Govt trebles earthquake levy as fiscal headaches continue
New Zealand's fiscal migraine is slightly less intense than expected – but it is still causing significant financial pain.
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New Zealand’s fiscal migraine is slightly less intense than expected – but it is still causing significant financial pain.
The government’s financial accounts for the year to June – released by the Treasury this morning – show higher revenue than expected, and some lower costs, but the loud pounding fiscal headache is still a deficit of $18.4 billion for the year.
Better than expected economic growth – not to mention stepped-up auditing from the Inland Revenue – saw a rise of $800 million in tax revenue for the year to June.
This is the first increase in tax revenue since the recession hit in the 2007-08 financial year.
The rise is mostly in GST and personal taxation: the company tax take is actually down by $220 million. However tax form source deductions - PAYE, withholding tax, and the like – is up $587 million, while GST is up $502 million on forecasts, even though those forecasts took the rise form 12.5% to 15% into account.
But expenses are also up. A big chunk of this is the Christchurch earthquake, of course, which pushed up expenses by $1.9 billion, and the Treasury’s financial statements warn of higher costs to come.
Finance Minister Bill English, not coincidentally, chose this morning to announce a rise in Earthquake Commission levies. Household levies are currently capped at $69 a year: this will rise to $207 a year.
The government’s largest outlays, however, managed to spend less than forecast. Welfare costs are down $263 million on expectations (but still, at $25.3 billion, very high). Health costs, which ritually outran forecasts for most of the last 20 years regardless of who was in government, came in slightly below expectations, at $13.06 billion instead of $13.11 billion.
Education, another sector traditionally not renowned for its sense of fiscal reasonability, managed to spending $377 million less than budgeted, at $12.4 billion.
Today’s financial statement is simply focused on the government accounts for the last financial year. The pre-election economic and fiscal update (PREFU) is to be released on 25 October and will include an updated set of economic forecasts.
Rob Hosking
Tue, 11 Oct 2011
Tue, 11 Oct 2011
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Govt trebles earthquake levy as fiscal headaches continue
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