The Government looks on track to report a substantially higher operating profit for the year ending June, despite dire warnings from Finance Minister Michael Cullen and Treasury.
Tax revenue continues to drive government revenue.
The operating balance, excluding losses and gains, (obegal) for the 11 months ending May came in $1.6 billion ahead of forecast at $7.3 billion, 29% higher than the forecast $5.6 billion.
However, after the gains and losses were extracted, the operating balance soared to $5.4 billion, nearly 92% from the previous forecast.
When directly compared with the corresponding period last year, the obegal was nearly 77% higher than the $4.1 billion reported in May 2007. The operating balance was 17% lower than the $6.5 billion reported.
Treasury said yesterday the operating balance was boosted by $800 million higher-than-expected gains on investments of Crown financial institutions in April and May.
Early indications were that the performance of those portfolios had ebbed again during June.
There was $800 million more tax revenue mainly due to corporate tax being $700 million higher than forecast. Tax revenue is forecast to be around $500 million higher than forecast at June 30.
In the period, tax revenue was 31.9% of gross domestic product, up from the forecast 31.5%.
And there was $700 million related to a change in the discount rate used for valuing ACC's outstanding claims liability.
The financial statements show that core Crown revenue rose 1.3% to $57 billion in the period and expenses grew 0.5% to $51.1 billion.
Social security and welfare still dominate government spending at $16 billion in May, up nearly 5% on the corresponding period last year.
Health spending grew 9.3% to $10 billion and education spending rose 3.7% to $8.9 billion.
The highest percentage increase in government spending came in economic and industrial services which grew 78% to $2.6 billion. The increase was primarily due to the introduction of the KiwiSaver "Kick Start" policy.
