Surplus grows and grows

Michael Cullen

The latest crown accounts today confirmed the Government's surplus continues to exceed expectations, swelling to $5.27 billion just seven months into the financial year.

In December, Treasury forecast that by the end of January 2005 the surplus would have grown to $4.1 billion.

But a booming economy and lower spending has meant Treasury's prediction is $1.1 billion short.

Also in December, Treasury forecast that by the end of this financial year the surplus will be $5.6 billion, and while this has not been updated it says that figure is likely to increase if higher investment valuation gains, spending delays and state-owned enterprises' surpluses continue.

Finance Minister Michael Cullen has continually played down the amount of money in the Government coffers, saying it does not represent cash in hand.

Dr Cullen has repeatedly underlined some of the surplus was not available for spending and the rest of the money was marked for the New Zealand Superannuation Fund and capital spending.

Instead, Dr Cullen has pointed to the actual cash surplus he has after all other matters have been taken into account.

Today's figures show the Government's cash surplus position has grown enormously from $91 million at the end of December to $1.77 billion.

Dr Cullen was quick to downplay the significance of his latest preferred indicator growing at such a spectacular rate saying it reflected "GST timing issues" and was expected.

Dr Cullen said the figure jumped every year at this time because, owing to the disruptions created by Christmas and the New Year, there is no GST due date in December but two in January.

"Of more significance is that the January result is running close to forecasts indicating that we are broadly on track to achieve Treasury's full-year forecast of $1.4 billion."

Dr Cullen also pointed to Treasury's December forecast that there would be a cash deficit on 2005/2006 and 2006/2007.

"Although both the operating balance (surplus) and the Oberac (another measure of the surplus taking into account book keeping changes) were running above forecast, this would have little effect on the Government's ultimate financing requirement," Dr Cullen said.

- NZPA