Crown accounts reflect stronger than expected economy

The first Government financial results for the new financial year show the continued strength of the New Zealand economy, despite the challenges of COVID-19.

The Crown accounts for the three months to the end of September take into account the improved starting position from the previous financial year and the continued strength in economic activity. However, the current Delta outbreak has dampened this improvement.

The result of the stronger economy means core Crown tax revenue was $2.3 billion above the Budget 2021 forecast, coming in at $24 billion. GST revenue was $184 million above forecast, owing to stronger than expected consumer demand.

The accounts also show the operating balance before gains and losses (OBEGAL) was a deficit of $5.4 billion, $0.8 billion higher than forecast. This is a result of the Delta outbreak which triggered a shift in Alert Level restrictions and the payment of government financial support.

As a result, core Crown expenses at $31 billion, were $3.2 billion above forecast mainly owing to the payment of wage subsidies and COVID-19 resurgence support payments.

Net core Crown debt was 33 percent of GDP which was lower than the 36.2 percent forecast.

“This result is better than expected, particularly given the impacts of the current Alert Level restrictions,” Grant Robertson said.

“We have been taking a balanced approach as we protect New Zealand from the global COVID-19 pandemic. This approach has been reflected in these results.

“As the country transitions to the new COVID-19 Protection Framework and the fewer restrictions that go with it, the prospects are strong for the economy to support the recovery and meet other challenges,” Grant Robertson said.