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Treasury reports budget surplus for 7 mths to Jan of $934 million, which is $724 mln more than forecast

Treasury reports budget surplus for 7 mths to Jan of $934 million, which is $724 mln more than forecast

By Bernard Hickey

Treasury has reported the Government's Budget surplus in the seven months to the end of January was NZ$724 million better than expected due to higher tax revenues from GST and PAYE, but also because of payment delays on Treaty settlements.

The Operating Balance Excluding Gains and Losses (OBEGAL) was a surplus of NZ$934 million for the period, which was better than the NZ$210 million forecast in the Budget Update in December. It was also significantly better than the NZ$77 million surplus recorded for the same period in the previous year. Core Government tax revenue has risen 4.6% over the year, while spending has risen just 2.2%.

"Core Crown revenue at $42.5 billion was $200 million higher than forecast with higher than expected core Crown tax revenue (mainly GST and source deductions) being the main contributor to this favourable variance," Treasury said.

"In addition to this result, core Crown expenses, at $42.1 billion, were $403 million (0.9%) lower than forecast primarily due to timing differences relating to items such as Treaty settlements," it said.

In December, Treasury forecast a budget deficit of NZ$401 million for the full 2015/16 financial year, but the latest figures suggest the Government's finances are slightly healthier than that. The Goverment loosened fiscal policy slightly in December and softened its surplus and debt targets, while also increasing its capital spending allocation. It has since also signalled significant new spending on road and rail projects in Auckland as the Government's hard-line position on Budget spending has softened somewhat.

This softening may be welcomed by the Reserve Bank, which called late last year for more Government spending on infrastructure in Auckland to ease supply constraints and help lift economic activity. The apparent improvement in the Budget position may give the Government even more room for easing policy in its May 26 Budget for 2016/17 and beyond.

Treasury said the Government's core residual cash position was a deficit of NZ$1.5 billion, which was NZ$1 billion lower than forecast.

Core crown tax revenues were NZ$446 million higher than expected, although this was offset by interest payments being NZ$240 million lower than expected because some derivatives being rolled rather than turning into interest bearing deposits.

Treasury said total labour income was stronger than forecast in the December quarter with source deductions (PAYE) being NZ$227 million above forecasts. GST was 2.2% or NZ$220 million above forecasts, which Treasury said indicated higher consumption income than expected, although it cautioned some of the increase may be related to timing.

Treaty settlements were NZ$177 million less than expected because of ongoing negotiations.

Treasury said net debt was NZ$1.178 billion below forecast.

Finance Minister Bill English cautioned that the monthly results fluctuated.

"We don't read too much into any particular month's result. We will continue to focus on keeping a tight rein on spending and paying down debt - we're working hard to reduce net Government debt to around 20 per cent of GDP in 2020," he said.

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It looks like the government accounted for all of my tax payments so we're in surplus again.

good news. We'll need it for the rainy days ahead

R3 Reserve Bank analytical accounts ($m) are as always interesting to read, but inexplicably difficult to analyse.

Wow, I never would have thought that would be what happens when you drastically cut funding on public services.
Now rebate back to the DHBs and Transport systems which are immensely strained under the stupid immigration policy.

when has he paid down Debt?
Finance Minister Bill English cautioned that the monthly results fluctuated.

"We don't read too much into any particular month's result. We will continue to focus on keeping a tight rein on spending and paying down debt

Getting the debt down to 20% is still 3% higher than what it was when national took office.
Debt to GDP ratio was 17% in 2008.
They managed to nearly double that by 2012 to 32%.
To want kudos for fixing their own mismanagement of government monies is arrogant and patronising.

They inherited a dog, and managed our economy through the worst recession since the the Great Depression masterfully. I for one take my hat off to JK and English.

Not sure I'd use "masterfully". "manage" suggests they actually did something, when really they did little. In hindsight however, yes they could have made a big mess and they didnt so some points for that. What they have done however is can kick, ie the have not addressed any of the medium and long term problems NZ has, indeed arguably they have made them worse. They have also done nothing on the housing problem, I do agree previous Govns started / continued it as well.

NZ is in debt of almost NZ$120 BILLION. Try sweep that under the carpet Bill!

Just looking at that debt-clock gives me vertigo!

If the NZ clock touches on vertigo, have a gander at the World Debt Clock! It accrues a million US Dollars in interest every 16 seconds.... Remind me how this is going to end?

Not much to see here is how it all ends up at the year end that is important......I like the fact that BE is actually very focused on his 2020 target.......

So our biggest export, dairy, has gone to crap and the tax take is going up? Shows how much farmers pay in tax doesn't it!

Perhaps it shows there is a lot more to the NZ economy than just dairy?

I am dumping my AKL bean counter and going to find one from Te Kuiti

How fickle !! Mum in Ak, and just out of interest I took the same accs to the B O P. $880 vs $330. My dude is in a one storey building.

Umm did you read the article Jimbo - mainly GST and source deductions) being the main contributor GST is neutral for farmers buying business related goods and services. If gst is up then it suggests higher consumer spending/debt??

Absolutely Dave - we have the AKL housing Ponzi to keep us ticking along for a while - see the Oz figures

Another episode of trade deficit debt transfer to the private sector. Nice one Bill.