OBEGAL deficit close to forecast in October

The Government’s $2.87 billion operating deficit before gains and losses in the four months to 31 October was slightly larger than forecast, after core Crown revenue and expenses both came in below expectations.

“The latest figures confirm that the Government is continuing to control its new spending and getting better results from existing programmes, as we move towards our target of returning to surplus in 2014/15,” Finance Minister Bill English says.

“Core Crown tax revenue was a bit below Budget 2012 forecasts, as it was in the three months to September. This reflected slightly weaker than forecast consumption and wage growth feeding into GST and PAYE revenue.

“But it’s good to see Inland Revenue’s tighter collection and enforcement policies resulting in higher effective tax rates for non-incorporated businesses.

“On the other side of the ledger, core Crown spending was $343 million below forecasts, reflecting slightly lower than expected spending in health, welfare, education and lower finance costs as a result of lower-than-forecast interest rates.”

The $2.87 billion OBEGAL deficit for the four months was $169 million larger than Budget 2012 forecasts. Net core Crown debt at $55.47 billion, or 27.1 per cent of GDP, was as forecast in the Budget.

“With the world economic position remaining uncertain, it is important that the Government remains focused on responsible and prudent fiscal policy well beyond its 2014/15 surplus target,” Mr English says.

“A new set of forecasts will be issued with the Half-Year Economic and Fiscal Update on 18 December. They will include the Treasury’s latest assessment of the global economic situation and its likely impact on New Zealand, as well as confirming the Government’s ongoing long-term economic plan.”