Crown accounts track in line with Budget forecasts

• OBEGAL, revenue, expenses close to Budget forecasts in first 3 months of 2018/19
• Corporate tax receipts in line with forecast, up 8.2% from last year
• Net debt below forecast at 30 September 2018

The first set of Crown financial statements for the 2018/19 year show the Government accounts are tracking in line with the Budget 2018 forecasts, Finance Minister Grant Robertson says.

“The Treasury today released the Financial Statements of the Government for the first three months of the new financial year, from 1 July to 30 September 2018. As with other years, these initial readings early in the financial year can be variable due to differences in the timing of revenue and expenses, and corporate reporting structures,” Grant Robertson said.

“The Operating Balance before Gains and Losses (OBEGAL) was close to forecast at a $0.3 billion deficit over the three months. A small deficit is normal at the start of the financial year. This is because monthly tax revenue ramps up as the year progresses, while expenses are more evenly spread out. The Treasury advises that the early deficit is set to reverse out into a surplus in the coming months.

“Core Crown expenses were close to forecast, at 1% below expectations, while core Crown tax revenue was within 0.6% of the Budget forecast.

“Within revenue, we saw some of the typical early-year variations. While source deductions and GST were slightly above forecast, in line with the strong labour market and stronger-than-forecast residential investment, corporate tax revenue – using the reported ‘accrual’ measure – was 12.3% below forecast. The Treasury advises that the September quarter accrual corporate tax result was affected by timing and accrual movements, and that the early reading is not necessarily a reliable indicator of underlying corporate profitability. The less-volatile ‘receipts’ measure of corporate tax was on forecast and is up 8.2% on the same period last year.

“Net core Crown debt stood at 20.9% of GDP at 30 September, below the Budget forecast of 21.7% of GDP. The Government is focussed on keeping net debt under control, with the Budget Responsibility Rules committing us to reducing net debt to 20% of GDP within five years of taking office. As pointed out at the release of the 2017/18 financial statements, net debt is set to fluctuate around the 20% mark.

“The Coalition Government is committed to responsible management of the Government’s books. We are running sustainable annual surpluses, keeping expenses under control and managing net debt carefully. At the same time, we are making record investments in infrastructure and public services like health, education and housing. This is a careful balance between making the important investments New Zealand needs while making sure we’re not burdening future generations,” Grant Robertson said.