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Budget 2005 Home Page Half-Year Economic & Fiscal Update 2005

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
Figure 2.21 - OBERAC comparison.
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.

Table 2.13 – OBERAC reconciliation (explains changes to the OBERAC since the Pre-election Update
  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

Table 2.14 – Consolidated tax revenue forecasts
  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
Figure 2.22 - Gross sovereign-issued debt.
Source: The Treasury
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