New Zealand's operating deficit was bigger than forecast in the first four months of the government's fiscal year as the tax take on personal income came up short of expectations.
The operating balance before gains and losses was $131 million, or 4.1 per cent, more than expected at $3.36 billion in the four months ended October 31. Total individual tax revenue accrued was 6.1 per cent below forecasts at $7.48 billion, though the Treasury's commentary said that was likely to be a seasonal variance and the gap should narrow in coming months.
Still, the corporate tax take was 8.6 per cent more than expected at $2.71 billion in the four month period, and the Treasury said that may result in higher-than-forecast annual taxable earnings.
"While the outlook for Europe has deteriorated since the pre-election economic and fiscal update, the local economy is continuing to grow, with higher than forecast corporate tax revenue," Finance Minister Bill English said in a statement. "But getting back to surplus won't be easy.
In many ways, restraint in the public sector has only just started."
The operating deficit was $7.45 billion, almost 20 per cent worse than forecast in the pre-election fiscal and economic update, due to an actuarial loss on the Government Superannuation Fund liability that was $1.05 billion worse than forecast.
Core Crown expenses were $237 million, or 1.1 per cent, better than forecast at $23.03 billion.
Net debt was slightly below forecast at 22.9 per cent of gross domestic product, or $45.81 billion, as at October 31.
Today's statements are the first released since the National Party secured enough support at the November 26 election to form a government. Prime Minister John Key is expected to announce formal confidence and supply agreements with the leaders of the Act Party and United Future later today.