The Government's economic credibility goes on the line this
morning when the Treasury issues its pre-election fiscal
update and the much anticipated return to surplus becomes
The Treasury updates can be notoriously inaccurate and even
forecasts issued with the May Budget out of date consistently
on tax data.
Also, by the time the figures for the 11 months ended May
were released last month, the forecasts were, in some cases,
well off the mark.
The operating balance before gains and losses (obegal) was in
deficit by $1.1 billion for the 11 months ended May, $332
million more than expected.
Core Crown expenses of $64.2 billion were 0.1% less than
forecast and core Crown tax revenue of $56.5 billion was 0.8%
less than forecast.
The operating balance (including gains and losses) was in
surplus by $4.3 billion.
Continued strength in equity markets saws gains recorded on
financial investments of $4.8 billion, which was $1.4 billion
ahead of forecast.
Finance Minister Bill English will be hoping the figures for
the end of June confirm the wafer-thin surplus of $372
million forecast in May's Budget is still included in the
figures released today.
The surplus is within a margin of error.
Labour finance spokesman David Parker said there were clear
signs the so-called ''rock star economy'' had fallen off the
stage, with plummeting prices for raw commodity exports.
New Zealand had become ever more reliant on raw commodities
such as milk and logs while non-primary manufacturing exports
and other industries struggled.
Overall exports had fallen from 33% of gross domestic product
(GDP) to 29% of GDP under National, a far cry from the
promise of increasing exports to 40% of GDP, he said.
''Analysts will be checking Treasury forecasts to see how
much further exports are now predicted to fall,'' Mr Parker
The Treasury is likely to revise down the expectations for
economic growth which underpinned the Budget.
The Green Party has commissioned Business and Economic
Research Ltd (Berl) to analyse parts of the May Budget.
Berl chief economist Ganesh Nana, Council of Trade Unions
economist Bill Rosenberg and Green co-leader Russel Norman
release the findings of the report today, before the release
of the Treasury pre-election update at 10am.