New Zealand Embassy Tokyo, Japan

Higher revenue helps improve Crown finances

Higher than forecast tax revenue continues to underpin an improvement in the Government’s finances, compared to the Half-Year Update in December, Finance Minister Bill English says.

The operating deficit before gains and losses for the eight months to 28 February was $3 billion, or $556 million smaller than the $3.6 billion deficit forecast in December.

“The other pleasing aspect of the financial statements is that government spending remains under control,” Mr English says. “That is important as we remain on track to surplus in 2014/15.

“It will remain important beyond then, because we will need to build up sufficient surpluses to provide choices around repaying debt and investing more in priority public services.”

Overall, core Crown tax revenue was $719 million higher than forecast at $37.6 billion for the eight months. Source deductions were $266 million above forecast due to a higher effective tax rate paid by those in the workforce, and tax from other individuals came in $326 million above forecast.

Compared with the eight months to February 2012, tax revenue has increased by $2.2 billion, mainly reflecting wage growth, higher effective tax rates and a rise in GST receipts due to growth in nominal consumption and residential investment.

Core Crown expenses were $370 million below forecast, reflecting broad-based spending control and delays in Treaty of Waitangi settlements.

Higher than expected net gains from Government investment funds delivered a $4.3 billion operating surplus for the eight months, which was significantly better than the $481 million forecast operating deficit.

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