2 Fiscal Outlook
Introduction
The fiscal position has strengthened over recent times. Operating and cash surpluses over the past few years have led to a build up of financial assets and to a lowering of debt (as a percentage of GDP).
Looking forward, growth in nominal GDP is forecast to slow resulting in a corresponding slowing in tax revenue growth. Additionally, Budget 2008 introduces personal tax cuts which results in core Crown revenue falling as a percentage of GDP. This is the main contributor to a reduction in OBEGAL and cash surpluses becoming deficits. These cash deficits are met by reducing financial assets accumulated in recent years and borrowing consistent with the debt objective of around 20% of GDP.
This chapter outlines the key trends for each of the indicators along with a comparison to the forecasts provided in the Half Year Update and should be read in conjunction with the financial statements (chapter 5) and the executive summary on pages 1 to 22. The chapter covers the fiscal results for the forecast period (2007/08 to 2011/12). The long-term fiscal outlook can be found on pages 42 to 64.
Each section in the chapter follows the five components of the fiscal strategy (outlined on page 45):
- Revenue and expenses
- Surpluses
- Cash position
- Debt, and
- The New Zealand Superannuation Fund (NZS Fund).
| Year ended 30 June | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 |
|---|---|---|---|---|---|---|
| $ million | Actual | Forecast | Forecast | Forecast | Forecast | Forecast |
| Revenue and expenses | ||||||
| Core Crown revenue excl NZS Fund | 58,482 | 61,814 | 61,787 | 63,552 | 66,284 | 69,004 |
| Core Crown expenses | 54,003 | 57,364 | 61,883 | 63,890 | 67,016 | 69,943 |
| Surpluses | ||||||
| Total Crown OBEGAL | 5,860 | 5,227 | 1,318 | 1,004 | 493 | 154 |
| Total Crown OBEGAL excl NZS Fund retained revenue | 6,250 | 5,219 | 1,354 | 1,048 | 543 | 207 |
| Total Crown operating balance | 8,023 | 2,559 | 3,105 | 3,009 | 2,779 | 2,734 |
| Cash position | ||||||
| Core Crown residual cash | 2,877 | 908 | (3,478) | (3,302) | (3,447) | (3,457) |
| Debt | ||||||
| GSID (excl Settlement Cash) | 30,647 | 31,763 | 32,498 | 32,251 | 35,974 | 35,499 |
| Net core Crown debt (incl NZS Fund financial assets) | (7,467) | (11,254) | (11,337) | (11,787) | (12,348) | (12,970) |
| Net core Crown debt | 4,109 | 1,846 | 4,578 | 7,272 | 10,145 | 13,193 |
| NZS Fund | ||||||
| NZS Fund net worth | 12,973 | 14,461 | 17,721 | 21,152 | 24,947 | 29,011 |
| Nominal GDP | 168,106 | 180,137 | 185,478 | 192,125 | 201,802 | 211,800 |
| % of GDP | ||||||
| Revenue and expenses | ||||||
| Core Crown revenue excl NZS Fund | 34.8 | 34.3 | 33.3 | 33.1 | 32.8 | 32.6 |
| Core Crown expenses | 32.1 | 31.8 | 33.4 | 33.3 | 33.2 | 33.0 |
| Surpluses | ||||||
| Total Crown OBEGAL | 3.5 | 2.9 | 0.7 | 0.5 | 0.2 | 0.1 |
| Total Crown OBEGAL excl NZS Fund retained revenue | 3.7 | 2.9 | 0.7 | 0.5 | 0.3 | 0.1 |
| Total Crown operating balance | 4.8 | 1.4 | 1.7 | 1.6 | 1.4 | 1.3 |
| Cash position | ||||||
| Core Crown residual cash | 1.7 | 0.5 | (1.9) | (1.7) | (1.7) | (1.6) |
| Debt | ||||||
| GSID (excl Settlement Cash) | 18.2 | 17.6 | 17.5 | 16.8 | 17.8 | 16.8 |
| Net core Crown debt (incl NZS Fund financial assets) | (4.4) | (6.2) | (6.1) | (6.1) | (6.1) | (6.1) |
| Net core Crown debt | 2.4 | 1.0 | 2.5 | 3.8 | 5.0 | 6.2 |
| NZS Fund | ||||||
| NZS Fund net worth | 7.7 | 8.0 | 9.6 | 11.0 | 12.4 | 13.7 |
Source: The Treasury
Core Crown vs Total Crown
The Fiscal Outlook chapter refers to both core Crown and total Crown results.
Core Crown includes Ministers, Departments, Offices of Parliament, the NZS Fund and the Reserve Bank of New Zealand.
Total Crown includes the Core Crown, State-Owned Enterprises and Crown Entities.
Notes
- [2]An historical trend series of the above indicators is available on page 188. The glossary on pages 184 to 187 includes a definition of these indicators.
