Treasury reports NZ$398 mln surplus in eight months to Feb; NZ$730 mln better than expected and NZ$667 mln better than last year; GST, corporate tax and PAYE higher than forecast; spending in line with forecasts

Treasury reports NZ$398 mln surplus in eight months to Feb; NZ$730 mln better than expected and NZ$667 mln better than last year; GST, corporate tax and PAYE higher than forecast; spending in line with forecasts

By Bernard Hickey

Treasury has reported the Government recorded a Budget surplus of NZ$398 million excluding gains and losses (OBEGAL) in the eight months to February 29, which was NZ$730 million better than the Treasury forecast in early December and NZ$667 million better than for the same period a year ago.

It reported that tax receipts from GST, corporate tax and PAYE were NZ$828 million better than expected at NZ$44.678 billion, which was only partly offset by lower than forecast interest revenues.

Treasury forecast a full year OBEGAL deficit of NZ$401 million in December, but better than expected results in recent months have increased the chances of a return to surplus for the full year. Treasury has also indicated in recent weeks that it is upgrading its economic growth forecasts for the 2016 Budget due on May 16.

Government spending of NZ$48.433 billion was NZ$113 million below forecasts, largely due to timing differences with delays in Treaty settlements and construction projects.

This all translated into the Government's residual cash position, which is often the determinant of the Government's borrowing programme, being a deficit of NZ$1.5 billion, which was NZ$1.6 billion better than forecast "primarily reflecting higher than expected tax receipts."

GST was NZ$306 million or 2.6% higher than forecast with GDP data for the December quarter showing stronger than forecast nominal domestic consumption.

Company tax was NZ$244 million or 4.3% above forecasts, although Treasury said part of the variance was expected to reverse out in March. Source deductions including PAYE were NZ$184 million better than forecast because of stronger labour income growth.

'One month's figures, but pleasing'

Finance Minister Bill English said monthly results could fluctuate significantly and he didn't take too much notice of one month's figures.

"The monthly results can fluctuate significantly - the February OBEGAL surplus was $500 million less than in January - so we don't put too much stock into any particular month's results," he said.

"What is more pleasing is the overall trend in the Government's books. We've moved from an NZ$18.4 billion deficit to around balance, and as long as we remain fiscally prudent we are on track to reduce net debt to around 20 per cent of GDP in 2020," English said.

He noted the operating balance - which includes gains and losses - was NZ$4.6 billion worse than expected.

"This was driven by the Super Fund recording a NZ$1.8 billion loss due to unfavourable market conditions, and falling interest rates and an increase in claim volumes have contributed to a NZ$3.1 billion increase in ACC's outstanding claims liability," he said.

Crown financial results

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22 Comments

The good tax take seems to happen everytime I pay tax. I have no doubt I'll be paying more tax this financial year, and there's a busy time ahead for the construction sector so it's not all bad for Government revenue.

Expect a tax cut announcement in the budget from next April just in time for election.

When times are tough tax cuts or government borrowing help (according to basic economics). The previous tax cut was welcome and it certainly helped. Another tax cut doesn't make a lot of sense (except for the election bribe part). Any tax cuts I get don't go into consumerism. There must be a point where tax cuts do more harm than good to society.

"There must be a point where tax cuts do more harm than good to society." cf. 2008

LOL im sorry, who did it help? Certainly not the poor

Now watch the household debt figures rise in the next print. Trade deficit and a government surplus equals a private sector deficit. The middle class, suckers again

He noted the operating balance - which includes gains and losses - was NZ$4.6 billion worse than expected.

"This was driven by the Super Fund recording a NZ$1.8 billion loss due to unfavourable market conditions, and falling interest rates and an increase in claim volumes have contributed to a NZ$3.1 billion increase in ACC's outstanding claims liability,"

If that is a surplus I'd hate to see a deficit...

for most of the last three years - the super and ACC have recorded huge gains month on month beating the market considerably on top of rising market gains - but the government did not claim to be in surplus for all that time despite the fact that if they included these they would according to one measure have been well in surplus - you cant have it every way - and its great to see that as a country we are actually earning more than we are spending !!

11
up

The earning more you delude yourself with is just digits on a screen. The relevant indicators are the destruction of our environment, polluted rivers, social benchmarks deteriorating rapidly, poverty, corruption, hospitals at breaking point, loss of assets to foreigners, completely unaffordable housing for the next generation, an emerging culture of corruption, choking overcrowded Auckland with broken transport infrastructure..and on it goes. Your in cuckoo land my friend.

agree

and we fix these with deficits ? it all costs money and resources so yes digits on a screen but the reality is until the unti of exchange moves away from money -those numbers are how we will measure things I don't disagree with some of your indicators of a successful country - in fact I have worked in health for over 25 years and can probably add a few more but the realist in me says that surpluses create resources to address them deficits lead to less resources and exacerbate the problems

Not sure which NZ you live in kpnuts but we definitely don't earn more than we spend as a country and haven't done so on aggregate for many years.

Well I give credit where credit is due. But yes, a surplus due to high immigration flowing on to gst revenue and private sector rising debt continues to rise. Still much to do. Tax cuts would be silly. Reduce the crown debt.

BE has already indicated he'll do tax cuts next year I think? simple he's clueless on old disproven neo-con dogma, but then the voters will vote with their wallets.

Looking around the world, the only advanced countries with a surplus are: Kuwait, Norway, Hong Kong, ,Germany, New Zealand, Luxembourg, Switzerland. Every other advanced country has a deficit.

For all countries in the world:
24 are in surplus
162 are in deficit

but NZ is a paper surplus as its debt is significant

We criticise politicians for buying votes instead of acting in best interests of the nation as a whole, yet we also vote for the one who is best for us and not the country. And then we all cry wen things go belly up. And then we vote them out as punishment. But we don't tell ourselves we shouldn't have voted for them in the first place which in essence is where we need to start. Very few people vote in a nations best interest. A I think the selection available means none of them are in our best interest.

This reminds me of the saying.... Power corrupts. And absolute power corrupts absolutely.

Such is human nature. It can't be changed. This is why revolutions have occurred throughout history. The old guard is thrown out in the revolution and over time it's replacement gradually is corrupted. And the cycle repeats. Oh to find a solution which does not corrupt itself over time.

It helped me. The National Party hate poor people and they want to enslave them with consumer debt. Tax cuts to the highest tax bracket will never help poor people. The tax cut should have been for the lowest tax bracket where it would have the most benefit.

e: was in response to spacex but the log in process relocated my post.

It's scientifically proven that trickle down economics works.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11619417

It is scientifically proven that no matter what under the table consulting and smiling and waving, and throwing good money after bad....does not a flag change make.

No matter what anyone says or does. You can fool most of the people, most of the time, but when push comes to shove...the oh so silent majority can win.

I always refer to it as trickle up to accurately describe the direction of capital flow.

Over half the working population pay no net tax - so a tax cut for the lower paid is another way of saying simply greater benefits.

The way the benefits work i.e. accommodation supplement, and even minimum wage increases is that increases in take home pay decrease the supplements meaning the individual is no better off.

The lower paid face effective marginal tax increases of between 70 and 90% according to Morgan so we need to do lot more work in this area. These are truly crazy incentives.

Suggesting tax cuts to the lower paid without considering these other more complex issues is simplistic.

It's not easy - but that doesn't mean we should not address it.