Annex 1 Short-term Fiscal Intentions and Long-term Fiscal Objectives
The Government's short-term fiscal intentions are substantially unchanged since those in the BPS; there are minor changes reflecting the revisions to the fiscal forecasts (see Table A1.1). These revised fiscal intentions are consistent with the Government's long-term fiscal objectives (see Table A1.2).
| Fiscal Strategy Report 2013 | Budget Policy Statement 2013 |
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Debt Gross sovereign-issued debt (including Reserve Bank settlement cash and Reserve Bank bills) is forecast to be 38.8 per cent of GDP in 2016/17. Net core Crown debt (excluding NZS Fund and advances) is forecast to be 27.3 per cent of GDP in 2016/17. |
Debt Gross sovereign-issued debt (including Reserve Bank settlement cash and Reserve Bank bills) is forecast to be 39.1 per cent of GDP in 2016/17. Net core Crown debt (excluding NZS Fund and advances) is forecast to be 29.3 per cent in 2016/17. |
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Operating balance Our 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 2013 Budget, the operating balance (before gains and losses) is forecast to be -0.9 per cent of GDP in 2013/14. The operating balance (before gains and losses) is forecast to be 0.0 per cent of GDP in 2014/15. This is consistent with the long-term objective for the operating balance. The operating balance is forecast to be 0.2 per cent of GDP in 2013/14. |
Operating balance Our 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 2013 Budget, the operating balance (before gains and losses) is forecast to be -0.9 per cent of GDP in 2013/14. The operating balance (before gains and losses) is forecast to be 0.0 per cent of GDP in 2014/15. This is consistent with the long-term objective for the operating balance. The operating balance is forecast to be 0.0 per cent of GDP in 2013/14. |
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Expenses Our 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 per cent of GDP by 2015/16. Core Crown expenses are forecast to be 30.0 per cent of GDP in 2016/17. Total Crown expenses are forecast to be 39.5 per cent of GDP in 2016/17. This assumes a new operating allowance of $1 billion in Budget 2014, growing at 2 per cent for Budgets thereafter (GST exclusive). |
Expenses Our 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 per cent of GDP by 2015/16. Core Crown expenses are forecast to be 30.1 per cent of GDP in 2016/17. Total Crown expenses are forecast to be 39.1 per cent of GDP in 2016/17. This assumes a new operating allowance of $800 million for Budget 2013, increasing to $1.19 billion in Budget 2014 and growing at 2 per cent for Budgets thereafter (GST exclusive). |
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Revenues Total Crown revenues are forecast to be 40.6 per cent of GDP in 2016/17. Core Crown revenues are forecast to be 30.9 per cent of GDP in 2016/17. Core Crown tax revenues are forecast to be 28.3 per cent of GDP in 2016/17. |
Revenues Total Crown revenues are forecast to be 40.1 per cent of GDP in 2016/17. Core Crown revenues are forecast to be 30.2 per cent of GDP in 2016/17. Core Crown tax revenues are forecast to be 27.7 per cent of GDP in 2016/17. |
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Networth attributable to the Crown Total net worth attributable to the Crown is forecast to be 28.7 per cent of GDP in 2016/17. Core Crown net worth is forecast to be 12.1 per cent of GDP in 2016/17. |
Networth attributable to the Crown Total net worth attributable to the Crown is forecast to be 25.9 per cent of GDP in 2016/17. Core Crown net worth is forecast to be 9.2 per cent of GDP in 2016/17. |
The Government's long-term fiscal objectives are unchanged from those outlined in the BPS - asshown below in Table A1.2. The long-term objectives are consistent with the principles of responsible fiscal management, including the new principles of responsible fiscal management included in the Public Finance (Fiscal Responsibility) Amendment Bill.
Table A1.2 - Long-term fiscal objectives
Fiscal Strategy Report 2013
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 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 per cent of GDP, and is then brought back to a level no higher than 20 per cent of GDP by 2020. 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
To 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 per cent of GDP.
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. 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.
Contributions to the NZS Fund
Under the New Zealand Superannuation and Retirement Income Act 2001, the Government is required to indicate the annual capital contribution into the NZS Fund that would result from the calculation method described in section 43 of the Act, as well as the actual planned contribution. Both sets of capital contributions, for all years of the Budget 2013 forecast horizon, are provided in Table A1.3.
Table A1.3 - NZS Fund calculations ($billions)
| Year ended 30 June | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|
| Calculations of annual contributions if they were to resume in 2013/14 |
2.4 | 2.2 | 2.1 | 2.1 |
| Forecast contributions | 0 | 0 | 0 | 0 |
