The government's operating deficit for the September quarter was wider than forecast, but Treasury said it expects this to reverse in coming months as the tax take ticks up.
The operating balance before gains and losses was a $343 million deficit in the three months through September, versus Treasury's forecast for a $279m deficit.
The government's tax take was $19 billion, slightly below the $19.1b forecast. Corporate tax revenue was below forecast by $300m, mainly due to 2018 income tax assessments lodged since June, indicating taxable profits in the 2018 tax year were lower than forecast, Treasury said.
"Tax revenue in the first quarter of the year tends to be less than what is recognised over the rest of the year, while expenses are generally more evenly spread across the year. As a result we expect the deficit reported in the September financial statements to reverse in the coming months," Treasury said.
Finance Minister Grant Robertson was also sanguine about the wider-than-expected deficit.
"A small deficit is normal at the start of the financial year. This is because monthly tax revenue ramps up as the year progresses, while expenses are more evenly spread out," he said in a statement.
Core operating expenses were $21.2b, 1 per cent or $223m below forecast, partly due to the Working for Family Tax Credit being lower than expected.
Net core Crown debt was $60.4b, or 20.9 per cent of GDP at the end of September - $2.2b less than forecast. The lower-than-expected net debt is largely due to a stronger opening position, Treasury said.
"The Government is focused on keeping net debt under control, with the Budget responsibility rules committing us to reducing net debt to 20 per cent of GDP within five years of taking office. As pointed out at the release of the 2017/18 financial statements, net debt is set to fluctuate around the 20 per cent mark," Robertson said.
The Crown's net worth was $129.3b as of September 30, $10.6b higher than forecast due to property, plant and equipment revaluations.
The government's operating balance, including investment gains from NZ Super and Accident Compensation Corp, was a $1.1b deficit, when a $483m surplus had been forecast.
Net investment gains were $1.5b as of September 30, $800m above forecast. This result was largely due to favourable changes in market prices not forecast, Treasury said.
Offsetting these investment gains were net losses on non-financial instruments of $2.3b, $2.2b higher than forecast losses. That was primarily driven by changes to discount rates used to calculate the ACC claim liability. The Emission Trading Scheme also recognised a loss of $500m due to an increase in carbon prices.