Deficit $760m better than forecast in 11 months

A further improvement in government tax revenue left the operating deficit before gains and losses $763 million smaller than forecast in the 11 months to 31 May, Finance Minister Bill English says.

“The improving economy suggests this lift in tax revenue is likely to remain through until the end of the financial year on 30 June,” Mr English says. “With the Government having locked in its spending track for the next few years, this pick up in revenue, as the economy and company profits improve, is flowing through into the Government’s books.

“This is a positive sign and confirms that the Government remains on track to return to surplus in 2014/15, so we are in a position to have choices about repaying debt and investing more in public services.”

The operating deficit before gains and losses was $3.26 billion in the 11 months to 31 May – or $763 million lower than the Budget 2013 forecast of $4.03 billion. If this improvement continues until the end of the financial year, the OBEGAL deficit will be $2.3 billion smaller than Budget 2012 forecasts.

Core Crown tax revenue was $502 million above forecast at $54 billion, most of which reflected higher corporate tax revenue.

Compared to May 2012, tax revenue was $3.5 billion higher for the first 11 months of this year, reflecting wage growth and an increase in the effective tax rate of sole traders, trusts and other individuals.

The partial sale of the Government’s shareholding in Mighty River Power was included in the latest financial statements. Gross sale proceeds of almost $1.7 billion were $185 million higher than forecasts, which were based on average receipts across the entire share sales programme.

These higher than forecast proceeds, along with other factors, contributed to the cash deficit being $768 million lower than forecast for the 11 months.