Today's Crown accounts are in line with forecasts but that will change as the impact of the Christchurch earthquake is felt, Finance Minister Bill English says.
Treasury today said core Crown tax revenue was 0.8 percent lower than forecast at $29.9 billion in the seven months to the end of January.
While the latest accounts showed spending and revenue consistent with forecasts in the half-year update in December, tax revenue was still about 4 percent behind budget 2010 forecasts.
"This result reflects the relatively flat economy in the latter part of 2010 and reinforces the need for sound fiscal management as we tackle the effects of the Christchurch earthquake in the coming months," Mr English said.
The earthquake would have a significant impact on the Government's finances and the economy for years.
"The Government will pay for the rebuilding of Christchurch by borrowing more in the short term, but also by prioritising spending on Canterbury over some other Government spending.
"It's important we stick to our broader economic programme to reduce New Zealand's vulnerability to foreign lenders, get the Government's finances in order and build faster growth based on higher national savings and exports."
Treasury said the lower tax take was due to underlying weakness in the economy resulting in a $285m shortfall in GST, a $157m shortfall in corporate tax, and a $120m shortfall in individuals' tax.
Partially offsetting the shortfall in tax revenue, source deductions (PAYE) were 2.6 percent, or $323m, higher than forecast.
"This was potentially due to wage and employment growth although volatility in recent data provides uncertainty over the cause," Treasury said.
Core Crown expenses were 0.9 percent lower than expected at $38.5b, while profits from State-owned enterprises and Crown entities were slightly higher.
The operating balance before gains and losses deficit remain largely in line with forecast at $6.2b.
Both the residual cash deficit, at $10.1b, and net debt, at just under $37b, or 19.4 percent of GDP, were also close to forecast, as the previous month's residual cash variance reversed as expected, Treasury said.
Gross debt stood at $63b, or 33.1 percent of GDP, which was $14.3b higher than the same time last year. It was $1.5b above forecast, as government stock issuances were $1.2b above forecast due to strong investor demand, and derivative values were $320m higher.
As a result of the higher debt position, finance costs for the seven months ended January 31 were $1.7b, compared with $1.3b in the same period last year.
The operating balance deficit of $998m was much lower than the deficit of $4.8b forecast. That was due to NZS Fund gains being $1.8b above forecast, and an ACC actuarial gain $1.8b above the forecast loss of $889m.
Treasury noted the results were for the period before the devastating Canterbury Earthquake on February 22, the costs of which would be recorded in future accounts as costs were quantified.
The monthly financial statements are compared against monthly forecast tracks based on the 2010 Half Year Economic and Fiscal Update published in December.
