Booming employment market gives Crown accounts another boost

Thursday, 5 July 2018

A healthy jobs market could see New Zealand post a slightly larger surplus than expected in May's Budget.

On Thursday chief government accountant Paul Helm released the Crown accounts for the 11 months to May 31, which were stronger than was forecast when Finance Minister Grant Robertson delivered the Budget.

While the tax take overall was broadly in line with expectations, 'source deductions' - mainly made up of tax paid by salary and wage earners - was $300 million more than expected.

Helm said 'recent data releases [were] indicating that the labour market may be a little stronger than was forecast in the 2018 Budget'.

Corporate tax, mainly paid by companies was $200m below forecast, which Helm said was 'mainly owing to seasonal fluctuations in provisional tax assessments, which are expected to reverse in June'.

New Zealand's employment market has continued to be stronger than expected, with unemployment falling to 4.4 per cent even as immigration is near record levels hit in 2015-2017.

Core Crown expenses were $400m below forecasts, with lower spending across a number of areas.

The operating balance before gains and loses was $5.2 billion, almost 10 per cent higher than expected. For the full year to June 30, the Crown was forecast to post a surplus of $3.1b when Robertson delivered the Budget.

Net core Crown debt was $57.5b at the end of May, $1.1b below forecast.

In a statement, Robertson said 'the books remain in a good position, with a strong surplus indicating that revenue and expenses are tracking in line with the Treasury's Budget forecasts'.

He added: 'The latest set of accounts show the coalition Government is sticking to our commitment to run the books responsibly by running sustainable surpluses and keeping expenses under control'.