December deficit $381m better than forecast

  • Bill English
Finance

Higher than expected tax revenue and lower than expected operating expenses contributed to an operating balance before gains and losses (OBEGAL) deficit of $990 million for the six months to December, Finance Minister Bill English says.

The OBEGAL deficit was $381 million better than the $1.37 billion deficit forecast by the Treasury in the Half-Year Update in December, driven primarily by core Crown tax revenue being $323 million above forecast.

GST was $132 million (1.7 per cent) above the HYEFU forecast and corporate tax was $124 million (3.1 per cent) above forecast. In addition, customs and excise duties were $46 million (1.8 per cent) above forecast.

“Although GST and corporate tax were both ahead of forecast for the six months to December, these latest figures underscore the difficulty in forecasting the difference between two large numbers. It remains to be seen whether the higher-than-expected growth in revenue continues through the rest of the financial year,” Mr English says.

“The Government still considers that the strong economy and responsible fiscal management can deliver a surplus when the final accounts are published in October. The smaller than expected OBEGAL deficit reinforces that message.”

Core Crown expenses for the first half of the financial year were $90 million lower than forecast at HYEFU – with the variance being spread over a number of departments.

“The Government is continuing to responsibly manage its finances. 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. The challenge is coming from revenue, which the Government has much less control over,” Mr English says.