Wellington, Thursday, January 26, 2017

Steven Joyce

Higher than forecast tax revenues are the primary reason the Government accounts for the first five months of the financial year are ahead of forecast.

The Governments financial accounts to November 30, 2016 were released today, and they show that the Crowns Operating Balance before Gains and Losses was a deficit of $768 million, which was $936 million better than the Treasury projected at the Half Year Fiscal Update.

Stronger economic growth is flowing through to the Governments tax take.

Tax revenue for the five months to November is $460 million ahead of forecast in the Half-Year Update, and $1.4 billion ahead of Budget 2016 forecasts.

Caution appropriate

It is appropriate to remain very cautious in terms of what the increased tax receipts might mean for the full-year financial result.

Treasurys Half-Year Update forecast a $473 million surplus for the whole 2016/17 year. It is far too early to say whether that surplus will be able to be achieved.

These accounts include the first tranche of the Governments expenses related to the Kaikura earthquake, with just under $700 million of EQC estimated costs being included. It will still be some time before the full cost of the recovery is known.

Tremor lessons

The Earthquake again demonstrates the importance of the National-led Governments prudent financial management. Getting back to surplus and repaying debt in the good times means we are in a position to support communities at times like this when they are in need.

More generally, these accounts underline the importance of strong fiscal discipline as we continue to build up our financial resilience in a relatively uncertain world. We need to remember that Budget 2016 forecast only a small surplus for the full financial year.

Steven Joyce is Finance Minister of New Zealand

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