The New Zealand government posted a smaller operating deficit than forecast as the corporate tax take continued to beat expectations, while its cash balance was bolstered by a more successful float of MightyRiverPower than anticipated.
The operating balance before gains and losses (obegal) was a deficit of $3.27 billion in the 11 months ended May 31, smaller than the $4.03 billion shortfall predicted in the Budget Economic and Fiscal Update, according to the Crown's latest accounts. Core tax revenue was 0.9 per cent ahead of forecast at $54.01 billion, with higher company taxes offsetting a smaller take on goods and services tax.
Total corporate tax was $491 million ahead of forecast at $8.07 billion, while personal tax was $140 million ahead of expectations at $24.54 billion. GST was $222 million below forecast at $14.03 billion.
"Higher than expected profitability, in part owing to strength in financial markets, contributed to the positive variances and we expect that the differences in core Crown tax revenue will persist to year-end," Treasury chief financial officer Fergus Welsh said in a statement.
The government is sticking to its pledge to return to budget surplus of $75 million in 2015 by putting on a new spending cap and further delaying contributions to the New Zealand Superannuation Fund, preferring to keep a lid on its rising debt.
The Crown reported a bigger operating surplus than predicted of $6.48 billion compared to the forecast $3.75 billion due to an increase in the discount rate being used at the end of May to value the long-term cost of future liabilities and gains in the government's investment portfolios.
The residual cash deficit was a smaller than expected $5.58 billion, with the government reaping $1.67 billion from the sale of 48.2 per cent of power company MRP, ahead of the $1.5 billion figure built into the forecasts. MRP was the first of the government's planned sell-down of its power companies, with Meridian Energy slated for a listing later this year.
Net debt was 1.4 per cent lower than forecast at $55.74 billion, or 26.4 per cent of gross domestic product, as at May 31, due to the stronger cash position.