Better than forecast figures point to surplus

Bill English
Bill English
The Government accounts are likely to end the financial year well in surplus after the $1.2 billion surplus achieved in the 11 months ended May, documents released yesterday by the Treasury showed.

In another case of the Treasury forecasts being well off the pace, the operating balance excluding gains and losses (obegal) was nearly $1 billion better than forecast in the Budget released as recently as May.

The operating balance, which includes gains made on Crown investments, was $4.5 billion higher than the Treasury forecasts at $4.6 billion and the Crown's wealth was $4.4 billion higher than forecast at $80 billion.

The key drivers of the higher obegal were better than forecast core Crown tax revenue ($401 million) and lower than forecast core Crown expenses ($433 million).

Also, the State Owned Enterprise and Crown entity financial results were about $200 million better than forecast. The largest rise related to NZTA with results about $100 million higher than forecast.

Finance Minister Bill English said the latest accounts reinforced the benefits of the Government's ''careful stewardship'' of its finances.

''The Government has a commitment to New Zealanders to prudently manage taxpayers' money and is working hard to improve the quality and effectiveness of public spending.''

That was why ambitious targets were set for departments to deliver real, measurable benefits to New Zealanders and why the Government monitored performance against targets and published the results, he said.

''These efforts are paying dividends through improved results and improving finances.''

In his typical understated manner, Mr English warned there was always volatility in the monthly Crown accounts and he would not know for some time if there would be a full-year surplus.

He and Prime Minister John Key campaigned through two elections on returning the Crown accounts to surplus by June 2015. However, for a while it appeared as though the target would not be met with Mr English playing down the prospect of a small deficit being close enough.

The latest accounts will give him some hope he can deliver on the campaign promise and prepare to leave Parliament before the end of next year.

The latest obegal is also well ahead of the same period last year when it was a deficit of $1 billion, meaning within a year, the accounts have had a $2.3 billion turnaround.

The full accounts show spending on social security and welfare remains the Government's top priority but spending increased on 1.9% from a year ago. Health spending increased 1.2% from May last year and education increased 4.7%.

Green Party co-leader Metiria Turei said the surprise surplus was likely to be short-lived.

Falling business confidence, collapsing dairy prices, stagnant wages and the possible slow-down meant the Government might soon need to start spending again to avoid a recession.

''If this is the case, National should invest in high-value infrastructure with multiple long-term benefits.''

Those projects should include spending on Auckland's city rail link - the top transport priority for Auckland and a project which would help employ hundreds and help reduce Auckland's climate emissions from transport.

The Government could also help schools reduce their own power bills by investing $20 million into solar power systems in schools, allowing them to benefit from cheaper, cleaner power, leaving them with more money to invest directly into teaching and learning, Mrs Turei said.

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