The New Zealand government posted a smaller operating deficit than forecast in the May budget on a bigger corporate tax take and less spending on the Canterbury earthquake than expected, and is sticking to its target to reach a surplus by the 2015 financial year.
The operating balance before gains and losses (obegal) was $4.41 billion in the 12 months ended June 30, smaller than the $6.29 billion shortfall forecast in the Budget economic and fiscal update in May, and less than half the $9.24 billion deficit a year earlier.
Core Crown tax revenue of $58.65 billion was ahead of the $58.29 billion tax take predicted, while annual expenses of $70.31 billion were less than the forecast $71.65 billion. Accrued corporate tax revenue of $9.02 billion was ahead of the forecast $8.62 billion, making up for a goods and services tax take of $15.21 billion, which missed the expected $15.41 billion.
"The government's approach has been validated by today's result," Finance Minister Bill English told a media briefing in Wellington. "It reflects a more resilient economy where government, households and business have patiently adapted to changing conditions."
English stuck to his target for an operating surplus in the year ending June 30 2015, saying it will provide room to reassess public spending priorities, repaying debt and resuming contributions to the New Zealand Superannuation Fund.
Repaying debt would be a higher priority than resuming contributions to the Super Fund, due to the greater liquidity of debt over the pension fund's assets, he said.
English said the continued strength of the New Zealand dollar remained a headwind for the export sector.
The cost of the Canterbury rebuild was $1.19 billion smaller than expected in the financial year as shared infrastructure spending was finalised after the June 30 balance date, and because of cheaper land zoning and delayed acquisitions.
The government's operating balance, which includes unrealised movements in the fair value of investment portfolios and future actuarial liabilities, was a surplus of $6.93 billion against a forecast surplus of $1.92 billion.
That was driven by a $4.4 billion gain in the value of the Super Fund and a $1.8 billion gain in the Accident Compensation Corp's investment portfolio, as well as a $3.6 billion reduction in the long-term liability of ACC claims and Government Superannuation Fund pensions.
The government's residual cash deficit of $5.64 billion was below the forecast shortfall of $7.75 billion, and almost half the $10.64 billion deficit in 2012.
Net debt of $55.84 billion, or 26.3 percent of gross domestic product, as at June 30 came in below the forecast $57.95 billion, or 27.1 percent of GDP, as the cash deficits got smaller. Gross debt of $77.98 billion, or 36.7 percent of GDP, was less than the forecast $78.64 billion, or 36.8 percent of GDP.