English gets surplus after all, but victory is spoiled

Finance Minister Bill English's surplus and its final size will not be known until October. Photo / Mark Mitchell

If anyone can strongly empathise with Charles Dickens' dictum about happiness, then that person should surely be Finance Minister Bill English.

It is Mr Micawber in David Copperfield who utters the famous sum: "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

In English's case, it is billions of dollars that count rather than long-abolished pieces of silver like sixpences.

But his margin between happiness and misery is just as narrow - as witnessed by yesterday's release of the Government's accounts which show a $1.2 billion surplus for the first 11 months of the 2014-2015 financial year.

That was the financial year that National had targeted as the year that would see the Government's books back in surplus - thus providing unquestionable proof of National's adherence to fiscal responsibility and the extremely valuable electoral kudos which comes with that.

The surplus and its final size will not be known until October. But yesterday's figures effectively guarantee there will be one, despite recent doubts.

English and Prime Minister John Key had long been relaxed about hitting the target but they had to eat their words when it became pretty apparent in the weeks leading up to the Budget back in May that judging from the monthly accounts, National's long-cherished surplus was something that was going to have to be for some future day.

Key, in particular, started playing down the importance of the target by stressing how difficult it was to meet it and that National was close enough anyway.

It seems, however, that just as Key and English were trying to hose down expectations, the figures covering tax revenue and spending were suddenly moving back in the right directions.

The pair were not to know it but they were snatching defeat from the jaws of victory. National could hardly start trumpeting something it had conceded only weeks ago was not likely to happen.

But National was not the only party tripped up by making assumptions from figures which turned out to be way out of date by the time they were issued.

When the figures seemed to suggest pretty unequivocally that the targeted surplus was no longer possible, Labour got stuck into English, accusing him of failing to deliver on a "promise" upon which he had staked National's economic credibility.

Labour yesterday wisely decided discretion was the better part of valour and took the unusual step of not issuing a press statement.

Unexpected result down to more tax, less spending

The latest monthly Crown accounts showed a larger than expected surplus for the past 11 months.

The Crown accounts for the 11 months to May recorded a $1.2 billion surplus, almost $1 billion more than was forecast in the Budget.

The figures indicate Finance Minister Bill English could yet record the full-year surplus he was targeting, despite May's Budget forecasting a $684 million deficit. The full year figures will be known in October.

"There is always some volatility in the monthly Crown accounts and we won't know for some time if there will be a full-year surplus in 2014/15."

He said it indicated the Government was on track to anchor Crown debt at low, sustainable levels.

Treasury said the $1.2 billion surplus was mostly due to higher tax revenue, including $395 million more in corporate tax and $112 million in individual tax. However, GST was $205 million lower than expected. The Government also spent $433 million less than forecast, including $205 million in education. Total Crown revenue was $87 billion and Crown expenses were $85.5 billion.

- Claire Trevett