Treasury has reported the Government's operating budget before gains and losses (OBEGAL) was a deficit of NZ$5.9 billion in the 10 months to the end of April.
This was NZ$1.4 billion better than forecast because core tax revenues were 1.7% above forecast, largely due to better than expected corporate profits and smaller than expected GST refunds.
Spending of NZ$56.1 billion was also 0.6% or NZ$323 million lower than forecast.
See more details below from Treasury and the full results here:
In the ten month period to 30 April, core Crown tax revenue of $45.1 billion was $772 million or 1.7% higher than forecast:
- Corporate tax was $452 million (7.0%) above forecast with 2011 terminal tax assessments and Portfolio Investment Entity (PIE) tax each approximately $200 million above forecast. There was stronger volume growth in PIE tax than forecast, particularly for KiwiSaver funds and strong investment returns in the March 2012 quarter.
- Goods and Services Tax (GST) was $313 million (2.7%) above forecast, mainly as a result of smaller-than-expected GST refunds.
For the same period, core Crown expenditure of $56.1 billion was $323 million or 0.6% lower than forecast.
The operating balance before gains and losses (OBEGAL) deficit for the ten months to 30 April was $1.4 billion (19.2%) lower than forecast at $5.9 billion, largely as a result of the higher-than-expected tax and lower-than-expected core Crown expenses. In addition, better than expected results across State-owned enterprises and Crown entities contributed approximately $300 million to the lower-than-expected deficit.
At 30 April, net debt stood at $52.0 billion (25.9% of GDP) and gross debt stood at $78.1 billion (38.8% of GDP).
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10 Comments
Excellent.
It appears we can ‘grow ourselves out of trouble’ after all Bernard.
Speaking of bears, where are the rest of you? Hibernating away from this polar blast? If the headline had the word ‘worse’ instead of ‘better’ they’d be a 100 disparaging comments about the government by now!
You're in dreamland if you think this is good news. I notice that you, like most Gov't Ministers, seem tio think that NZ will be able to "Grow" it's way out of it's debt problems. Dream on!
Why do you think it cant grow out? it did after all pre-2007.
regards
Pre-2007 growth was due to excessive borrowing by the private sector, not organic growth i.e. increased productivity. The private sector is now de-leveraging and that's why tax revenues are falling. The Gov't is now trying to stimulate demand by taking over the borrowing role but a 6% Gov't deficit is only producing a 2% growth rate and this is not sustainable.
Yes, non-productive growth, housing. So for now not only does the Govn have to stay in the "market" it also needs to get us back to a productive economy......of course that means growth in goods which takes growth in (cheap) energy, which we dont have......welcome our not sustainable future. That leaves tax increases of one form or another......and/or lopping off a major segment of our Govn spend, say nothing beyond basic healthcare? or bye bye OAP pensions? the choice is really quite drastic....
regards
steven - I agree with your conclusion that ultimately the Gov't will either have to raise taxes or cut spending. However this will be certain political suicide for the incumbent Gov't, therefore they will attempt to kick the can down the road for as long as possible. Unfortunately this will only mean that the problem will get worse and the solutions even more drastic. I have no doubt that in the future people will have to become far more self-reliant as they finally come to the conclusion that the welfare state is unsustainable.
Im not so sure on suicide, look at Greece, havnt the two main parties formed a marriage in hell? End result is the voter is voting for extremists as their only avenue of "escape"
welfare unsustainable, well the three pillars of Govn spending are education, health and welfare. To make any meaningful cut to spending one of those has to all but go.....anything else is chicken feed.....
The problem with the welfare state going is its all that stops riots and looting on the streets which would happen pretty quickly, witness the UK. So that leaves education and health as the decimated one. Health, well thats also a bad one especially given the BBs voting power.......cant see that being cut. To an extent you can self-teach your children, fundies often do....trouble is that leaves many of their kids ill-educated which is bad news longer term......BBs will have got thiers so wont care, so I guess it means bye bye formal education first off........
or we come back to taxes......hello 70% PAYE in an eye blink....
regards
No the welfare state is an essential component of a capitalist system if its inherent flaws are to be corrected, or at least partially compensated for.
No the welfare state is an essential component of a capitalist system if its inherent flaws are to be corrected, or at least partially compensated for.
Okay news, without getting too excited about a $6 billion deficit. How's the current account?
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