Fiscal Outlook
Overview
- Tax revenue is forecast to increase slightly, while expenses decline, as a share of GDP over the next four years.
- Operating deficits narrow and a surplus of $75 million is forecast in 2014/15 after taking into account the proposed reduction in ACC levies.
- Net core Crown debt peaks as a share of GDP at 28.7% in 2014/15.
- The Crown's balance sheet strengthens and fiscal buffers begin to be rebuilt.
| Year ended 30 June |
2012 Actual |
2013 Forecast |
2014 Forecast |
2015 Forecast |
2016 Forecast |
2017 Forecast |
|---|---|---|---|---|---|---|
$billions |
||||||
| Total Crown OBEGAL1 | (9.2) | (6.3) | (2.0) | 0.1 | 0.8 | 2.6 |
| Net core Crown debt2 | 50.7 | 57.9 | 64.8 | 68.2 | 69.7 | 70.3 |
| Gross debt3 | 79.6 | 78.6 | 87.7 | 83.2 | 87.5 | 93.9 |
| Net worth attributable to the Crown | 59.3 | 61.5 | 62.0 | 64.8 | 68.5 | 73.9 |
% of GDP |
||||||
| Total Crown OBEGAL1 | (4.4) | (2.9) | (0.9) | 0.0 | 0.3 | 1.0 |
| Net core Crown debt2 | 24.3 | 27.1 | 28.4 | 28.7 | 28.1 | 27.3 |
| Gross debt3 | 38.2 | 36.8 | 38.5 | 34.9 | 35.3 | 36.5 |
| Net worth attributable to the Crown | 28.5 | 28.7 | 27.2 | 27.3 | 27.6 | 28.7 |
Notes:
- Operating balance before gains and losses
- Net core Crown debt excluding the New Zealand Superannuation Fund (NZS Fund) and advances
- Gross sovereign-issued debt excluding Reserve Bank bills and settlement cash
Source: The Treasury
Overall, growth in the economy, and managed spending levels, sees the Crown return to surplus, slow the pace of growth in debt and increase the size of net worth, helping the Crown to begin rebuilding fiscal buffers to absorb future shocks.
The fiscal forecasts shows the Government is expected to achieve its fiscal objective of a return to surplus in 2014/15 with $75 million forecast.
Tax revenue increases in each year of the forecasts reflecting the expected growth in the economy, as discussed in the Economic Outlook chapter.
Core Crown expenses are expected to increase by $5.5 billion over the next four years, largely owing to new spending announced in Budget 2013 and Budget allowances set aside for future spending. Budget 2013 decisions have increased expenses by around $1.0 billion per annum. Coupled with revenue initiatives, the net spending in Budget 2013 reduces to $900 million per annum. As in previous years, most of the new funding is allocated to the priority areas of education, health, welfare.
Including allocations from the operating allowance and the Future Investment Fund, total Canterbury earthquake expenses are now forecast to reach $15.2 billion by 2016/17 (refer to page 33).
The improving fiscal position has provided enough headroom for the Government to signal reductions in ACC levies from 2014/15 onwards, with the expected impacts built into these forecasts (refer to page 35).
Net debt peaks as a share of GDP in 2014/15 at 28.7%, although nominal net debt continues to increase until 2017/18, one year following the end of these forecasts.
The partial share offers are expected to provide proceeds that the Government will invest largely in social assets, managed through the Future Investment Fund that was established in Budget 2012 (refer to page 38).
|
Year ending 30 June $billions |
2012 Actual |
2013 Forecast |
2014 Forecast |
2015 Forecast |
2016 Forecast |
2017 Forecast |
|---|---|---|---|---|---|---|
| Core Crown revenue | 60.6 | 63.8 | 68.4 | 72.3 | 75.8 | 79.5 |
| Core Crown expenses | (69.1) | (71.6) | (72.4) | (73.5) | (75.2) | (77.2) |
| Net surpluses/(deficits) of SOEs and CEs | (0.7) | 1.5 | 2.0 | 1.3 | 0.2 | 0.3 |
| Total Crown OBEGAL | (9.2) | (6.3) | (2.0) | 0.1 | 0.8 | 2.6 |
| Net retained surpluses of SOEs, CEs and NZS Fund | 0.4 | (1.2) | (2.1) | (1.4) | (0.3) | (0.5) |
| Non-cash items and working capital movements | 1.6 | 1.6 | 0.9 | 0.7 | 1.3 | 1.8 |
| Net core Crown cash flow from operations | (7.2) | (5.9) | (3.2) | (0.6) | 1.8 | 3.9 |
| Net purchase of physical assets | (1.3) | (1.5) | (2.6) | (1.9) | (1.3) | (1.5) |
| Advances and capital injections | (2.1) | (1.9) | (2.1) | (2.0) | (2.6) | (2.0) |
| Forecast for future new capital spending | - | - | (0.5) | (0.7) | (0.9) | (1.0) |
| Proceeds from Government share offers | - | 1.5 | 1.5 | 1.5 | 1.5 | - |
| Core Crown residual cash deficit | (10.6) | (7.8) | (6.9) | (3.7) | (1.5) | (0.6) |
| Opening net debt | 40.1 | 50.7 | 57.9 | 64.8 | 68.2 | 69.7 |
| Core Crown residual cash deficit | 10.6 | 7.8 | 6.9 | 3.7 | 1.5 | 0.6 |
| Valuation changes in financial instruments | - | (0.6) | - | (0.3) | - | - |
| Closing net debt | 50.7 | 57.9 | 64.8 | 68.2 | 69.7 | 70.3 |
| As a percentage of GDP | 24.3% | 27.1% | 28.4% | 28.7% | 28.1% | 27.3% |
Source: The Treasury
