Pressure on English as surplus deadline looms

The pressure is mounting on Finance Minister Bill English to meet his deadline of returning the government accounts to surplus in the 2014-15 financial year.

While the accounts are well ahead of the corresponding time last year, the operating balance before gains and losses (obegal) for the six months ended December was $380 million higher than forecast at a deficit of $1.78 billion. At the corresponding time last year, the obegal was a deficit of $3.2 billion.

The operating balance of $3.2 billion was double the $1.6 billion forecast. At the corresponding time last year, the operating balance was $1.7 billion.

Treasury chief financial officer Fergus Welsh said the deficit of nearly $1.8 billion was mainly due to lower core Crown tax revenue across most tax types.

''At this stage, it is difficult to determine how much of the lower-than-forecast tax is temporary versus permanent but we expect this to become clearer over the next few months.''

Following on the trend in recent months, continued strength in equity markets resulted in gains recorded on investments of $3.1 billion, $1.8 billion ahead of forecast.

Net debt was $392 million higher than forecast at $62.3 billion, or 28.8% of gross domestic product (GDP), he said.

Higher debt was mainly due to a higher-than-forecast residual cash deficit driven by lower core Crown tax receipts and higher operating payments.

At December 31, total Crown assets were $248 billion and liabilities were $173.1 billion. The Crown's net worth strengthened to $70.5 billion.

Mr English said in a statement government spending remained under control and revenue remained ''somewhat below'' forecast.

''Given the large size of both the revenue and spending bases, overall we are still tracking reasonably close to forecast for the first six months of the financial year.

''We remain on track to surplus in 2014-15. As we've said many times, this will require ongoing discipline and responsible fiscal and economic management.''

Picking up the theme of election year, Mr English said New Zealand did not need irresponsible and expensive spending promises such as were being seen from other political parties more than a year before a surplus had been posted.

Social security and welfare, health and education remained the top three spends for the Government. Social security and welfare payments rose 2.3% in the period to $11.6 billion, health payments rose 1.4% to $7.3 billion and education rose 2.1% to nearly $6 billion.

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