The government took in $1.57 billion less tax than expected in the first nine months of the fiscal year, reflecting a tepid economy, Treasury figures show - reflecting what the Finance Minister says has been a 'difficult year'.
The Crown took in $39.8 billion in tax in the nine months ended March 31, against a forecast in the Pre-election Economic and Fiscal Update estimate of $41.3 billion, according to the government's financial statements.
Core Crown spending was $1.75 billion below forecast at $50.99 billion, which the Treasury said reflected revenue variances and spending delays.
The operating balance before gains and losses (OBEGAL) was a deficit of $6.13 billion, or $800 million more than forecast.
Much of the shortfall reflected an increase in estimated earthquake costs of about $500 million, net of reinsurance, "much of which related to the 23 December 2011 earthquake," it said.
The operating deficit was $8.9 billion including gains and losses versus a Prefu forecast of $7.6 billion.
That reflected higher-than-expected actuarial losses on the Government Superannuation Fund and Accident Compensation Corp liabilities.
The Treasury expects a rebound in corporate tax, given "stronger performance by some corporate taxpayers" during the latest reporting period. It is expecting some $400 million of ground will be made up in the final quarter of the year, it said.
The financial statements are the final set to be released before Finance Minister Bill English releases his budget on May 24, which is expected to outline how the government will keep its commitment of returning to surplus by 2015.
'DIFFICULT YEAR' - ENGLISH
Commenting on the Crown accounts to reporters at Parliament, Finance Minister Bill English said they reflected the fact it had been "a bit of a difficult year."
There had been extra earthquake costs from the December 23 earthquake last year.
"But otherwise spending is reasonably well controlled and revenue is somewhere near where we expect it. This is just part of the longer time it is taking for the economy to pick up and for the Government's books to get back in order."
Asked how it would impact on the Government's goal to get back into surplus in 2014 - 15, he said the month to month accounts didn't make much difference to where New Zealand would be in three years time.
"The important thing is if we're getting back to surplus is to have fundamentally a more competitive economy.
"Containing Government spending matters and we are focused very much on the effectiveness of the spending. But in the long run we need a more productive, competitive economy."
Changes such as those to the Building Act, the Resource Management Act, and the oil and gas exploration programme were all just as important as the Government getting back to surplus.
Mr English said lower that forecast GST revenue had been a product of the earthquakes with a high level of GST refunds when insurance pay-outs were made.
It indicated substantial insurance pay-outs being made that were sitting in bank accounts.
The Government had had to pay GST refunds but when it was spent on rebuilding, the Government would get the GST back.
Labour finance spokesman David Parker said the lower than expected tax take was the result of "stuttering, under-performing economy that the Government has failed to grow."
"It's 'nek minnit' economic management. Every time the Government updates its forecasts, it promises jam tomorrow. Nek minnit it produces the actual results and they look worse.
"It's the performance, not the forecasting that's the problem," he said.By Audrey Young Email Audrey, BusinessDesk