The government books are showing a surplus:
The operating balance before gains and losses (OBEGAL) for the seven months to January was a surplus of $77 million, driven by higher than expected tax revenue and lower than expected operating expenses, Finance Minister Bill English says.
“This is the first time the Government’s books have shown a part-year surplus since 2009. Although it is too early to say whether we will have a surplus for the full 2014/15 year, this result demonstrates the strides we have made in improving the Government’s finances,” Mr English says.
The OBEGAL outturn was $712 million better than the $635 million deficit forecast by the Treasury in the Half-Year Update (HYEFU) in December, but was still $120 million below Treasury’s Budget 2014 forecast, undertaken at the start of the fiscal year.
Corporate tax was $158 million, or 3.2 per cent above the HYEFU forecast and source deductions were $146 million, or 1.0 per cent above forecast.
“Although corporate tax and source deductions were both ahead of forecast for the seven months to January, these latest figures underscore the difficulty in forecasting the difference between two large numbers,” Mr English says.
“We won’t know until the final accounts are published in October whether we will achieve a surplus for the whole year. The variance of both tax and expenditure from forecasts reinforces that message.”
Core Crown expenses for the first half of the financial year were $249 million lower than forecast at HYEFU.
“The Government is continuing to responsibly manage its finances. Core Crown expenditure for 2014/15 is forecast to be $4.1 billion lower than forecasts made when we first set the surplus target back in 2011,” Mr English says.
This is on-track to an annual surplus.
Whether or not that is reached this financial year or next it is a significant achievement and good reflection on the government’s careful management.
It has turned around the decade of deficits forecast in Labour’s last year in government and has been achieved in spite of the financial turmoil and natural disasters the government had to face.