Government coffers well stocked

The Government has managed to maintain a healthy operating surplus of $6.6 billion, according to the Crown accounts for the eight months ending February 2006.

The figures released today show the operating balance is higher than forecast by $2.7 billion due to previously announced investment income returns and the sale of assets.

After stripping out investment returns, revaluations and other book keeping items the surplus is running at $4.7 billion, $800 million higher than forecast.

Gross debt jumped to 23.2 per cent of GDP to $35.8 billion. This was around $3.2 billion higher than forecast, though Treasury said this was mainly explained by the Reserve Bank changing cash settlement rules with banks and not a leap in government borrowing.

Treasury said that net cash -- the money available or needed to borrow after all investments are taken into account -- was as expected with a $1.3 billion surplus.

Notes to the accounts said while the tax take was still ahead of expectations, this was being offset by higher expenditure.

In comparison to the first eight months of the previous financial year, taxation revenue was $2.2 billion higher (7.2 per cent) reflecting the strong labour market, company profits and consumer spending.

Core government spending was $4.3 billion higher (15.2 per cent) with welfare spending up S600 million, health expenses up $700 million and the impact of interest free student loans lifting education costs by $1.8 billion.

- NZPA