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Operating deficit grows as GST, PAYE misses forecasts

The government's operating deficit was wider than forecast in the first four months of the financial year as the Crown clipped a smaller tax take on consumer spending and wages.

The operating balance before gains and losses (obegal) was a deficit of $2.87 billion in the four months ended October 31, $169 million, or 6.3%, bigger than forecast in the May Budget.

Core tax revenue was 1.6% short of expectations at $17.92 billion, with GST and source deductions from weak private consumption and tepid wage growth the biggest drag on the accounts.

The tax take from GST accruals was 4.9% short of forecast at $8.13 billion in the four-month period, while source deductions missed expectations by 2.6% at $7.16 billion.

Treasury officials say they expect the weakness in both revenue streams to continue through the year.

The total corporate tax take was 1.5% below forecast at $2.41 billion after a smaller return from non-resident withholding tax.

Core Crown spending was 1.5% below forecast at $22.95 billion, with delays in health expenditure and less spent on welfare for fewer beneficiaries.

The under-spends were offset by higher than forecast expenditure on earthquake expenses from land zoning decisions, and the government has lifted its Christchurch red zone provision by $234 million to $1.17 billion.

Including gains from the New Zealand Superannuation Fund and Accident Compensation Corp's investment portfolio, the Crown's operating deficit was $34 million in the period, a 98% improvement on the forecast shortfall of $1.96 billion.

Net government debt was near expectations at $55.47 billion, or 27.1% of gross domestic product.


Comments and questions

Including profits and losses from the Superannuation fund in the operating deficit distorts the underlying performance and it doesn't seem valid to do so when the government doesn't use the Super fund to fund its expenditure.

So this is why poor old Davey Bain can't be reimbursed for 13+ years of lost wages and dignity. Plus, I guess, AMI & the Finance companies and EQ Comission have siphoned off the rest.

If David Bain needs a job while he waits for his big pay day NZ First has an opening.

He doesn't look the type to absorb all of the tricks that the NZ First leader teaches his political troops.

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