Operating deficit grows as GST, PAYE misses forecasts
The government's operating deficit was wider than forecast in the first four months of the financial year as the Crown clipped a smaller tax take on consumer spending and wages.
The operating balance before gains and losses (obegal) was a deficit of $2.87 billion in the four months ended October 31, $169 million, or 6.3%, bigger than forecast in the May Budget.
Core tax revenue was 1.6% short of expectations at $17.92 billion, with GST and source deductions from weak private consumption and tepid wage growth the biggest drag on the accounts.
The tax take from GST accruals was 4.9% short of forecast at $8.13 billion in the four-month period, while source deductions missed expectations by 2.6% at $7.16 billion.
Treasury officials say they expect the weakness in both revenue streams to continue through the year.
The total corporate tax take was 1.5% below forecast at $2.41 billion after a smaller return from non-resident withholding tax.
Core Crown spending was 1.5% below forecast at $22.95 billion, with delays in health expenditure and less spent on welfare for fewer beneficiaries.
The under-spends were offset by higher than forecast expenditure on earthquake expenses from land zoning decisions, and the government has lifted its Christchurch red zone provision by $234 million to $1.17 billion.
Including gains from the New Zealand Superannuation Fund and Accident Compensation Corp's investment portfolio, the Crown's operating deficit was $34 million in the period, a 98% improvement on the forecast shortfall of $1.96 billion.
Net government debt was near expectations at $55.47 billion, or 27.1% of gross domestic product.