Finance minister says bigger surplus due to timing
FINANCE Minister Steven Joyce is downplaying the latest Crown financial surplus, saying an extra $1 billion of the $2.5 billion surplus is due to timing differences.
The operating balance excluding gains and losses (obegal) was $2.5 millon for the 10 months ending April 30, compared with a forecast surplus of $1 billion.
Jayne Winfield, from the Office of the Government Accountant, said the extra $1 billion was due to higher-than forecast core Crown tax revenue and lower-than-forecast Crown expenses.
Tax revenue was $1.2 billion, or 2%, higher than forecast and $5 billion (8.8%) higher compared with the same period last year.
Corporate tax was the largest driver of increased tax revenue against forecast, being $1 billion ahead, she said.
The corporate tax forecast was based on an assumption the annual peak in provisional tax assessments and estimates processing would occur in May.
Crown expenses were $391 million lower.
Mr Joyce said the Treasury and Inland Revenue expected most of the tax gain to reverse in the May accounts.
At this stage, the Treasury expected the 201617 accounts to be broadly as forecast.
Deloitte Dunedin tax partner Phil Stevenson agreed with the summation by Mr Joyce.
‘‘For the 10month period, corporate tax revenue was ahead of the forecasted amount due to Inland Revenue simply having processed more provisional tax assessments and estimates than previously assumed.’’
The peak processing for those items normally occurred in May but this year it occurred in April.
The result was the April result being ahead of the yeartodate forecast.
‘‘Come May, the actual result should be more in line with the forecasted yeartodate at that time and therefore most of the increase is simply a onemonth timing difference that will reverse,’’ he said.
Mr Joyce warned it was important not to take too much from a single month’s figures, particularly because of the timing differences.
However, the accounts overall did underline the Government’s improving fiscal position.
‘‘It is only by having this strong economic plan we get to make the sort of choices were were able to make in the recent Budget.
‘‘And only a strong economic plan will give us the capacity to make more positive decisions into the future.’’
The Treasury accounts showed the operating balance, which included gains and losses from Government investments from the New Zealand Super annuation Fund, ACC and other departments was $2.12 billion ahead of forecast at $11.9 billion.
Net gains were $599 millon above forecast, largely due to investment gains on financial instruments of $1.5 billion.
Offsetting those, actuarial gains on the Crown’s investment portfolios were $863 million lower than forecast, mostly reflecting a lower discount rate used to convert future cash into presentday dollars.
At the same time last year, the operating balance was a deficit of $3.4 billion, a turnaround of more than $15.2 billion.