Comparison with Pre-election Update
OBERAC and operating balance
Compared with the Pre-election Update the OBERAC is expected to be lower over the forecast period due to:
- the move to fair value measurement of student loans in 2005/06 (refer page 39)
- the working for families package extension from 2006/07
- reforecast transport spending including a change in mix between operating and capital spending
- higher net finance costs (finance costs less interest income) due to the increase in net core Crown debt
- other core Crown functional expenses higher including increases to family support debt provisioning and decisions made from the future new operating spending.
- Figure 2.21 – OBERAC comparison
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- Source: The Treasury
This has been partially offset by higher forecast tax revenue in 2005/06, 2006/07 and 2007/08 reflecting increases in nominal GDP.
| 2006 | 2007 | 2008 | 2009 | |
|---|---|---|---|---|
| ($ million) | Forecast | Forecast | Forecast | Forecast |
| OBERAC 2005 Pre-election Update | 7,293 | 6,344 | 4,217 | 5,512 |
| Changes (revenue) | ||||
| Tax revenue (forecasting) | 416 | 378 | 75 | (47) |
| Tax revenue (policy) | - | - | 760 | (760) |
| Reduction in student loan interest | (258) | (462) | (503) | (546) |
| Other sovereign revenue | (51) | (66) | (111) | (151) |
| Investment income | 85 | 123 | (100) | (179) |
| Other revenue | 63 | 126 | 132 | 156 |
| Changes to SOE/CE results | (81) | (129) | 18 | (96) |
| Total revenue changes | 174 | (30) | 271 | (1,623) |
| Changes (core Crown expenses) | ||||
| Student loan interest free policy | (940) | 90 | 82 | 99 |
| Working for families extension | (85) | (360) | (485) | (500) |
| Welfare benefit forecast changes | 79 | 88 | (4) | 26 |
| Transport forecast changes | 60 | 92 | 201 | 136 |
| Future new operating spending | 44 | 168 | 248 | 238 |
| Other core Crown functional expenses | (679) | (327) | (276) | (334) |
| Finance costs | (22) | (172) | (151) | (187) |
| Total core Crown expenses changes | (1,543) | (421) | (385) | (522) |
| Total Changes | (1,369) | (451) | (114) | (2,145) |
| OBERAC 2005 Half Year Update | 5,924 | 5,893 | 4,103 | 3,367 |
Source:The Treasury
| 2006 | 2007 | 2008 | 2009 | |
|---|---|---|---|---|
| ($ million) | Forecast | Forecast | Forecast | Forecast |
| Tax revenue 2005 Pre-election Update | 48,833 | 50,443 | 51,418 | 54,567 |
| Changes | ||||
| Source deductions | 189 | 160 | 242 | 370 |
| Other persons tax | (32) | 9 | (185) | (338) |
| Corporate taxes | 223 | 144 | 17 | (57) |
| RWT | 181 | 307 | 352 | 330 |
| GST | (88) | (192) | (312) | (322) |
| Other | (57) | (50) | (39) | (30) |
| Gross changes | 416 | 378 | 75 | (47) |
| Policy changes | - | - | 760 | (760) |
| Total Changes | 416 | 378 | 835 | (807) |
| Tax revenue 2005 Half Year Update | 49,249 | 50,821 | 52,253 | 53,760 |
| % of GDP | 31.0% | 31.2% | 30.8% | 30.1% |
Source:The Treasury
Cash available/(shortfall to be funded)
The amount required to be financed (cash shortfall) is around $2.5 billion higher across the forecast period than the Pre-election Update mainly due to a reduction in cashflow from operations.
Debt indicators
Compared to the Pre-election Update both gross sovereign-issued debt and net core Crown debt are forecast to be higher over the forecast period. Gross sovereign-issued debt is higher due to the borrowing requirement mentioned above. Net core Crown debt is expected to be higher due to the reduction in financial assets as a result of the move to fair value measurement of student loans and the increased borrowing requirement.
- Figure 2.22 - Gross sovereign-issued debt comparison
-
- Source: The Treasury
