Paul Helm, Chief Government Accountant
The Financial Statements of the Government of New Zealand for the ten months ended 30 April 2015 were released by the Treasury today. The statements are compared against forecasts based on the Budget Economic and Fiscal Update (BEFU) published last month.
Once minority interests' share of revenues and expenses are removed, the total Crown's operating balance before gains and losses (OBEGAL) was a surplus of $448 million in the ten-month period. This compares to a forecast deficit of $555 million.
Total Crown expenses, which include day-to-day spending by departments, Crown entities and State-owned Enterprises as well as non-cash items such as depreciation on physical assets, were $77.7 billion for the ten month period. Total Crown revenues were $78.5 billion. Given the size of the Crown's operations, the OBEGAL is subject to some fluctuation from month to month.
The core Crown, which consists primarily of government departments, had higher than forecast tax revenue and lower than anticipated expenses.
Core Crown tax revenue, at $55.0 billion, was 0.8% or $437 million stronger than forecast. Higher than forecast tax revenue largely related to corporate tax ($190 million) and GST ($141 million):
- Corporate tax was higher than expected mainly owing to Portfolio Investment Entity (PIE) tax in the month of April being stronger than anticipated. With April being the last significant month for PIE tax in this financial year, there is potential for this positive-to-forecast variance to persist through to 30 June.
- Above forecast GST suggests higher than forecast domestic spending as indicated by strong March quarter retail sales. However, it is still too early to be confident whether or not this strength will continue through to 30 June.
Core Crown expenses, at $59.8 billion, were $420 million (0.7%) lower than forecast with the variance spread across a number of departments. The largest related to education expenses which were $164 million lower than forecast. While a large portion of this variance is timing in nature, some of the variance may persist until year end.
Net losses on non-financial instruments were $865 million lower than forecast, mainly due to lower than forecast actuarial losses on the ACC claims liability, mostly reflecting the impact of higher interest rates on discount rates.
When these gains and losses are combined with the OBEGAL result, the operating balance was a surplus of $795 million ($1.7 billion stronger than forecast).
The core Crown residual cash position, at a deficit of $4.8 billion, was $420 million stronger than forecast, mainly due to core Crown tax receipts tracking above forecast ($229 million) and capital payments being $123 million less than forecast. Net debt, at $64.2 billion, (equivalent to 27.0% of GDP) was $268 million lower than forecast, largely reflecting the residual cash result. Both the residual cash deficit and net debt are expected to reduce further over the remainder of the financial year.
At 30 April, total Crown assets were valued at $267.8 billion and liabilities were $186.4 billion while the Crown’s share of net worth stood at $76.2 billion.
|Year to date||Full Year|
|Core Crown tax revenue||55,048||54,611||437||0.8||66,077|
|Core Crown revenue||59,885||59,473||412||0.7||71,884|
|Core Crown expenses||59,753||60,173||420||0.7||73,090|
|Core Crown residual cash||(4,838)||(5,258)||420||8.0||(2,674)|
|as a percentage of GDP||35.9%||35.7%||35.0%|
|as a percentage of GDP||27.0%||27.1%||25.7%|
|Operating balance before gains and losses||448||(555)||1,003||180.7||(684)|
|Net worth attributable to the Crown||76,235||74,677||1,558||2.1||74,803|
- Using GDP for the year ended 31 December 2014 of $237,924 million (Source: Statistics New Zealand).
- Using forecast GDP for the year ended 30 June 2015 of $239,771 million (Source: 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.
Officer for EnquiriesKamlesh Patel | Office of the Government Accountant
Tel: +64 4 917 6094