Treasury reports NZ$167 mln OBEGAL surplus for 9 mths to end of March; NZ$334 mln better than forecast; Core Crown tax revenue NZ$702 million better than forecast on stronger economy

Treasury reports NZ$167 mln OBEGAL surplus for 9 mths to end of March; NZ$334 mln better than forecast; Core Crown tax revenue NZ$702 million better than forecast on stronger economy

By Bernard Hickey

Treasury has reported an Operating Balance Excluding Gains and Losses (OBEGAL) surplus of NZ$167 million for the nine months to March 31 this year, which was NZ$334 million better than the Treasury had forecast in December.

A faster-growing-than-expected economy helped boost core crown tax revenues by NZ$702 million more than expected, although this was offset somewhat by lower lower interest revenues and dividend payments.

More soon.

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13 Comments

A faster-growing-than-expected economy helped boost core crown tax revenues by NZ$702 million

Who would have guessed given record low swap and government bond yield quotes?

Are NZers being spin captured to reinforce the bail out tactics for the shareholders of our Aussie banks due to restrictive APRA imposed capital adjustments?

SH - so how do you see your 'bail out tactics' playing out for we bank shareholders ( who have already taken a price haircut due partly to APRA imposed increased capital adequacy ratio rules) ?

Not well. What were once banks have evolved into building societies with little official constraint about the lending mix. It's all on black.

A funny thing happened to business lending on the way from the GFC.

Australia’s banks turned into giant building societies, lending almost exclusively against residential property and rarely, if ever, making unsecured loans to businesses or people any more.

If someone asks for a business or personal loan these days, the banker asks for the house. Read more

I have no doubt the current banking regulations will be the source of a major problem. We won't be alone in that problem as Basel III applies everywhere (even here when we aren't bound by it). The previous regulations created additional problems during the subprime collapse. It's going to be fascinating to see the next historic crisis unfold.

Pfft. Ordinary people don't formulate their understanding of economic measures from that OCR/swap rate/bond yield mumbo jumbo.
As long as the headline reads along the lines of "Strong. Good. No worry here", that's good enough for them.

A "faster-growing-than-expected economy", huh.
I thought it would be relatively easy to forecast immigration numbers and corresponding wealth effect, given that you know the targets.

Perhaps it is in fact the result of the witch hunt on all those incredibly wealthy sole trader contractors with highly sophisticated tax avoidance practices.

It will be interesting to see the breakdown.

Everytime I pay tax it goes into surplus. The last four months of the financial year were busy so it's not surprising. There will be a spill over effect from the construction industry into this year. Does this mean the Government will deleverage its debt? Approaching 48% government debt to GDP is rather high.

Living in Auckland it seems to me the word crisis does not exaggerate either our housing or transport issues. Yet almost nothing is being done or even planned by the government to materially affect either, other than soundbites blaming the Council. In those circumstances it is very difficult to be impressed by a government surplus. There does not remotely seem to be any bold vision or leadership, especially on transport, at central government level.

Much of what we see depends on where we stand. Compared with the Aussies things are roses: "Government's position expected to be $21 billion worse by 2018-19.."

http://www.abc.net.au/news/2016-04-26/federal-budget-deficit-likely-to-k...

I agree that perspective will largely determine one's views.
The Aussies may or may not have a problem, depending to some extent how they fund their deficit over time. In a recession, they are wise to have a deficit. In the meantime they are spending $10 billion in Melbourne, in a City that already has vastly superior transport to Auckland.
http://www.theage.com.au/victoria/911b-melbourne-metro-swanston-street-p...
Sydney is getting serious about underground rail.
http://nwrail.transport.nsw.gov.au/
Separately The Turnbull government announced a new Smart Citiespolicy last month with an aspirational target of a 30-minute commute for city workers. It has committed $50 million to help co-ordinate investors into leveraging the government's historically low interest rates into funding projects.

http://www.afr.com/news/policy/budget/budget-2016-feds-need-to-fund-cong...

It is this last bit that is especially interesting, and something Bill English could learn from.
Government funding costs are 2.5%, but English chose to fund Transmission Gulley privately at 15%, but otherwise is sitting on his hands, proudly proclaiming a surplus.

Of course, no one can predict the future. But they are running significant and continuing deficits without any plans for fiscal structuring in a global environment that shows few signs of upside and fair signs of downside. Their best hope is in China, who given the opaque nature of their economy, I think qualifies for Churchill's,'riddle wrapped in a mystery, inside an enigma".

I would suggest, if there is any significant downside global event in the next 2-3 years the decision to keep running that deficit may turn out to be anything but wise. Only time will tell.

Having lived in Sydney for a decade I would have to say commutes of 90-120 minutes are normal and quite entrenched. Over a million people move from west (where they can afford to live) to east (where the jobs are) every day. In context, whilst clearly 2.5% funding is an opportunity of sorts, I think their coming election says more about where $50 million will go than anything else.

I guess I see the chances of large, negative, external events to be quite high in historical terms. In that context keeping some powder dry seems to me to be a pretty responsible thing to do.

Or course, I don't have to commute in Auckland every day but if I managed a surplus in the current world economic environment I'd be pretty pleased about it. Even though it was a bit of a surprise.

I mean, every western economic dog and his brother is spending or printing their way to prosperity at the moment and they don't seem to be much better off than little NZ.

All the dairy farmers are approaching the end of their financial year, I think the IRD will suddenly owe lots of money for provisional tax refunds.

A "faster-growing-than-expected economy"

Right so if it's so great...why no inflation? Why having to lower the OCR to a new 'record' low?

Got to love those spin merchants eh.