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Govt first-half accounts beat forecasts

NZ Newswire logoNZ Newswire 12/02/2018 Paul McBeth

The government's operating surplus was bigger than expected in the first six months of the 2018 financial year as low unemployment and upbeat consumer sentiment helped GST and income taxes beat forecasts.

The operating balance before gains and losses was a surplus of $1.09 billion in the six months ended December 31, more than three times the $311 million surplus predicted, and up from a wafer-thin $9m surplus a year earlier, the latest government accounts show.

The Crown's tax take rose 4.9 per cent to $37.18b and was $597m ahead of forecast, due largely to source deductions tracking $300m ahead of expectations and GST $200m ahead.

Treasury officials said they expect some of those gains to remain through to the end of the financial year on June 30.

"At this point in the year these results indicate the economy is tracking well," Finance Minister Grant Robertson said in response to Tuesday's accounts.

"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."

The higher take from source deductions was likely due to higher employment growth compared to the PAYE forecast while GST was bolstered by residential investment and private consumption.

The Crown accounts follow government figures showing the lowest unemployment rate since December 2008 with firms still absorbing the inflow of new migrants while separate data reported strong retail sales in recent months.

The Crown accounts show core Crown expenses rose 4.1 per cent to $39.6b, some $166m ahead of expectations with some costs coming earlier than anticipated.

Net debt was $64.82b, or 23.2 per cent of gross domestic product, $515m below forecast and down from $65.34b a year earlier.

The Crown's net worth was $114b, some $826m more than expected, and up from $95.55b a year earlier.

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