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Surpluses

Total Crown OBEGAL

OBEGAL is the operating balance before gains and losses for the total Crown. By excluding gains and losses the OBEGAL gives a more direct indication of the underlying stewardship of the Government than the operating balance.

Figure 2.6 – Total Crown OBEGAL
Figure 2.6	- Total Crown OBEGAL.
Source: The Treasury

OBEGAL reduces reflecting Budget decisions …

The OBEGAL reduces over the forecast period from $5.9 billion in 2006/07 to $0.2 billion in 2011/12.

This fall reflects Budget decisions, including the reduction in core Crown tax revenue discussed earlier. State-Owned Enterprises (SOEs) and Crown Entities (CEs) OBEGAL forecasts have declined in line with tighter market conditions associated with macroeconomic forecasts of slower growth.

The OBEGAL (excluding the NZS Fund retained revenue) is a measure of the operating balance that recognises that the NZS Fund has been set up to meet future spending pressures and as a result the returns it earns are not available to the Crown to meet current spending requirements. OBEGAL (excluding the NZS Fund retained revenue) reduces over the forecast period from $6.3 billion in 2006/07 to $0.2 billion in 2011/12.

Total Crown Operating Balance

Figure 2.7 – Total Crown gains and losses
Figure 2.7			 – Total Crown gains and losses.
Source: The Treasury

The operating balance shows whether the government sector has generated enough revenues to cover its expenses in any given year.

… which coupled with a financial market downturn …

Losses of $2.7 billion are forecast in 2007/08. This is a reflection of the recent decline in overseas equity markets and increases in the ACC claims liability and GSF liability. Looking forward, net gains are forecast to range from $1.6 billion in 2008/09 to $2.4 billion in 2011/12. These later forecasts are based on long term benchmark rates of return, in conjunction with the exchange rates and interest rate curves prevailing at the forecast reference date.

… leads to a reduction in the operating balance …

Figure 2.8 – Total Crown operating balance
Figure 2.8	- Total Crown operating balance.
Source: The Treasury

The operating balance is forecast to remain positive over the forecast period from $2.6 billion in 2007/08 to $2.7 billion in 2011/12.

The total Crown operating balance is not available to be drawn upon to fund core Crown operations, as current policy is for the NZS Fund, SOEs and CEs to retain a portion of their surpluses for the purpose of achieving their long-term objectives. Over the forecast period SOE and CE surpluses total $7.6 billion. Approximately $2.3 billion of these surpluses will be returned as dividends. This becomes cash available to the core Crown.

Table 2.8 - Total Crown OBEGAL and operating balance comparison to the Half Year Update
Year ended 30 June 2008 2009 2010 2011 2012
$ million Forecast Forecast Forecast Forecast Forecast
OBEGAL          
Half Year Update 6,574 4,327 4,062 3,984 3,850
Core Crown revenue impact (316) (1,360) (1,860) (2,681) (3,164)
Core Crown expense impact (227) (1,346) (784) (384) 91
CE/SOE results (648) (64) (111) (64) (230)
Other items (156) (239) (303) (362) (393)
Total OBEGAL impact (1,347) (3,009) (3,058) (3,491) (3,696)
Budget Update 5,227 1,318 1,004 493 154
Operating balance          
Half Year Update 7,388 6,053 5,924 6,094 6,228
Decrease in OBEGAL (1,347) (3,009) (3,058) (3,491) (3,696)
GSF valuation (643)
Kyoto valuation due to changes in carbon price (145)
Core Crown gains and losses (1,099) 195 289 353 404
CE/SOE gains and losses (1,704) (152) (165) (357) (336)
Other gains 109 18 19 180 134
Total operating balance impact (4,829) (2,948) (2,915) (3,315) (3,494)
Budget Update 2,559 3,105 3,009 2,779 2,734

Source: The Treasury

 

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