The Government accounts crept into surplus in the three
months ending September, without fanfare and without any
comment from Finance Minister Bill English.
However, before there is too much celebration, the surplus
was a minuscule $90 million and was achieved through some
higher-than-expected returns on investments by the New
Zealand Superannuation Fund ($1.1 billion) and ACC ($600
The operating deficit for the three months ended September
last year was nearly $7 billion.
The Government has made much of returning the accounts to
surplus by the 2014-15 financial year. The Government has two
measures in its Crown accounts: the operating balance
excluding gains and losses (obegal) and the operating
Mr English, as former Labour finance minister Sir Michael
Cullen did before him, focuses on the measure that suits the
Government's policy of the day.
At present, it suits Mr English to focus on the obegal
because it remains in deficit and sits with his message that
careful management of the country's finances is still needed.
Looking at the obegal alone, the deficit is $2.12 billion
compared with the Budget Economic and Fiscal Update forecast
of $1.7 billion. Core Crown tax and interest revenue were
both lower than expected, partly offset by lower core Crown
In the three months ended September last year, the obegal was
a deficit of nearly $2.5 billion.
Tax revenue this year of $13.5 billion was $295 million, or
2.1%, lower than expected. Most major types of tax revenue
were below forecast, the exception being "other individuals"
tax revenue which was higher than expected.
Wage growth and private consumption below forecast led to
lower-than-forecast source deductions and GST of $166 million
for both those types of tax.
Lower-than-forecast provisional tax resulted in $103 million
lower corporate tax.
Other core Crown revenue was higher than forecast. Dividend
revenue from state-owned enterprises was $248 million higher
than forecast, mainly due to dividends received earlier than
Craigs Investment Partners broker Chris Timms said the global
background to the better returns by Crown investments showed
interest rates at an all-time low around the world but
investors getting good returns from stocks.
"We are seeing a significant rebound in sharemarket activity
as people look for better returns.
United States companies are in a strong position. The US
economy may be flat, but these companies are multinationals
and are performing well."
In Australia, there had been a move away from investments in
mining towards the financial sector, and bank shares were
In New Zealand, companies had been paying down debt, there
had been an influx of KiwiSaver funds into the market and
investors had been following good companies to receive an
income through dividends, he said.
Mr English said the accounts reinforced the need for careful
"The accounts confirm the Government is keeping its spending
under control but that revenue can be affected by the
uncertain global economic situation and its impact on New
Zealand. This effect will continue."
As the Government worked to reduce its deficits and meet the
target of returning to surplus by 2014-15, it needed to
remain prudent with new spending and ensure existing spending
delivered better public services and good value for
taxpayers, he said.
Net debt, at $54.9 billion, was close to forecast, at 26.9%
of gross domestic product (GDP).
At a glance
Government accounts for three months ended September.
• Crown tax revenue: $13.5 billion, down 2.1% on
• Crown expenditure: $17.3 billion, down 1.1% on
• Operating balance excluding gains and losses: -$2.12
• Operating balance: $90 million.