Government books back in the red
The New Zealand government's books were back in the red in the first three months of the 2016 financial year.
However, a bigger-than-expected tax-take and smaller workplace insurance liability meant the deficit was below forecast.
The operating balance before gains and losses (obegal) was a deficit of $545 million in three months ended September 30, below the $798 million shortfall forecast in the May budget, and an improvement on the $725 million deficit a year earlier.
The government’s financial statements show the Crown's tax take rose 4.5% in the year to $16.24 billion, more than the $16.14 billion projected, while a 2.8% increase in core expenses to $18.54 billion was largely in line with expectations.
The obegal was helped by the Accident Compensation Corp's lower insurance costs as the workplace insurer's forward liabilities were valued at $32.12 billion, some $2.88 billion below forecast.
"This improved result included ACC's obegal which was $214 million higher than expected due to lower insurance expenses as a result of a decrease in the outstanding claims liability, increase in liable earnings for the current year and higher dividend income than expected," chief government accountant Paul Helm says.
The first-quarter deficit comes almost a month after Finance Minister Bill English ushered in his first fiscal surplus for the 2015 year, ending a six-year run of deficits. A cap on increased spending and a swelling tax take gained enough momentum to squeak into the black.
Company taxes were 3.4% ahead of forecast due to a number of large one-off payments which the Treasury said will probably be a permanent difference against the annual forecast, while income tax was also ahead of expectations. Goods and services tax missed its forecast due to consumption falling short of expectations.
The residual cash deficit of $2.05 billion was $732 million below forecast due to the stronger tax receipts and lower operating and capital payments made during the period.
The Crown's net debt at $62.78 billion, or 26.1% of gross domestic product, was below expectations due to a smaller cash deficit than predicted. Gross debt was $87.34 billion, or 36.3% of GDP.
The operating balance, which includes movements in the Crown's investment portfolios, was a deficit of $2.24 billion against a forecast shortfall of $4 million. That was due to the New Zealand Superannuation Fund posting a loss on its investments in a quarter when equity markets were hit by fears over the Chinese economy.