The Financial Statements of the Government for the six months ended 31 December continue the positive trends seen in October and November, Finance Minister Grant Robertson says.
Better-than-expected employment growth, higher residential investment, together with private consumption at the end of 2017, contributed to the Government’s accounts continuing to track slightly better than Treasury’s forecasts.
“Core Crown tax revenue was $597 million higher than forecast, and is currently $1.7 billion better than the same point last year. Core Crown expenses remained above the Half Yearly Economic and Fiscal Update (HYEFU) forecast, by $166 million. The Operating Balance Before Gains And Losses (OBEGAL) was a surplus of $1.1 billion over the six months, $779 million above forecast. Net debt was 23.2% of GDP at the end of December, similar to the HYEFU forecast of 23.4% of GDP and on track to be below 20% of GDP by 2022 – meeting the Budget Responsibility Rule,” Grant Robertson says.
“Treasury analysis shows that the better revenue result was driven largely by source deductions coming in at $254 million above forecast. This was due to higher-than-expected employment growth in recent months. Treasury also noted that they expect some of this variance will be permanent, indicating this will now be incorporated into the Budget 2018 fiscal forecasts.
“Meanwhile, GST was $196 million above forecast in the six months. Treasury said this was due to residential investment and private consumption being higher than expected. Customs and excise duties also came in at $129 million above forecast.
“These positive results chime with the evidence we’ve been hearing through recent consumer, employee and business confidence surveys. Unemployment fell to a nine-year low of 4.5% in December. Meanwhile, the ANZ’s job ads series in January showed the biggest monthly increase in three years. Employment confidence is also near 10-year highs, according to the latest Westpac McDermott Miller index.
“We’ve seen consumer confidence improve over the past month, while businesses’ confidence in their own activity – which is more closely correlated to economic growth than headline business confidence – has also been positive.
“At this point in the year these results indicate the economy is tracking well. The Government is committed to seeing this continue and ensuring that we have sustainable growth and a fair share in prosperity for all New Zealanders,” Grant Robertson says.