The Government's deficit for the first quarter of the 2011-12 financial year was NZ$2.5 billion, which is NZ$210 million worse than expected, Treasury says, due to lower tax revenue than forecast.
Treasury released the Government's financial statements for the three months to September 30, 2011 today.
The operating balance before gains and losses (OBEGAL) was a deficit of NZ$2.5 billion. Compared with monthly forecast tracks based on the 2011 Pre-election Economic and Fiscal Update (PREFU), which was published on October 25, over the quarter this deficit was NZ$210 million greater than expected.
"The key driver of this difference was core Crown tax revenue, which at NZ$13 billion was NZ$301 million (2.3%) lower than forecast," Treasury said.
The main variances were:
GST revenue was NZ$154 million (4.2%) below forecast;
Other individuals’ tax was NZ$85 million (13.2%) below forecast; and
Corporate tax was NZ$63 million (3.2%) below forecast.
Treasury noted that monthly flows of tax revenue can be quite volatile and said with only one month of new data since completing the PREFU forecasts it's likely the volatility will reduce in coming months.
"For example, since completing the PREFU forecasts there have been a range of corporate profit announcements, both positive and negative," Treasury said.
It said the operating balance deficit was close to forecast at NZ$7 billion. This included forecast losses on the valuation of long-term liabilities of the Government Superannuation Fund and Accident Compensation Corporation - NZ$1.9 billion - and losses on investment portfolios of NZ$2.7 billion.
"We have forecast for these investment losses to reverse during the year but returns on global equity markets are currently volatile."
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