9 Jun 2015

Govt might make surplus after all

6:51 pm on 9 June 2015

An apparent turn-around in the Government's finances has raised the possibility it might make surplus this year after all.

Bill English holding the 2015 Government Budget.

Finance Minister Bill English - pictured holding the 2015 Government Budget Photo: RNZ / Alexander Robertson

In the 10 months to the end of April, the Government recorded a $448 million surplus just a few weeks after the Budget forecast a $555 million deficit.

A stronger-than-expected tax take and lower spending helped the public finances into a much healthier position than the Budget had predicted.

Finance Minister Bill English was happy but not jumping to conclusions.

"We won't be counting our chickens too early. You know we'll focus on controlling the expenditure.

"The fact that tax revenue is up a bit tells us that there's a bit more income around than was expected and that's a good thing," Mr English said.

Grant Robertson

Labour Party finance spokesperson Grant Robertson (file) Photo: RNZ / Diego Opatowski

The Labour Party's finance spokesperson, Grant Robertson, did not read too much into the latest financial statements.

"It is possible that the deficit will be smaller than what was forecast in the Budget but the reality remains that the, you know, the long-promised surplus is still highly unlikely to be achieved," Mr Robertson said.

Green MP James Shaw

Greens co-leader James Shaw (file) Photo: RNZ / Alexander Robertson

Greens co-leader James Shaw was more optimistic about the prospects of a surplus.

"The Government may achieve the surplus this year, in this financial year which, you know, obviously... has been the kind of core of their economic policy for the last, you know, however many years... It still is an estimation, it is still only a potential surplus so we don't know that it is an actual surplus yet. But yeah, they might achieve it."

But he said, if the Government did achieve surplus, it would reflect decisions it had made when it should have invested more in children and intiatives like the New Zealand Superannuation Fund.

Part of the reason why the Government's books are in better shape is because both company tax and GST have been higher than forecast.

But Mr English said he was not expecting GST payments to keep flowing in.

"The GST uptick means people are spending a wee bit more than was expected. There's been a bit of confidence around but we'd expect that to be coming back a bit as the reality of, you know, lower dairy prices set in.

"Also, the Christchurch rebuild seems to be peaking about now, so some of the things that drove that GST a bit higher may be tapering off, and that's why we don't jump to conclusions too far."

Mr English said the Government would have a much better idea of the state of its books when the actual results came out for the eleven months to the end of May.

But he said that still would not guarantee whether the finances would end up in surplus for the full financial year, as last minute accounting changes could shift the numbers by hundreds of millions of dollars.