NZ govt operating deficit wider than expected as Kaikoura costs mount, customs duties lag
By Paul McBeth
Dec. 5 (BusinessDesk) - The New Zealand government's operating deficit was slightly wider than expected in the first
four months of the financial year as the cost of reinstating State Highway 1 between Picton and Christchurch was more
expensive than anticipated and as customs and excise duties lagged behind forecast.
The operating balance before gains and losses (obegal) was a deficit of $308 million in the four months ended Oct. 31,
compared to a forecast shortfall of $217 million and widening from $131 million a year earlier. Tax revenue rose 4.4
percent to $24.17 billion, although it was $69 million short of forecast as petrol and tobacco excise taxes fell from a
year earlier and missed expectations. Meantime, core Crown spending rose 5.3 percent to $26.32 billion, some $233
million ahead of forecast with the cost of reinstating the South Island highway link one of the more expensive items.
"Obegal can fluctuate from month to month as the recognition of tax revenue does not happen uniformly throughout the
year, while expenditure is fairly static on a monthly basis before peaking in June," chief government accountant Paul
Helm said in a statement. "As a result, it is not unusual for obegal to be a small surplus or deficit in the first part
of the financial year."
The Crown accounts are the last spanning the previous administration, with the new Labour-led government sworn in in
late October. Finance Minister Grant Robertson will outline his priorities at next week's half-year economic and fiscal
update and Budget policy statement. The government has been softening the public for some changes to capital spending,
with Prime Minister Jacinda Ardern yesterday saying there had been a lack of budgeting by the previous administration
and that unbudgeted projects may be axed.
Today's accounts show the Crown's net debt position was smaller than expected at $61.37 billion, or 22.9 percent of
gross domestic product, while the residual cash deficit of $2.02 billion was largely in line with expectations.
Total capital commitments stood at $13.59 billion as at Oct. 31, up from $12.08 billion a year earlier. Of that, $6.96
billion was earmarked for state highways and $3.14 billion for land and buildings.
The operating balance, which includes unrealised movements in the value of the Crown's investment portfolios and
actuarial adjustments of its Accident Compensation Corp scheme, was a surplus of $2.08 billion, more than the $714
million expected, as investment gains offset a bigger actuarial loss in the period.
ACC's investment portfolio was valued at $40.4 billion as at Oct. 31, more than the $38.73 billion predicted, while the
NZ Superannuation Fund was worth $37.87 billion, against a forecast of $35.17 billion. ACC's long-term liability was
valued at $40.52 billion, more than the $38.76 billion projected.
(BusinessDesk)
ends