Fiscal Sensitivities
The scenarios above indicate the sensitivity of fiscal aggregates to changes in economic conditions. Table 3.5 provides some “rules of thumb” on the sensitivities of the fiscal position to changes in specific variables.
| ($ million) Year ending 30 June | 2007 | 2008 | 2009 | 2010 | 2011 |
|---|---|---|---|---|---|
| Forecast | Forecast | Forecast | Forecast | Forecast | |
| 1% Lower nominal GDP growth per annum | |||||
| Revenue | (507) | (1,026) | (1,559) | (2,174) | (2,892) |
| Addition to financing costs | 15 | 61 | 139 | 251 | 401 |
| Impact on the operating balance | (522) | (1,087) | (1,698) | (2,425) | (3,293) |
| Revenue impact of a 1% decrease in the growth rates of: | |||||
| Wages and salaries | (205) | (430) | (670) | (935) | (1,225) |
| Taxable business profits | (110) | (250) | (385) | (520) | (725) |
| One percentage point lower interest rates | |||||
| Interest income | (65) | (59) | (63) | (55) | (59) |
| Expenses | (79) | (135) | (156) | (190) | (223) |
| Impact on the operating balance | 14 | 76 | 93 | 135 | 164 |
The forecasts of capital contributions to the New Zealand Superannuation (NZS) Fund are sensitive to the rate of return assumed on the Fund’s assets:
| Variable | Marginal Change (%age points) |
Effect on Net Return After Tax (%age points) |
Effect on Capital Contribution ($ billion) | |||
|---|---|---|---|---|---|---|
| 2007/08 | 2008/09 | 2009/10 | 2010/11 | |||
| Expected gross rate of return | -1% | -0.71% | +0.200 | +0.217 | +0.234 | +0.251 |
