The Government accounts ended their short-lived period in
surplus in September to record a minuscule deficit of $34
million in October.
Lately, Finance Minister Bill English has been concentrating
on the operating balance before gains and losses (obegal)
which remains in deficit.
But the obegal deficit of nearly $2.9 billion, while ahead of
forecast, was a 14.7% reduction on the same time last year.
The operating deficit of $34 million was a significant
reduction on the $7.45 billion recorded at the same time last
Again, continued strengthening global and New Zealand equity
markets helped keep the deficit at its low level.
Gains on the New Zealand Superannuation Fund and ACC
investment portfolios were $724 million and $660 million
higher than forecast respectively.
In addition, ACC recorded an actuarial gain on its liability
for outstanding claims that was $228 million.
Mr English said the obegal was slightly larger than forecast
after core Crown revenue and expenses both came in below
''The latest figures confirm that the Government is
continuing to control its new spending and getting better
results from existing programmes.''
The Government continued to have an aim of returning to
surplus in 2014-15, he said.
Analysis of the accounts showed core Crown revenue was $536
million lower than forecast.
Tax revenue was down $292 million, or 1.6% on the forecast.
GST was $253 million (5%) lower than forecast due to weakness
in private consumption.
Source deductions were $191 million (2.6%) lower than
forecast, due to weaker-than-anticipated wage growth, and
other indirect taxes were $86 million (14.2%) lower than
expected, mainly due to a fall in road user charges.
Offsetting those results was other individuals tax which was
$351 million (46.6%) above forecast.
Treasury said tighter collection and enforcement policies by
Inland Revenue were considered to be a factor, resulting in a
higher effective tax rate being paid by non-incorporated
The variance was expected to continue widening during the
rest of the financial year, albeit at a slower pace.
Crown interest income was $173 million lower than anticipated
due to lower interest rates than forecast.
Crown expenses were 15.1% lower than forecast at $22.95
This was mainly due to health expenses being $117 million
lower than forecast, social assistance benefits being $108
million lower than forecast, due mainly to fewer than
expected beneficiaries, and education expenses coming in $72
million lower than forecast.
Lower teacher numbers, departmental expenses and expenditure
across school programmes helped reduce the education
In the four months ended October, gross debt rose 8.7% to
$81.5 billion and net debt rose 21.5% to $55 billion.
Mr English said that with the world economic position
remaining uncertain, it was important the Government remained
focused on responsible and prudent fiscal policy well beyond
the 2014-15 surplus target.
A new set of forecasts would be issued with the Half-Year
Economic and Fiscal Update on December 18.
Labour finance spokesman David Parker said the economy
continued to stagnate under National.
''The Government's deficit is over 6% higher than forecast,
undermining their credibility as managers of the economy.
National is breaking promise after promise.''
For four months ended October
• Core Crown tax revenue: $17.9 billion
• Crown expenses: $22.9 billion
• Operating balance excluding gains and losses: -$2.865
• Operating balance: -$34 million