Higher revenues keep New Zealand’s deficit in check

4 Jun 13
Above-forecast tax revenues helped New Zealand post a lower-than-expected budget deficit for the 10 months to the end of June, according to figures published by the Treasury today.

By Nick Mann | 4 June 2013

Above-forecast tax revenues helped New Zealand post a lower-than-expected budget deficit for the 10 months to the end of June, according to figures published by the Treasury today.

The deficit totalled $3.99bn over the period to April 30 – $664m less than was forecast in projections published alongside last month's budget. This figure, defined as the operating balance before gains and losses, discounts short-term changes in the value of government assets and liabilities. It is used to measure New Zealand’s progress towards its goal of returning to an operating surplus in 2014/15.

Overall tax revenues were $486m higher than expected, largely as a result of better-than-expected corporate tax receipts. These came in $532m above last month’s forecast – just over half of which the Treasury attributed to higher corporate profitability, partly resulting from continued strength in equity markets. The remainder came from large taxpayers filing their returns in April – earlier than expected.

New Zealand finance minister Bill English said the figures reflected a combination of the strengthening economy and the government’s continued spending restraint.

‘A number of indicators confirm that New Zealanders can look to the future with some well-earned confidence and optimism. The economy is growing more strongly, new jobs are being created, unemployment is coming down and business and consumer confidence have picked up,’ he said.

‘The government is supporting these positive trends with a common-sense economic programme focused on giving businesses the confidence to invest, grow and create new jobs. The plan is working and the benefits are starting to show through in the government’s finances, as we remain on track to surplus in 2014/15.’

Government spending was slightly below forecast, at $57.8bn, while net crown debt was $441bn below last month’s forecast at $60bn. This equates to 28.7% of gross domestic product.

‘It’s important that we cap and then start reducing this debt by sticking to sound fiscal and economic management. That will allow us to meet our second fiscal target of reducing net debt to no more than 20% of GDP by 2020,’ English said.

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