The New Zealand government posted a smaller operating deficit than expected in the first four months of the financial year as it reported a bigger personal tax take and reaped more from customs duties on imported tobacco.
The Crown's operating balance before gains and losses (obegal) was $1.75 billion in the four months ended Oct. 31, smaller than the $2.14 billion forecast in the May Budget economic and fiscal update, and down from a shortfall of $2.87 billion a year earlier. Treasury is scheduled to release updated forecasts on Dec. 17.
Core crown tax revenue was 1 per cent ahead of forecast at $19.34 billion, as a bigger take from personal income and larger than expected duties on imported tobacco and exported refined fuel offset a smaller company tax. Core expenses were also 1.1 per cent below forecast at $23.32 billion due to delayed spending on the Canterbury earthquakes and Treaty of Waitangi settlements.
"The result continues a trend over the past year of the Government's fiscal results exceeding forecasts, as we remain on track to return to surplus in 2014/15, Finance Minister Bill English said in a statement.
"Although the economy is improving and revenue is increasing, there are a lot of other large influences on the government's books. These include a growing prominence of financial assets and liabilities, which expose taxpayers to greater volatility," he said.
The government's residual cash deficit of $3.26 billion was smaller than the $3.42 billion forecast in May, with $1.26 billion raised from the sale of instalment receipts in Meridian Energy. Another $627.5 million is payable on May 15, 2015.
Net debt of $59.08 billion, or 27.8 per cent of gross domestic product, was slightly lower than the $59.43 billion, or 27.9 per cent of GDP, forecast. Gross debt of $82.89 billion, or 39 per cent of GDP, was more than the $80.83 billion, or 38 per cent of GDP, expected, due to more government bond issuance.
The government's operating balance, which includes movements in its investment portfolios and actuarial adjustments, was a surplus of $1.83 billion compared to a forecast deficit of $1.47 billion, and compared to a shortfall of $34 million for the same period in 2012.
That was largely due to investment portfolio gains being $1.7 billion ahead of expectations, a $798 million actuarial gain on its Accident Compensation Corp liability and a $539 million gain from its Government Superannuation Fund liability.
Offsetting that was a $210 million loss from the Emissions Trading Scheme due to carbon prices rising to $3.65 as at Oct. 31 from 24 cents at the May budget. The Treasury also lifted its provision for ETS credits to $389 million from the $164 million forecast.