Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports.
The Treasury released the finalised financial statements for the government of New Zealand, confirming a further reduction in the size of the budget deficit to 1.3 percent of gross domestic product, or $2.9 billion for the last financial year.
That was some $900 million higher than forecast in nominal terms, largely reflecting ACC and Canterbury quake insurance costs.
The operating deficit, known as the OBEGAL, had blown out to 9.2 percent of GDP, or $18.4 billion, in the year to June 30, 2011, following the huge costs borne by the Crown from the Canterbury earthquakes. A small surplus is forecast in the year to June 30, 2015.
Asked at a media briefing whether the surplus was likely to be achieved, English said: "The PREFU (pre-election fiscal update) forecast a surplus and the next update is the mid-year update", due on Dec. 16.
"The drop in the dairy payout is further and faster than was anticipated and will have some impact and we will know more about that the half year update."
The figures released today also confirm the rising net government debt track peaked in the previous financial year at 26.3 percent of GDP, sitting at 26.2 percent of GDP at June and at $59.9 billion, $4.8 billion lower than forecast.
In nominal terms, net government debt was $4.1 billion higher than a year before, but relative to the size of the economy, net debt has shrunk slightly and is forecast to keep falling, with economic growth of 3.9 percent for the year the highest in 10 years.
However, the deficit outcome owed as much to government spending slightly under forecast to offset a lower than forecast tax take, which English warned today could be a trend.
"Tax revenue was $2.8 billion higher than the previous year, but it was just over $900 million lower than the Treasury forecast in Budget 2013," he said. "It is possible that revenue will continue to track below forecast in the current financial year, which reinforces the need for the government to continue controlling its spending."
English also stressed the importance of the government's social housing reform agenda as a means of "managing expenditure tightly and stabilising and reducing debt - including carefully managing future capital needs."
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In state housing, the government "will work closely with community and private providers to provide housing to New Zealanders most in need," said English in a statement issued with the Crown accounts.
"This will allow us to draw on outside capital, rather than being the sole responsibility of taxpayers."
On the spending side, total government expenditure as a proportion of GDP slipped to 31.2 percent of GDP, the lowest level since the year to June 2008, the year before the global financial crisis and more than two years before the first of the devastating Christchurch earthquakes.
Among tax categories, corporate tax and GST were a little lower than expected. The $1.4 billion increase in revenue from source deductions was a reduction of 0.3 percent of GDP on the previous year as pay rates and consumption grew at a lower rate than the economy.