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Budget 2008 Home Page Budget Economic and Fiscal Update 2008

Fiscal Sensitivities

Table 3.1 provides some “rules of thumb” on the sensitivities of the fiscal position to changes in specific variables.

Table 3.1 - Fiscal sensitivity analysis
  Year ending 30 June
($ million)
2008 Forecast 2009 Forecast 2010 Forecast 2011 Forecast 2012 Forecast
1% lower nominal GDP growth per annum          
 Revenue (550) (1,100) (1,725) (2,365) (3,055)
 Addition to financing costs 17 68 152 271 425
Impact on the operating balance (567) (1167) (1878) (2636) (3480)
Revenue impact of a 1% decrease in the growth rates of:          
 Wages and salaries (245) (490) (765) (1,045) 1,355)
 Taxable business profits (125) (265) (420) (590) (770)
One percentage point lower interest rates          
 Interest income (41) (89) (57) (70) (49)
 Expenses (21) 88) (130) (167) (201)
Impact on the operating balance (20) (0) 72 97 152

The forecasts of capital contributions to the New Zealand Superannuation (NZS) Fund are sensitive to the rate of return assumed on the Fund's assets.

 

Table 3.2 - NZS Fund contributions sensitivity analysis
Variable Marginal change Effect on net return after tax Effect on Capital Contribution
($ million)
  (%age points) (%age points) 2008/09 2009/10 2010/11 2011/12
Expected gross rate of return -1 -0.76 220 230 243 256
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