Treasury reports OBEGAL deficit of $545 mln in first quarter of financial year; better than $798 mln forecast in May; Income taxes bit better than forecast; GST lower than forecast

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.