deficit of $3.8 billion, which was $3.47 billion worse than expected and reflected $3.6 billion of larger-than-expected actuarial losses on the ACC and Government Superannuation Fund liabilities related to changes in valuation.
Gross debt was $84.5 billion, or 34.3 percent of gross domestic product, which was $1.8 billion below forecast. Net debt was $1.3 billion below forecast.