The operating balance excluding gains and losses (obegal) was a surplus of $222 million, $725 million better than the $503 million deficit forecast in May.
The operating balance, which includes gains and losses on Crown investments made through superannuation funds and ACC, was up more than $2.2 billion on the $113 million forecast to $2.3 billion.
Net worth attributable to the Crown rose 9.6% in the three months to $91.6 billion, or $8 billion ahead of forecast. The Office of the Government Accountant said the obegal was up largely due to higher than forecast Crown tax revenue.
Tax increased 3.1% on the forecast to $17.34 billion and was $1.1 billion higher than for the same period last year. Higher-than-expected provisional tax resulted in an increase to corporate tax ($252 million), with residential investment and tourist spending contributing to higher-than-forecast GST ($134 million).
Deloitte Dunedin tax partner Phil Stevenson told the Otago Daily Times the increased tax take was a sign of a buoyant economy.
"This has been our biggest tourism year for a long time and businesses in Auckland and Queenstown have been busy. Tourism, along with the low interest rate environment, is all contributing to the bottom line."
Asked about prospects for the next three months, Mr Stevenson said there was a feeling of "cautious optimism" but people were uncertain about the United States presidential election, the future for Europe and Great Britain leaving the EU.
Some people remembered how quickly things turned after the 2008 global financial crisis and were enjoying things while they could. The construction sector was contributing to the growing economy.
Dairy farmers would welcome the higher dairy prices but they would have tax losses built up from lower payouts in past seasons. It would be a while before they started paying tax again, Mr Stevenson said.
In September last year, the obegal was a deficit of $545 million and the operating balance was a deficit of $2.2 billion.
Last month, Finance Minister Bill English announced a surplus of $1.8 billion for the year ended June. The surplus was $414 million last year and in May’s Budget, Mr English was talking about a surplus of about $700 million for the June financial year.
New Zealand’s unemployment rate was at an eight-year low at the end of September and the employment participation rate of 70.1% was an all-time high. The lower unemployment number prompted Act New Zealand leader David Seymour to call for tax cuts.
"As more people move into employment, the Government sucks up extra revenue from income tax and spends less on benefits. That creates space to give workers some long-awaited tax relief.
"Taxpayers shouldn’t have to wait eight years between tax cuts, especially when the economy’s going well."
The Government could adjust the tax brackets so the top rate started when people earned $100,000 rather than just $70,000, he said.
Social security and welfare remained the Government’s largest expenditure in the three months ended September, with more than $6.3 billion spent in the period. That was up $267 million on the same period last year. However, the increase was largely due to the indexing of welfare benefits and an increase in recipient numbers, particularly New Zealand superannuitants.
