Just when the financial clouds seemed to be darkening, the Government has been given a boost with news the deficit for the current year is tracking $1.4 billion better than forecast in the Budget just two weeks ago.
The Government's financial statements for the 10 months to the end of April show tax revenue was $772m or 1.7 per cent higher than forecast mainly thanks to corporate tax coming in $452m or 7 per cent ahead of expectations.
Treasury said 2011 terminal tax assessments and Portfolio Investment Entity (PIE) tax were each approximately
$200m above forecast.
"There was stronger volume growth in PIE tax than forecast, particularly for KiwiSaver funds and strong investment returns in the March 2012 quarter," officials said.
GST returns were $313m (2.7 per cent) above forecast, mainly because of lower than expected GST refunds.
There was also better news on the spending side, with core Crown expenditure at $56.1b, which was $323m or 0.6 per cent lower than forecast.
That left the operating balance before gains and losses (Obegal) in deficit by $5.9b which was 19.2 per cent or $1.4b lower than forecast.
Better than expected results from State-owned enterprises and Crown entities contributed about $300m to the lower-than-expected deficit.
At the end of April net debt stood at $52b, equivalent to 25.9 per cent of GDP, with gross debt at $78.1b (38.8 per cent of GDP).
Gains and losses from investments in the New Zealand Superannuation Fund and ACC, partially offset by actuarial losses on ACC's claims liability, added another $100m to the improvement, taking the final operating balance deficit to $9b, $1.5b lower than forecast.
- The Dominion Post
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