Deputy Secretary to the Treasury
The Financial Statements of the Government of New Zealand for the six months ended 31 December 2010 were released by the Treasury today.
The monthly financial statements are compared against monthly forecast tracks based on the 2010 Half Year Economic and Fiscal Update published in December 2010.
The financial statements show that in the first six months of the financial year, core Crown tax revenue was close to forecast at $25.0 billion or 0.7% above forecast. Within this result, source deductions (PAYE) were $271 million or 2.6% higher than forecast and GST revenue was $125 million or 1.9% lower than forecast. With the complexity of forecasting the October tax changes, the recent volatility in labour market data and uncertainty whether subdued consumer spending is reflected in GST outturns, it is too early to predict whether the PAYE and GST variances will persist.
Core Crown expenses were 0.5% below forecast at $32.9 billion, due to individually small variances across several departments.
The operating balance before gains and losses deficit stood at just over $5.9 billion at the end of the six month period, a 2.8% smaller deficit than forecast. The operating balance deficit (inclusive of gains and losses) was significantly less than forecast, however, at just over $1.3 billion. This was driven in part by the NZS Fund which recorded gains in its investment portfolio that were $1.7 billion higher than forecast, while ACC recorded an actuarial gain on their outstanding claims liability of $911 million, $1.8 billion above its forecast actuarial loss.
The residual cash deficit at $13.2 billion was $555 million higher than forecast mainly due to payments that occurred in late December which had not been anticipated to occur until January. As a result, this residual cash variance is expected to reverse in January.
Although the residual cash deficit was 4.4% higher than forecast, net debt was only 0.4% higher than expected as the increased cash deficit was partially offset by changes in the market value of the underlying financial assets and liabilities.
At 31 December, gross debt was $62.1 billion (32.5% of GDP), $1.8 billion higher than forecast across a number of debt instruments. This variance did not translate into a corresponding increase in net debt because there were similar increases in financial assets during the period. Net debt stood at $39.5 billion (20.7% of GDP) at the end of December, very close to forecast.
|Year to date||Full Year|
|Core Crown tax revenue||25,028||24,865||163||0.7||52,527|
|Core Crown revenue||27,239||27,411||(172)||(0.6)||58,446|
|Core Crown expenses||32,933||33,095||162||0.5||70,560|
|Core Crown residual cash||(13,184)||(12,629)||(555)||(4.4)||(15,602)|
|as a percentage of GDP||32.5%||31.6%||33.3%|
|as a percentage of GDP||20.7%||20.7%||20.8%|
|Operating balance before gains and losses||(5,968)||(6,137)||169||2.8||(11,098)|
1 Using GDP for the year ended 30 September 2010 of $190,740 million (Source: Statistics New Zealand)
2 Using forecast GDP for the year ended 30 June 2011 of $202,398 million (Source: Treasury)
3 Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills
4 Net core Crown debt excluding student loans and other advances
Officer for EnquiriesNicola Haslam | Macroeconomic and Fiscal Environment Portfolio
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