Surplus may be achieved this year

The Budget track is continuing to hold out the prospect of a surplus this year despite the Government officially postponing the prospect until at least 2015/16.

The Crown accounts for the 10 months to the end of April showed a $1 billion turnaround on Budget night predictions, with a surplus before gains and losses (Obegal) of $448 million against an expected deficit of $555m.

Treasury said total Crown expenses were $77.7b for the 10-month period and total Crown revenues were $78.5b.

‘‘Given the size of the Crown’s operations, the Obegal is subject to some fluctuation from month to month,’’ they said.

Core Crown tax revenue of $55b was 0.8 per cent, or $437m, ahead of forecast while higher than expected tax revenue largely related to corporate tax ($190m) and GST ($141m).

There was potential for the higher corporate tax take to persist through to June, but it was too early to say the same about the higher-than-expected GST take.

Net losses on non-financial instruments were $865m lower than forecast, mainly due to lower than forecast actuarial losses on the ACC claims liability.

When the gains and losses are combined with the Obegal result, the operating balance showed a surplus of $795m, $1.7b stronger than forecast in the May Budget.

Net debt at $64.2b, equivalent to 27 per cent of gross domestic product, was $268m lower than forecast.

Finance Minister Bill English said he would not know if the accounts were in surplus this year until the final figures were published in October. ‘‘But it’s clear it will be a close run thing.’’

The $1b swing around highlighted the volatility of monthly fiscal results,

‘‘From the Government’s point of view, what matters is the quality of our spending, the results we get from that spending and clear improvement in our overall fiscal direction.’’

April was the second month this financial year in which the books were in the black, following a $77m surplus in the seven months to the end of January.

‘‘The Treasury advises that, based on the April results, there is now some upside risk in both tax revenue and Crown expenses,’’ English said

‘‘However, it’s not yet clear how much of this latest overall improvement will carry through to the full year’s result.

‘‘Whatever happens, the Government will continue with its responsible and balanced economic and fiscal programme, which is taking New Zealand in the right direction.’’