NZ government operating surplus bigger than expected on company, investment taxes
By Paul McBeth
July 6 (BusinessDesk) - The government's operating surplus beat the Treasury's forecast in the May budget again as the company and investment tax take beat expectations.
The operating surplus before gains and losses (obegal) was $4.49 billion in the 11 months ended May 31, more than the $2.94 billion surplus predicted in the budget forecasts, and widening from $2.3 billion a year earlier. The Crown's tax take rose 7.8 percent to $69.53 billion, or $1.09 billion more than anticipated of which $250 million was put down to early revenue recognition which will likely be reversed and $450 million from "higher-than-expected tax assessments and additional portfolio investment entity (PIE) tax revenue", which the Treasury said was probably more permanent. That was in spite of the Treasury amending its statements for the 10 months ended April 30 after discovering it overstated the corporate tax take by $352 million.
Core Crown expenses rose a more modest 3 percent to $69.26 billion, some $345 million below forecast with the biggest underspend due to smaller bad tax debts than anticipated. Spending on social security and welfare rose $1.03 billion in the 11-month period from a year earlier, accounting for about half of the annual increase, of which $719 million was on superannuation.
In the May 25 budget, Finance Minister Steven Joyce unveiled a new programme to boost family incomes, expand infrastructure spending, and more aggressively reduce debt, which was seen chewing up increasing surpluses in coming years. At the time, the Treasury predicted the obegal would be in a surplus of $1.6 billion in the year ended June 30, rising to $2.86 billion the following year and $4.05 billion in 2019.
The Crown's net debt was $59.33 billion, or 22.4 percent of gross domestic product, as at May 30, lower than the projected $60.52 billion, or 22.9 percent of GDP. That was due to a bigger residual cash surplus of $2.62 billion than the $1.82 billion predicted on the swelling tax take. Capital spending was $3.36 billion in the 11-month period, down from $4.02 billion a year earlier and some $173 million below the budget forecast.
The operating balance, which includes non-cash balance sheet items, was a surplus of $13.1 billion, turning around a deficit of $1.46 billion a year earlier, and $1.28 billion ahead of expectations as larger investment returns made up for smaller than anticipated actuarial gains.
The government's Accident Compensation Corp investment portfolio, which has been built up to fully-fund the state-owned workplace insurer, was worth $40.92 billion as at May 30, up from $38.35 billion a year earlier, while the New Zealand Superannuation Fund held $35.58 billion of assets compared to $30.48 billion a year earlier.
ACC's long-term liabilities were $40.17 billion as at May 30, up from $37.99 billion a year earlier.
The Crown's net worth of $103.76 billion as at May 30 was $1.3 billion more than expected in the May budget forecasts.