Annex 2
Long-term Fiscal Objectives and Short-term Fiscal Intentions
The Government's long-term fiscal objectives are not materially different from those outlined in the BPS - asshown below in Table A1. There has been a change to the net debt objective to indicate the Government's objective to reduce net debt to 20% of GDP by 2020 (as opposed to the previous "...by the early 2020s"). The operating expenses objective has also been changed to allow for core Crown expenses to be reduced to below 30% of GDP over time (previously "...around 30% of GDP"). This change ensures consistency with the Government's spending limit. These long-term objectives are consistent with the principles of responsible fiscal management.
The Government's short-term fiscal intentions have been revised since those in the BPS, consistent with the revisions to the fiscal forecasts (see Table A2). These revised fiscal intentions are consistent with the Government's long-term fiscal objectives.
| Fiscal Strategy Report 2012 |
|---|
DebtManage 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 shocks. 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 35% of GDP, and is then brought back to a level no higher than 20% of GDP by 2020. We will work towards achieving this earlier as conditions permit. |
Operating balanceReturn 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 expensesTo meet the operating balance objective, the Government will control the growth in government spending so that over time, core Crown expenses are reduced to below 30% of GDP. |
Operating revenuesEnsure sufficient operating revenue to meet the operating balance objective. |
Networth worthEnsure 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 full fiscal impact of the demographic change expected in the mid-2020s. |
| Fiscal Strategy Report 2012 | Budget Policy Statement 2012 |
|---|---|
DebtGross sovereign-issued debt (including Reserve Bank settlement cash and Reserve Bank bills) is forecast to be 35.1% of GDP in 2015/16. Core Crown net debt (excluding NZS Fund and advances) is forecast to be 27.7% of GDP in 2015/16. |
DebtGross sovereign-issued debt (including Reserve Bank settlement cash and Reserve Bank bills) is forecast to be 36.9% of GDP in 2015/16. Core Crown net debt (excluding NZS Fund and advances) is forecast to be 28.6% in 2015/16. |
Operating balanceOur intention is to return the operating balance (before gains and losses) to surplus as soon as practical and no later than 2014/15, subject to any significant shocks. Based on the operating allowance for the 2012 Budget, the operating balance (before gains and losses) is forecast to be -3.6% of GDP in 2012/13. The operating balance (before gains and losses) is forecast to be 0.1% of GDP in 2014/15. This is consistent with the long-term objective for the operating balance. The operating balance is forecast to be -2.6% of GDP in 2012/13. |
Operating balanceOur intention is to return the operating balance (before gains and losses) to surplus as soon as practical and no later than 2014/15, subject to any significant shocks. Based on the operating allowance for the 2012 Budget, the operating balance (before gains and losses) is forecast to be -2.6% of GDP in 2012/13. The operating balance (before gains and losses) is forecast to be 0.2% of GDP in 2014/15. This is consistent with the long-term objective for the operating balance. The operating balance is forecast to be -1.5% of GDP in 2012/13. |
ExpensesOur intention is to support a return to fiscal surplus by restraining the growth in core Crown expenses - so that they are reduced to around 30% of GDP by 2015/16. Core Crown expenses are forecast to be 30.2% of GDP in 2015/16. Total Crown expenses are forecast to be 39.6% of GDP in 2015/16. This assumes a new operating allowance of $800 million for Budget 2013, increasing to $1.19 billion, in Budget 2014 and growing at 2% for Budgets thereafter (GST exclusive). |
ExpensesOur intention is to support a return to fiscal surplus by restraining the growth in core Crown expenses - so that they are reduced to around 30% of GDP by 2015/16. Core Crown expenses are forecast to be 30.3% of GDP in 2015/16. Total Crown expenses are forecast to be 39.8% of GDP in 2015/16. This assumes a new operating allowance of $800 million per annum for Budgets 2012 and 2013, then returning to $1.19 billion, growing at 2% for Budgets thereafter (GST exclusive). |
RevenuesTotal Crown revenues are forecast to be 40.5% of GDP in 2015/16. Core Crown revenues are forecast to be 30.5% of GDP in 2015/16. Core Crown tax revenues are forecast to be 27.8% of GDP in 2015/16. |
RevenuesTotal Crown revenues are forecast to be 40.9% of GDP in 2015/16. Core Crown revenues are forecast to be 30.5% of GDP in 2015/16. Core Crown tax revenues are forecast to be 27.8% of GDP in 2015/16. |
Networth attributable to the CrownTotal Crown net worth is forecast to be 28.6% of GDP in 2015/16. Core Crown net worth is forecast to be 8.8% of GDP in 2015/16. |
Networth attributable to the CrownTotal Crown net worth is forecast to be 27.5% of GDP in 2015/16. Core Crown net worth is forecast to be 8.2% of GDP in 2015/16. |
