A better-than-expected tax take, buoyed by strong consumer spending and wage/salary income have helped the Government's books, a new Treasury report shows.
Released by the Treasury on Tuesday, financial statements for the Government for the three months to September 30 show core Crown tax revenue was $22 billion. It was $2.1 billion above the PREFU 2020 forecast and included $6.2 billion from GST.
A further $9.3 billion of income came from salary and wages, ('source deduction revenue'), which was $0.6 billion above forecast.
In a statement, Finance Minister Grant Robertson said due to a better-than-expected tax take, the deficit was lower than the amount forecast. It showed consumers were spending, reflecting confidence in the economy.
Core Crown expenses were $27 billion, coming out at $1.1 billion below forecast. This was mainly due to lower than expected take-up of the wage subsidy scheme.
For the first three months of the financial year, the operating balance, before gains and losses (OBEGAL), showed a deficit of $3.2 billion, less than half forecast by the Treasury of $6.5 billion.
Total borrowing: $154.6 billion
At the end of September, total borrowing was $154.6 billion: $27.8 billion below forecast.
By comparison, in 2010, Government borrowing was $69.7 billion. In 2015, it was $112 billion. In June 2019, it was $110 billion.
As a percentage of gross domestic product (GDP), Infometrics senior economist Brad Olsen, confirmed total borrowing was 35 percent of GDP in 2010 and 46 percent in 2015. As at September 2020, total Government borrowing was 51 percent of GDP.
Net core Crown debt: $94 billion
At the end of September, net core Crown debt was $94 billion (30.5 percent of GDP) and $3.6 billion less than forecast.
Robertson said New Zealand debt levels compare favourably to other advanced economies.
"Net core Crown debt was 30.5 percent of GDP, also better than the PREFU forecast of 31.7 percent of GDP. This compares to the average for advanced economies before COVID of about 80 percent. Debt servicing costs remain low and are forecast to stay that way," he said.
Infometrics senior economist Brad Olsen said Crown accounts show a considerable hit due to the pandemic. The Treasury report, which covers the first three months of the financial year, indicates they're in better shape than expected.
"New Zealand's response to the pandemic has seen the economy open up much faster than other areas around the world, which has lessened the immediate burden on the Government," Olsen added.