Surplus still eludes English

Bill English
Bill English
Tax receipts are still hindering Finance Minister Bill English's quest to return the Government accounts to surplus, although he again issued an assurance yesterday a small surplus was on the way next year.

With his sixth Budget scheduled for Thursday, Mr English will be hoping some good financial news will shift attention away from a scandal-plagued Government and back to his record of fiscal restraint.

The accounts for the nine months ended March showed the operating balance before gains and losses (obegal) - the preferred measure of the finances - was still a deficit of $1.7 billion, 13.6% larger than Treasury forecasts at December. At the corresponding time last year, the obegal was a deficit of nearly $5 billion. Progress is being made.

The operating balance, which has the benefit of returns from the Crown's share portfolio, was well ahead of forecast at $3.3 billion, up 62.1% on the December half-year fiscal update's estimates. At the corresponding time last year, the operating balance was $2.5 billion.

However, while core Crown tax revenue is up 6.3% from March last year, tax revenue was 1.8% lower than forecast, reflected across most tax types and continuing the pattern of recent months.

GST in the period was $264 million, 2.2% below forecast with about half of the variance due to stronger-than-expected earthquake-related insurance refunds.

Source deductions were $220 million, 1.2% below forecast. Again, Treasury said that was due to timing issues.

Other individuals' tax was $163 million, 4.7% below forecast.

Customs and excise duties were $97 million, 3.1% below forecast. Most of the variance was in relation to strong tobacco excise forecasts which did not eventuate.

Corporate tax was $73 million, 1.3% below forecast. Again this was put down to timing issues.

Updated tax revenue forecasts will be released as part of Budget 2014.

Crown expenses were slightly lower than forecast at $52 billion, about the same as they were in March last year.

Mr English said the track to surplus was just one indicator confirming the economy was heading in the right direction.

''As the Budget will show, the Government's economic programme is making good progress in supporting more jobs, higher incomes, increased business investment and better public services New Zealanders deserve.

''Now is certainly not the time to put that at risk through untried and convoluted experiments such as fiddling with monetary policy, nationalising the electricity industry or returning to bloated and inefficient government spending,'' he said.

Labour finance spokesman David Parker said that for the fifth month in a row, the Government's accounts had undershot expectations with tax revenue $829 million below forecast.

''Bill English claims the benefits of the economic growth are being shared fairly. If that were the case, tax revenue would not be short of his projections.''

The books had now been worse than predicted in November, December, January, February and now March.

It would be interesting to see what effect that had on the Finance Minister's ''wafer-thin micro surplus'' for 2014-15 that he would announce in next week's Budget, Mr Parker said.

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