Finance Minister Bill English said that while the latest accounts, for the seven months ended January, showed spending and revenue consistent with forecasts, tax revenue was still about 4% behind Budget 2010 forecasts.
But on a year-by-year perspective, tax revenue increased by 3% in January compared with the same period last year.
Mr English has consistently downplayed any signs of recovery in the accounts. Yesterday, he said the result reflected the relatively flat economy in late 2010 and reinforced the need for sound fiscal management as the Government tackled the effects of the Christchurch earthquake.
"As I've previously said, the earthquake will have a significant impact on the Government's finances and the wider New Zealand economy for years to come."
The Government would pay for the rebuilding of Christchurch by borrowing more in the short term but also by giving priority to spending on Canterbury, Mr English said.
Treasury deputy secretary Struan Little said that for the seven months ended January, the majority of key indicators were tracking close to forecast.
The only notable variances were for gross debt and the operating balance deficit. In line with recent months, those variances were largely due to debt issuance being ahead of schedule and investment returns being higher than expected.
Core crown tax revenue was slightly weaker than forecast at $29.9 billion as weakness in the economy led to shortfalls in GST ($285 million), corporate tax ($157 million) and other individuals' tax ($120 million), Mr Little said.
Partially offsetting the shortfall in tax revenue, PAYE was again 2.6% higher than forecast.
"This was potentially due to wage and employment growth, although volatility in recent data provides uncertainty over the cause."
Although core crown revenue was weaker than expected, lower crown expenses and slightly higher profits from state-owned enterprises and crown entities saw the operating balance before gains and losses (obegal) deficit remain largely in line with forecast at $6.2 billion, Mr Little said.
However, it was not all bad news in the accounts. Analysis shows the operating balance deficit of $998 million was significantly lower than the forecast deficit of $4.7 billion, thanks mainly to the New Zealand Superannuation Fund and ACC reporting higher than expected gains.
Strong global equity markets meant the super fund's gains were $1.8 billion above forecast.
Its return since inception was 7.55%, 1.8% above the return on Treasury bills.
Changes to forecast ACC claims resulted in an actuarial gain of $881 million, $1.8 billion higher than the forecast loss of $889 million.
At a glance
• Tax revenue 3% up on January 2010
• Super fund and ACC give much higher than expected returns
• Operating deficit well below forecast
• Warning of deterioration because of earthquake
