Paul Helm, Chief Government Accountant
The Financial Statements of the Government of New Zealand for the seven months ended 31 January 2017 were released by the Treasury today. The statements are compared against forecasts based on the 2016 Half Year Economic and Fiscal Update (HYEFU) published on 8 December 2016.
The operating balance before gains and losses (OBEGAL) was a surplus of $1,145 million, compared to a forecast surplus of $442 million. This favourable variance of $703 million was largely due to the higher than forecast core Crown tax revenue and lower than forecast core Crown expenses.
Core Crown tax revenue was $291 million (0.7%) higher than forecast for the seven months ended 31 January 2017. Corporate tax was the largest driver of this favourable result with revenue being $378 million ahead of forecast. This increase was across both provisional and terminal tax indicating that profits in 2016 tax year were higher than forecast and that this has continued into the 2017 tax year. This favourable result was partially offset by GST revenue being $138 million (1.2%) lower than forecast. Economic indicators point to below-forecast growth in domestic consumption and residential investment in the December quarter.
Core Crown expenses at $44.2 billion were $338 million (0.8%) lower than forecast. The majority of this variance relates to forecast expected costs in relation to the Kaikōura earthquakes which have yet to be quantified with enough certainty to include in the actual results. Over time, as reasonable estimates are able to be made, these costs will be recognised in the actual results, reducing the variance.
Net gains at $6.5 billion, were $3.3 billion higher than forecast in the seven months to 31 January 2017 primarily relating to an actuarial gain of $3.3 billion ($3.0 billion higher than forecast) on the ACC liability. Net gains combined with the OBEGAL surplus, resulted in an operating balance surplus of $7.8 billion ($4.0 billion higher than forecast).
Net worth attributable to the Crown was $4.1 billion ahead of forecast largely owing to the operating balance result.
Core Crown residual cash was close to forecast at a surplus of $555 million resulting in core Crown net debt at $61.7 billion (24.1% of GDP) also being close to forecast. However, gross debt was $1.8 billion lower than forecast largely as a result of increased repurchasing of government stock.
|$ million||Year to date||Full Year|
|Core Crown tax revenue||42,429||42,138||291||0.7||74,224|
|Core Crown revenue||45,910||45,829||81||0.2||80,455|
|Core Crown expenses||44,181||44,519||338||0.8||78,276|
|Core Crown residual cash||555||650||(95)||(14.6)||(2,192)|
|as a percentage of GDP||33.9%||34.6%||34.7%|
|as a percentage of GDP||24.1%||24.1%||24.3%|
|Operating balance before gains and losses||1,145||442||703||159.0||473|
|Net worth attributable to the Crown||97,234||93,165||4,069||4.4||93,034|
- Using the most recently published GDP (for the year ended 30 September 2016) of $256,191 million (Source: Statistics New Zealand).
- Using forecast GDP for the year ending 30 June 2017 of $264,760 million (Source: The Treasury).
- Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.
- Net core Crown debt excluding student loans and other advances. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.
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