The New Zealand government eked out a tiny surplus in the first six months of the fiscal year as growth in domestic consumption lifted the goods and services tax take, while uncertainties over the Kaikoura earthquake costs meant expenses were less than expected.
The operating balance before gains and losses was a surplus of $9 million in the six months ended December 31, compared with a forecast deficit of $666m in the Treasury's Half Year Fiscal and Economic Update (HYEFU). That was largely due to core Crown revenue being 0.9 per cent more than forecast at $35.4 billion while core Crown expenses were 0.8 per cent below forecast at $38.1b.
The tax take has been rising in an economy which is outpacing many of New Zealand's trading partners. The Treasury said today that GST revenue was 1.9 per cent, or $173m above forecast, "consistent with the higher than forecast growth in domestic consumption through the September quarter". Core Crown expenses were $303m less than expected, with the Treasury said mainly reflected "forecast expected costs in relation to the Kaikoura earthquakes which have yet to be quantified with enough certainty to include in the actual results".
"Over time, as reasonable estimates are able to be made, these costs will be recognised in the actual results, reducing the variance," the department said.
The actual operating balance was a surplus of $6.1b compared with a HYEFU forecast of $2.47b. Net gains in the fiscal first half of $5.9b, were $2.9b higher than forecast, primarily related to an actuarial gain of $3.1b ($2.8b higher than forecast) of the ACC liability, the Treasury said.
Core Crown net debt was $65.3b, or 25.5 per cent of gross domestic product, largely reflecting higher than forecast residual cash deficit, partially offset by the impact of higher than forecast circulating currency, due to increased demand for currency over the Christmas period, leading to an increase in financial assets, it said.
Gross debt was $86.7b, or 33.9 per cent of GDP. That was $1.6b below forecast and reflected increased repurchasing of government stock.
The net worth attributable to the Crown was $95.5b, compared with a HYEFU forecast of $91.9b.
In December, the HYEFU reduced the Obegal surplus by $200m to $473m for the 2017 fiscal year compared to the May budget before projecting growth of a combined $1.3b through to 2020, producing a forecast surplus of $8.5b in the year to June 2021. The Treasury lifted its economic growth forecasts for the next three years, with real gross domestic product now expected to grow 3.6 per cent on an annual average basis in the June 2017 year, up from the 2.9 per cent pace it projected in the May budget. On average, the Treasury expected growth to average 3 per cent a year over the next five years.