Hon Grant Robertson

Minister of Finance

29 November 2019

PĀNUI PĀPĀHO

MEDIA STATEMENT

Govt accounts show strong debt position, impact of tax timing changes

The Government’s books are in good shape, with low debt and expenses close to forecast, Finance Minister Grant Robertson says.

“A strong position, with expenses under control, is important for the Government. There are continued warnings about the state of the global economy, with issues like the US-China trade war and Brexit throwing up increased uncertainty.

“Our strong debt position gives us the space for further opportunities to invest to strengthen the economy, particularly in infrastructure,” Grant Robertson says.

The Treasury today released the Crown accounts for the four months to October. Net debt at 20.2% of GDP was below the 20.8% forecast, while expenses were within 0.6% of forecast.

The accounts continued to show the temporary impact on the OBEGAL position from Inland Revenue’s new system for recognising revenue.

This has affected when revenue is recognised in the accounts during the year, mainly for corporate tax. The corporate tax measure which feeds into the OBEGAL was 28% below forecast over the four months – but Treasury says this is temporary and set to reverse out over the year as the timing issue evens out.

“When you look at the actual cash amount of corporate tax collected in the four months, it’s 10% ahead of forecasts,” Grant Robertson said.

The impact of the timing issues on the monthly OBEGAL position was clearly signalled when the Government released the Financial Statements in October.

The Treasury and Inland Revenue are working closely to fully understand how the new system impacts the timing for recognising revenue.

They’re also discussing why and how their respective forecasts have been different – corporate tax in the four months was much closer to Inland Revenue’s forecast. The Treasury includes its own tax estimates in the Budget forecasts, not Inland Revenue’s.

This is the last set of monthly accounts before new forecasts are released at the Half Year Economic and Fiscal Update on 11 December.

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