The Treasury

Global Navigation

Personal tools

Government
Publication

Budget 2011 Home Page Budget Policy Statement 2011

Annex 1

Long-term fiscal objectives and short-term fiscal intentions

The Government remains committed to the long-term fiscal objectives set out in Fiscal Strategy Report 2010 (FSR) - asshown below in Table A1. These long-term objectives are consistent with the principles of responsible fiscal management.

The Government's short-term fiscal intentions have been revised since Budget 2010, consistent with the revisions to the fiscal forecasts (see Table A2). The short-term intention for the operating balance has also been clarified to state that the Government's intention is to return the operating balance, before gains and losses, to surplus no later than 2015/16, subject to any significant shocks. These revised fiscal intentions are consistent with the Government's long-term fiscal objectives.

Table A1 - Long-term fiscal objectives
Fiscal Strategy Report 2010

Debt

Manage total debt at prudent levels. Over the short to medium term it is prudent to allow an increase in debt to deal with the current economic and fiscal shock.

However, we need to ensure that this increase is eventually reversed and that we return to a level of debt that can act as a buffer against future shocks.

We will do this by ensuring that net debt remains consistently below 40% of GDP, and is then brought back to a level no higher than 20% of GDP by the early 2020s. We will work towards achieving this earlier as conditions permit.

Operating balance

Return to an operating surplus sufficient to meet the Government's net capital requirements, including contributions to the New Zealand Superannuation Fund, and ensure consistency with the debt objective.

Operating expenses

Reduce the growth in government spending to ensure operating expenses are consistent with the operating balance objective.

Operating revenues

Ensure sufficient operating revenue to meet the operating balance objective.

Net worth

Ensure net worth remains at a level sufficient to act as a buffer to economic shocks. Over the medium term, net worth will continue to fall as the impact of the global financial crisis unfolds. Consistent with the debt and operating balance objectives, we will start building up net worth ahead of the demographic change expected in the mid-2020s.

Table A2- Short-term fiscal intentions
Budget Policy Statement 2011 Fiscal Strategy Report 2010

Debt

Gross sovereign-issued debt (including Reserve Bank settlement cash and Reserve Bank bills) is forecast to be 36.9% of GDP in 2014/15.

Core Crown net debt (excluding NZS Fund and advances) is forecast to be 28.5% in 2014/15.

Debt

Gross sovereign-issued debt (including Reserve Bank settlement cash and Reserve Bank bills) is forecast to be 35.3% of GDP in 2013/14.

Core Crown net debt (excluding NZS Fund and advances) is forecast to be 26.5% in 2013/14.

Operating balance

Based on the operating allowance for the 2010 Budget, the operating deficit is forecast to be 1.9% of GDP in 2011/12. The operating balance is forecast to be 1.1% of GDP in 2014/15.  This is consistent with the long-term objective for the operating balance.

Our intention is to return the operating balance, before gains and losses, to surplus as soon as practical and no later than 2015/16, subject to any significant shocks.

Operating balance

Based on the operating allowance for the 2010 Budget, the operating deficit is forecast to be 3.5% of GDP in 2010/11. The operating deficit is forecast to be 0.3% of GDP in 2013/14.  This decrease is consistent with the long-term objective for the operating balance.

Expenses

Total Crown expenses are forecast to be 40.8% of GDP in 2014/15. 

Core Crown expenses are forecast to be 31.7% of GDP in 2014/15.

This assumes a new operating allowance of $1.12 billion per annum, continuing to grow at 2% for Budgets thereafter (GST exclusive).

Expenses

Total Crown expenses are forecast to be 42.4% of GDP in 2013/14. 

Core Crown expenses are forecast to be 32.4% of GDP in 2013/14.

This assumes a new operating allowance of $1.1 billion per annum for the 2010 Budget, growing at 2% for Budgets thereafter (GST exclusive).

Revenues

Total Crown revenues are forecast to be 40.8% of GDP in 2014/15. 

Core Crown revenues are forecast to be 30.9% of GDP in 2014/15.

Core Crown tax revenues are forecast to be 27.7% of GDP in 2014/15.

Revenues

Total Crown revenues are forecast to be 41.1% of GDP in 2013/14. 

Core Crown revenues are forecast to be 30.7% of GDP in 2013/14.

Core Crown tax revenues are forecast to be 27.5% of GDP in 2013/14.

Net worth

Total Crown net worth is forecast to be 33.6% of GDP in 2014/15. Core Crown net worth is forecast to be 8.6% of GDP in 2014/15.

Net worth

Total Crown net worth is forecast to be 34.8% of GDP in 2013/14. Core Crown net worth is forecast to be 10.7% of GDP in 2013/14.

Page top