Crown accounts reflect strong economic fundamentals

  • Hon Grant Robertson

New Zealand’s strong economic fundamentals continue to show through in the Crown accounts, Finance Minister Grant Robertson says.

The Treasury today released the Crown accounts for the four months ended 31 October.

“The strong jobs market, higher-than-expected residential investment and the strength of the corporate sector continued to show through in the accounts. Net debt also remained below the Budget 2018 forecast,” Grant Robertson said.

“It’s still early in the new financial year and, as with the September results, readings earlier in the year can show an OBEGAL deficit due to the different timings of revenue and expenses.

“The OBEGAL deficit of $258 million is similar to the same time last year as Core Crown expenses came in 1.2% ($344 million) above forecast. Half of this variance was due to the top down adjustments the Treasury makes through the year, while the remainder was spread over a number of departments. It should be remembered that expenses at the end of the previous financial year came in below forecast, meaning there might be reversals early in the current 2018/19 year.

“Core Crown tax revenue over the four months was 0.8% above the Budget 2018 forecast. Source deductions – mainly PAYE – were 1.5% higher than expected due to the strong jobs market, as indicated by the ten-year low unemployment rate of 3.9%. GST was 1.7% above forecast due to stronger-than-forecast residential investment.

“The accrual measure of corporate tax was 5.5% below forecast, partly due to timing differences. The Treasury says they expect this variance to decrease over the year. The less volatile receipts measure of corporate tax was 5.9% above forecast, indicating strong underlying business fundamentals.

“Net debt at the end of October was 21.1% of GDP, versus the Budget 2018 forecast of 21.6%.

“These accounts were the last to be compared against the Budget 2018 forecasts. The next set will be measured against more up to date forecasts being released on 13 December in the Half Year Economic and Fiscal Update.”