Government records $3bn surplus

The Government has recorded a $3 billion surplus in the first four months of the financial year, Treasury said today.

The Crown accounts to October 2005 show the operating surplus was $2.98 billion, $900 million more than forecast just before the election in September.

Treasury is currently forecasting a total surplus of $7.2 billion for the full financial year ending next June, but these forecasts are set to be updated later this month.

The surplus had been driven up by:

* Investment income from Crown agencies such as the New Zealand Superannuation Fund and ACC being $439 million ahead of forecast.

* Government spending being $334 million lower than forecast; and

* Tax revenue being $50 million ahead of predictions.

After taking into account revaluations and accounting changes the surplus was running at $2.8 billion or $808 million ahead of forecasts.

Finance Minister Michael Cullen has taken issue with the media highlighting the operating surplus and for years preferred to refer to the operating balance after accounting changes were taken into account.

In recent times, Dr Cullen has highlighted the Government's net cash flow, which takes into account all expenditure including investing activity.

This was $166 million for the first four months of the year, $447 million ahead of predictions because of the delay in payments.

The positive cash flow was reflected in the Government's debt position with net core Crown debt to $9.8 billion or 6.6 per cent of GDP.

Despite Government expenditure being down on forecasts it was still well ahead of last year's spending programme.

Core crown expenses for the four months was $15.5 billion, $1.2 billion more than last year.

Welfare payments ($408 million) and health expenses ($216 million) were the largest contributors to the increase in expenditure.

Likewise revenue was higher last year with the tax take running at $16.1 billion, up $1.1 billion on the previous year.

- NZPA