4 Jun 2009

Investment returns boost Government's books

6:06 am on 4 June 2009

Less than a week after the Government delivered its first Budget, its books are already looking better, as investment returns rebound.

The New Zealand Superannuation Fund, the Accident Compensation Corporation and the Earthquake Commission have recorded investment gains during April, partially offsetting large losses made earlier in the financial year.

Those better investment returns in April have resulted in an operating deficit of nearly $7.7 billion, $1 billion lower than forecast in Thursday's Budget.

When investment gains and losses are excluded, the operating deficit for the 10 months is $1.8 billion, just $100 million lower than forecast.

The Treasury says income from tax was up $400 million on Budget forecasts, though it expects tax receipts to be in line with forecasts by the end of June.

Net government debt stood at $17.8 billion, or 9.9% of gross domestic product.

The better-than-expected figures were due almost entirely to a good month in April for the Government's investments, particularly returns on the New Zealand Superannuation Fund.

But Finance Minister Bill English says investment performance is not the reason for the Government suspending its annual contributions to the fund.

The Government says payments are on hold until its books are back in surplus and it may be 2020 before they are fully resumed.