Government deficit better than forecast

  • 26/01/2017
Bill English
New Prime Minister Bill English has been the Government's Finance Minister since 2009 (Simon Wong / Newshub.)

The Government's books have beaten Treasury forecasts again, with a deficit $936 million less than what was predicted for the five months to the end of November.

The operating balance, before gains or losses, was a deficit of $768m rather than the $1.704 billion, which Treasury had forecast in December's Half Year Economic and Fiscal Update.

Chief Government accountant Paul Helm said the difference of $936m was down to a higher tax take and lower expenses than forecast.

It was boosted by core Crown tax revenue of $28.8b - $460m more than forecast and $2.5b higher than for the same period a year earlier. GST revenue beat forecasts by 3.3 percent and corporate tax was 2.5 percent higher.

It said it was too early to know if the higher tax take was timing related or whether it will be permanent.

GST on online purchases came into effect in November 2016. The new rule is expected to earn the Government about $180 million a year in GST.

Core Crown expenses were 0.8 percent less than forecast at $31.7b.

Mr Helm said the preliminary fiscal cost of the Kaikōura earthquakes in November is expected to be between $2b-$3b.

The figures showed the actual operating balance was a surplus of $4.69b, compared to the half year forecast of $1.2b.

Gross debt of $87.1b, or 34 percent of GDP, was about $1.1b below forecast, reflecting the impact of repurchases of government stock, the Treasury said. Net debt was in line with forecast at $63.5b, or 24.8 percent of GDP