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Budget 2006 Home Page Half Year Economic & Fiscal Update 2006

Key Trends

Table 2.2 – Reconciliation to core Crown residual cash
    Year ended 30 June
  $ million 2006 Actual 2007 Forecast 2008 Forecast 2009 Forecast 2010 Forecast 2011 Forecast
  Core Crown revenue 59,170 59,020 59,917 61,577 64,746 67,895
Less Core Crown expenses 49,900 53,963 55,577 58,159 60,554 63,479
Plus Net surpluses/(deficits) of SOEs and CEs 2,203 1,203 1,731 1,779 1,634 1,563

Equals

 operating balance 11,473 6,260 6,071 5,197 5,826 5,979
Less OBERAC adjustments            
  Revaluation changes 1,471 (396) -  -  -  - 
  Accounting changes 1,354 -  -  -  -  - 

Equals

OBERAC 8,648 6,656 6,071 5,197 5,826 5,979
Less Net return on the NZS Fund (excl revaluation changes) 580 675 840 1,027 1,238 1,468
Equals OBERAC less NZS Fund retained earnings 8,068 5,981 5,231 4,170 4,588 4,511
Less Net retained surpluses of SOEs and CEs 1,179 1,203 1,731 1,779 1,634 1,563
  Non-cash items and working capital movements (1,970) 1,829 1,313 473 1,095 1,297

Equals

  8,859 6,607 4,813 2,864 4,049 4,245
Less              
  Contribution to NZS Fund 2,337 2,131 2,687 2,790 3,173 3,146
  Purchase of physical assets 1,826 2,237 1,233 966 1,025 690
  Advances and capital injections 1,711 2,132 1,584 929 829 703

Equals

residual cash 2,985 107 (691) (1,821) (978) (294)
  Domestic bond programme 2,375 2,456 2,517 2,476 2,472 2,465
Indicators for fiscal objectives (% of GDP)            
  Core Crown revenue 37.6 36.3 35.1 34.2 34.3 34.3
  Core Crown expenses 31.7 33.2 32.6 32.3 32.1 32.0
  OBERAC 5.5 4.1 3.6 2.9 3.1 3.0
  Gross sovereign-issued debt 22.5 23.3 23.5 21.8 20.5 20.7
  Net core Crown  debt 4.9 3.9 3.5 4.0 4.1 3.8
  Net core Crown debt with NZS Fund assets (1.3) (3.9) (5.7) (6.6) (7.9) (9.7)
  Net worth 45.4 47.8 49.1 49.5 50.2 50.9
  New Zealand Superannuation Fund            
  Fund asset returns (after tax) 969 743 840 1,027 1,238 1,468
  Fund assets 9,861 12,653 15,626 18,979 22,676 26,720
  % of GDP 6.3 7.8 9.2 10.6 12.0 13.5

Top-down adjustment to cash payment forecasts

The core Crown cash payments for 2006/07 incorporate a top-down adjustment of $800 million to take into account the usual timing delays of departmental spending. The adjustment is made in the above table and is spread over operating ($500 million) and capital ($300 million) payments.

The level of the adjustment has been based on the analysis of previous over-forecasting by departments and a review of the actual outturn to 31 October 2006.

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