The Government's much-touted financial surplus remains
elusive, with the operating loss for the 11 months ended May
coming in higher than expected and tax revenue still proving
The operating balance before gains and losses (obegal) for
the 11 months was $1.1 billion, $332 million more than
forecasts released with the Budget on May 15.
However, the obegal was still significantly down on the 11
months ended May 2013, which saw a deficit of $3.26 billion.
Tax revenue of $56.5 billion for the current period was $2.5
billion, or 4.6%, ahead of the previous corresponding period
but was still $459 million below Budget forecasts.
GST and corporate tax were less than expected at $238 million
and $120 million respectively.
The Treasury said GST revenue variance mostly reflected lower
than forecast domestic consumption growth, although some of
the variance was expected to have reversed in the month of
''It's too early to determine the likely impact of these
results on the current and future financial years as both
downside and upside risks exist.''
The Treasury's next set of economic and fiscal forecasts -
the Pre-election Economic and Fiscal Update - would be
published on August 19.
It would include updated assessments of macroeconomic
conditions and fiscal forecasts, including updates on the
expected tax result for the fiscal year ended June 30 and the
following four financial years.
The operating balance, including gains and loses, was in
surplus by $4.3 billion.
Continued strength in equity markets saw gains recorded on
financial investments of $4.8 billion, which was $1.4 billion
ahead of forecast.
At the same time last year, the operating balance was a
surplus of $6.5 billion.
The Treasury said that the gains were offset by an increase
in ACC's insurance liability because of recent decreases in
short-term discount rates.
Finance Minister Bill English remained optimistic yesterday,
saying careful spending was in order with the surplus within
Mr English, who will become a list MP after the election,
probably will not serve out a full three-year term before
retiring from politics and seeking other opportunities.
However, if National is re-elected on September 20, he would
want to see the books return to surplus before he left.
Both he and Prime Minister John Key have promised a
''wafer-thin'' surplus in the 2014-15 financial year.
Mr English said the Government's latest monthly financial
accounts confirmed achieving a surplus required a determined
focus on careful spending and responsible economic
''Just as the Government's careful fiscal stewardship has
taken New Zealand within sight of fiscal surplus in the
coming year, the last thing we need is a return to big
government spending programmes that would crowd out private
investment and put the surplus in jeopardy.''
New Zealanders should be wary of such approaches from
political parties as the country headed towards the election,
Mr English downplayed the tax result from the current period.
While tax revenue was lower than forecast, it was $2.5
billion higher than at the same time last year.
''These figures are within the normal variation for
The Treasury figures showed social security and welfare
remained the top expenditure for the Government at $21.2
billion for the 11 months, up 3.6% on the previous
Health spending rose 3% to $13.6 billion and education
spending was up 2.1% at $11.1 billion. Housing and
development spending was up more than 49% at $320 million.
Core government services spending fell 19.2% to $3.7 billion
and transport and communications spending was down nearly 8%
at $1.8 billion.