The government's books are running a deeper shade of red than forecast.
Updated accounts from the Treasury released this morning show the operating balance before gains and losses for the five months to November was $4.48 billion, which was $252 million (6.0%) higher than forecast.
Add the gains and losses in and the figure is higher: $9.92 billion, a whopping $2.83 billion (39.9%) higher than forecast.
That is due to some large losses on the government's financial bodies: a $1.04 billion loss on the Government Superannuation Fund and a $898 million increase in Accident Compensation Corporation liabilities.
Although corporate tax revenue is running ahead of forecast - by $210million or 7.1% - this is offset by a lower tax take from personal income tax and GST.
"Source deductions" - a combination of personal income and related taxes - are $394 million (4.4%) below forecast, while GST is $309 million, or 5.1%, lower than expected.
These forecast figures are taken from the pre election economic and fiscal update (PREFU) which were lower than the forecasts in budget 2011, delivered in May.
Yesterday Prime Minister John Key indicated the government might not reach its target of returning to surplus by the end of the 2014/15 financial year.
The commentary from the Treasury which accompanied this morning's figures says some of the current shortfall in tax revenue may reverse out by the end of the financial year but not all of it will.
"The source deductions and GST revenue variances were mainly timing‐related and are expected to reverse; however there is a risk that some of the GST variance may not reverse by year end," says the commentary.
About half the GST drop is due to the timing of refunds to insurance companies relating to the Canterbury earthquakes, the Treasury says.
The higher corporate tax take reflects higher corporate profitability over that period, but this will drop as GDP for the December quarter was lower than forecast in the PREFU.
Core government spending, meanwhile, is $399 million or 1.4%, below forecast, but much of this is expected to reverse out over coming months as it is mostly due to deferments of expected outlays for Waitangi settlements and transport projects.
Comments and questions7
No surprises there then - the government is taking the first few steps along the well beaten Grecian pathway.
With each year that passes and with each growth disappointment they will mumble 'unexpected' 'surprisingly poor outcome'etc etc.
Prepare yourself people because central government is only ever reactive, never proactive.
Of course we will have a deficit if we do nothing about it. Many government agencies, commissions,boards could be abolished and we wouldnt even notice. The abolishment of working for families and returning 400,000 NZ citizens to being taxpayers would be a bold start. Remember working for families was communism by stealth.
Cmon JK move on from just tinkering?
And our concentration is on the price of milk.
Agreed...and still far too many Quasi govt departments or positions of no use to anyone. Troughers the lot of them.
Time for govt to start taking some firm action
Pretty speeches are nice but action is what counts!
liberte
All governments do is that they try to do their best for the voters who voted them in and if it doesnt work well they go out in 3 years time, promise this promise that ,still same old boring 78 record, nothing changes.
The longer the patient puts off taking the medicine the bigger the dose required. Treasury are thinking the economy will get back to 2006 that was a once in a generation boom and this deficit is structural! wake up you overpaid buracrats and do your job, even a tadpole who woke up a frog would not think you can possibly make up $10 billion in 3 years and get back in surplus! The National party is the modern version of communism. There is a complete lack of personal accountability in their policies. Lose your money in a finance company - don't worry the gov will see you right! We need transactional based capital gain taxes (heavy stamp dusty) and more efficency in all departments and in particular health. We need to break down and stop the public drain to these areas of self interest!
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