By Bernard Hickey
Treasury has reported the Government made an Operating Balance Excluding Gains and Losses (OBEGAL) deficit of NZ$545 million in the three months to the end of September, which was better than the NZ$798 million deficit forecast in the May Budget.
Treasury said the result included a NZ$253 million boost from ACC's own OBEGAL because of lower insurance costs and and higher dividends, but that income taxes were NZ$101 million higher than expected and spending of NZ$18.5 billion was NZ$34 million higher than forecast.
It said the higher than forecast trend in PAYE earnings in the June quarter had continued through into the September quarter and corporate tax receipts were NZ$72 million above forecasts because of a number of permanent one-off tax payments.
However, GST receipts were NZ$76 million below forecasts, "mainly owing to lower-than-forecast consumption."
"Current indicators are pointing to consumption growth being close to forecast in the September quarter, but lower‐than‐forecast consumption growth through the first half of 2015 has lowered the GST‐taxable base overall relative to the Budget forecast," Treasury said.
Treasury forecast a NZ$176 million surplus for the full year in the May budget, but that also included a forecast for a deficit for the 2014/15 year. The Government's final result was a surplus, indicating an improvement since May.
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7 Comments
It only forecast a deficit for the first quarter (which came in below forecast i.e. -$500m instead of -$750). The year forecast is for a small surplus. The question is what was the reason for a forecast large deficit in the Q1 and what is supposed to change in Q2, Q3 and Q4 to give us the forecast annual surplus.
You are wrong to assume the Q1 forecast is merely an average of the forecast yearly deficit so that Q2, Q3 and Q4 are also forecast to be -$500m to -$750m.
There was a surplus for the 2015 year (see http://www.interest.co.nz/bonds/78132/treasury-reports-obegal-surplus-n…).
This was despite a deficit forecast for 2015.
We are now in the first quarter of the 2016 year. The forecast is for a surplus and the Q1 result, albeit a deficit of -$500m is better than the expected deficit of -$750. This would indicate the forecast surplus for 2016 looks on track as presumably Q2, Q3 and Q4 are forecast to bring the annual budget back to surplus (and now only have to turn around a -$500m Q1 deficit and not a -$750m one).
Key process for fixing all ills. Celebrating the surplus.
Just who do you believe?.
This is the new reality process for curing all ills and also the economy.
AJ may take heart from this.
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Now, just imagine what you could achieve with a decent glass of Pinot Noir!!!!
The economy might hum.
The Friday Funny is not all about who you believe, it is all about seeing the funny side of life.
Some people can spin a yarn. Some people can wine about it.
Key point is...don't believe a word of what he and I say.
Have a nice day.
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