Govt operating deficit smaller than Budget forecast on underspend
The government posted a smaller operating deficit than expected in last month's Budget forecast as an underspend in April offset a lagging GST tax-take.
The Crown's operating balance before gains and losses (obegal) was a deficit of $1.37 billion in the 10 months ended April 30, smaller than the $1.52 billion shortfall estimated in the May 15 Budget economic and fiscal update, and down from a deficit of $3.99 billion a year earlier. Core Crown expenses were $90 million below forecast at $57.88 billion with underspends across a number of departments, the biggest of which was at the Ministry of Business, Innovation and Employment. The tax-take was $111 million below forecast at $50.23 billion due largely to the timing of goods and services tax refund assessments, which are expected to reverse in May, though still up 4.8 percent from a year earlier.
Last month Finance Minister Bill English confirmed a return to Budget surplus in 2015 at $372 million, wider than the $86 million projected in the half year economic and fiscal update, with bigger surpluses projected after that as an accelerating economy helps bolster the government's books.
The corporate tax take was in line with the May forecast at $7.14 billion accrued in the 10-month period, and was up from $7.09 billion a year earlier. Income tax was $147 million ahead of forecast at $23.43 billion, up from $22 billion in 2013, while residential withholding tax was $61 million short of expectations at $1.7 billion, and down from $1.75 billion. GST was $194 million below forecast, though still up from $12.41 billion in 2013.
The Crown's residual cash deficit was $138 million below forecast at $6.51 billion, and lower than the $9.64 billion in 2013, due to a smaller than expected wage bill and capital expenditure.
Net debt was in line with the May forecast at $62.25 billion, or 28.1 percent of gross domestic product, while gross debt was $83.04 billion, or 27.5 percent of GDP.
The operating balance, which includes movements in the Crown's investment portfolio, was a surplus of $3.81 billion, $252 million ahead of forecast, and up from $2.81 billion a year earlier, with strong equity markets underpinning unrealised gains in the value of the New Zealand Superannuation Fund.