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Budget 2012 Home Page Budget Economic and Fiscal Update 2012

Fiscal Outlook

Overview

Table 2.1 - Fiscal indicators
Year ended 30 June 2011
Actual
2012
Forecast
2013
Forecast
2014
Forecast
2015
Forecast
2016
Forecast

$billions

           
Core Crown tax revenue 51.6 54.7 58.2 63.1 67.2 71.2
Core Crown expenses 70.5 69.6 73.7 72.9 74.9 77.3
Total Crown OBEGALa -18.4 -8.4 -7.9 -2.0 0.2 2.1
Total Crown OBEGAL (excluding earthquake expenses) -9.3 -7.1 -5.9 -1.7 0.4 2.2
Total Crown operating balance -13.4 -10.6 -5.7 0.4 2.7 4.8
Core Crown residual cash -13.3 -12.1 -9.7 -5.2 -3.7 -1.2
Net debtb 40.1 51.9 61.3 66.5 69.8 70.7
Gross debtc 72.4 80.1 80.0 88.1 84.2 84.8
Net worth attributable to the Crown 80.6 70.0 64.6 65.2 68.1 73.2

% of GDP

           
Core Crown tax revenue 25.7% 26.3% 26.7% 27.2% 27.5% 27.8%
Core Crown expenses 35.2% 33.5% 33.8% 31.5% 30.7% 30.2%
Total Crown OBEGALa -9.2% -4.1% -3.6% -0.9% 0.1% 0.8%
Total Crown OBEGAL (excluding earthquake expenses) -4.6% -3.4% -2.7% -0.8% 0.1% 0.9%
Total Crown operating balance -6.7% -5.1% -2.6% 0.2% 1.1% 1.9%
Core Crown residual cash -6.7% -5.8% -4.4% -2.2% -1.5% -0.5%
Net debtb 20.0% 25.0% 28.1% 28.7% 28.6% 27.7%
Gross debtc 36.2% 38.5% 36.7% 38.0% 34.5% 33.2%
Net worth attributable to the Crown 40.2% 33.7% 29.6% 28.1% 27.9% 28.6%

Notes:

  1. Operating balance before gains and losses
  2. Net core Crown debt excluding the New Zealand Superannuation Fund and advances
  3. Gross sovereign-issued debt excluding Reserve Bank bills and settlement cash

A glossary and longer time series for these indicators are provided on pages 126 and 131 respectively.

Source: The Treasury

Budget 2012 forecasts narrowing operating deficits over the next three years before the Crown returns to surplus in the 2014/15 fiscal year.

This strengthening fiscal outlook is underpinned by higher revenues together with restrained growth in discretionary spending.

While the nominal value of core Crown expenses is expected to increase across the four-year forecast period, growth in spending is anticipated to be modest, so that expenses will decline as a share of GDP from 35% of GDP in 2010/11 to 30% of GDP in 2015/16.

Over the next four years, the core Crown is expected to spend around $18 billion on capital items such as the purchase of physical assets and advancing student loans. Net debt is expected to peak at 28.7% of GDP in 2013/14, fall to 27.7% of GDP in 2015/16 and continue to ease throughout the projection period[4] ending 2025/26.

Total Crown assets are forecast to grow by $18.9 billion over the next five years, from $245.2 billion to $264.1 billion. This five-year growth figure is roughly half that forecast in Budget 2011, reflecting ongoing fiscal restraint and the beginning of an unwinding of financial assets that had been built up in recent years to fund a series of upcoming bond maturities.

Table 2.2 - Reconciliation between OBEGAL and net debt
Year ending 30 June
$billions
2011
Actual
2012
Forecast
2013
Forecast
2014
Forecast
2015
Forecast
2016
Forecast
Core Crown revenue 57.6 60.0 64.2 69.2 73.6 77.9
Core Crown expenses (70.5) (69.6) (73.7) (72.9) (74.9) (77.3)
Net surpluses/(deficits) of SOEs and CEs (5.5) 1.2 1.6 1.7 1.5 1.5
Total Crown OBEGAL (18.4) (8.4) (7.9) (2.0) 0.2 2.1
Net retained surpluses of SOEs, CEs and NZS Fund 6.0 (1.4) (1.7) (1.7) (1.5) (1.4)
Non-cash items and working capital movements 3.1 1.6 2.9 1.1 1.0 1.1
Net core Crown cash flow from operations (9.3) (8.2) (6.7) (2.6) (0.3) 1.8
Net purchase of physical assets (1.5) (1.4) (1.9) (1.6) (1.6) (1.4)
Advances and capital injections (2.5) (2.4) (2.4) (1.9) (2.5) (2.2)
Forecast for future new capital spending (0.1) (0.2) (0.6) (0.8) (0.9)
Partial share sales 1.5 1.5 1.5 1.5
Core Crown residual cash deficit (13.3) (12.1) (9.7) (5.2) (3.7) (1.2)
Opening net debt 26.7 40.1 51.9 61.3 66.5 69.8
Core Crown residual cash deficit 13.3 12.1 9.7 5.2 3.7 1.2
Other valuation changes in financial assets and financial liabilities 0.1 (0.3) (0.3) (0.4) (0.3)
Closing net debt 40.1 51.9 61.3 66.5 69.8 70.7
As a percentage of GDP 20.0% 25.0% 28.1% 28.7% 28.6% 27.7%

Source: The Treasury

Notes

  • [4]The projection period is the ten year period from 2016/17 to 2025/26.
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