Government coffers swell

The Government continues to collect money faster than Treasury forecasts, with a $2.3 billion operating surplus to December 2002 - $635 million more than it predicted three months ago.

The crown accounts for the six months ending December 2002 show that tax revenue was $435m higher than forecast, driven by a higher GST take ($204m) and deductions at source ($151m).

Total expenses were $370m lower than forecast in the December Economic and Fiscal Update (Defu). Welfare expenses were down by $192m and health expenses by $90 million.

The welfare and health bills were lower due to timing issues and Treasury expected the expenditure to still take place.

Likewise, Treasury remains cautious about the booming tax take, saying in its commentary that the variance from forecast may not be permanent and may be balanced out by a reduction in the second half of the financial year.

The bottom line surplus after stripping out accounting matters such as revaluations - known as Oberac - was $2.58 billion. Treasury are predicting an Oberac of $3.5b for the year ending June.

The operating surplus taking into account all financial calculations is still predicted to be $2.5b for the complete financial year.

Net government debt was $953m lower than forecast in Defu.

In December, Finance Minister Michael Cullen said the Government would use its positive cash flow to slash its planned debt expansion.

At a recent select committee hearing, Dr Cullen said he was maintaining a cautious attitude to the surplus growing faster than Treasury believed.

Dr Cullen said since then there had been continuing "uncertainty around the revenue track".

As a result, he was still being cautious and "not spending surpluses before they arrive".

Dr Cullen is under pressure from spending ministers in portfolios such as education, health and welfare to open his purse strings. So far he has resisted all pressure.

He has promised minor increases in spending this year. But indicated that Cabinet would look at larger increases to family support payments in the 2004 budget.

This would rely on surpluses weathering an economic downturn as well as they have done economic good times.

- NZPA