2 Fiscal Outlook
Introduction
The fiscal position is forecast to continue to strengthen over the forecast period.
Based on strong nominal Gross Domestic Product growth forecast over the next few years and its subsequent impact on tax revenue forecasts, the fiscal outlook is stronger than what was expected at the Budget Update. This is notwithstanding the inclusion of a revenue reduction contingency of $1.5 billion effective 1 April 2009, rising to $1.7 billion by 2011/12.
This strengthening is reflected in most indicators. For example:
- The operating balance before gains and losses (OBEGAL), while forecast to fall from $6.6 billion in 2007/08 to $3.9 billion in 2011/12, is higher in all years than forecast at the time of the Budget Update.
- Cash deficits of $2.6 billion over the forecast period, are less than the $5.7 billion forecast at the Budget Update.
- Gross sovereign-issued debt excluding settlement cash is forecast to increase by around $2.3 billion over the forecast period in nominal terms, but continues to fall as a percentage of GDP from 18.5% to 15.6%.
This chapter outlines the trends of the key indicators over the forecast period, before discussing the main drivers of these trends in more detail. The forecasts are then compared to those provided in the Budget Update.
The chapter also includes a description of how the fiscal indicators are derived, how they are used and a historical series.
| Year ended 30 June | ||||||
|---|---|---|---|---|---|---|
| $million | 2007 Actual |
2008 Actual |
2009 Forecast |
2010 Forecast |
2011 Forecast |
2012 Forecast |
| Core Crown revenue excluding NZS Fund revenue | 58,473 | 62,130 | 63,147 | 65,412 | 68,965 | 72,168 |
| Core Crown revenue | 58,174 | 62,409 | 63,496 | 65,832 | 69,458 | 72,740 |
| Core Crown expenses | 53,977 | 57,137 | 60,537 | 63,106 | 66,632 | 70,034 |
| OBEGAL | 5,339 | 6,574 | 4,327 | 4,062 | 3,984 | 3,850 |
| OBEGAL3 excluding NZS Fund net revenue | 5,757 | 6,405 | 4,116 | 3,809 | 3,688 | 3,507 |
| Operating balance | 7,999 | 7,388 | 6,053 | 5,924 | 6,094 | 6,228 |
| Core Crown residual cash | 2,653 | 759 | (763) | (779) | (851) | (937) |
| Gross sovereign-issued debt (excl Settlement Cash) | 30,890 | 33,303 | 33,034 | 31,779 | 34,566 | 33,172 |
| Net core Crown debt | 4,411 | 1,983 | 1,756 | 1,705 | 1,792 | 2,105 |
| Net core Crown debt (incl NZS Fund) | (8,112) | (13,102) | (16,224) | (19,545) | (22,990) | (26,414) |
| % of GDP | ||||||
| Core Crown revenue excluding NZS Fund revenue | 35.1 | 34.9 | 33.8 | 33.6 | 34.0 | 34.0 |
| Core Crown revenue | 34.9 | 35.0 | 34.0 | 33.8 | 34.2 | 34.3 |
| Core Crown expenses | 32.4 | 32.1 | 32.4 | 32.4 | 32.8 | 33.0 |
| OBEGAL | 3.2 | 3.7 | 2.3 | 2.1 | 2.0 | 1.8 |
| OBEGAL excluding NZS Fund net revenue | 3.5 | 3.6 | 2.2 | 2.0 | 1.8 | 1.7 |
| Operating balance | 4.8 | 4.1 | 3.2 | 3.0 | 3.0 | 2.9 |
| Core Crown residual cash | 1.6 | 0.4 | (0.4) | (0.4) | (0.4) | (0.4) |
| Gross sovereign-issued debt (excl Settlement Cash) | 18.5 | 18.7 | 17.7 | 16.3 | 17.0 | 15.6 |
| Net core Crown debt | 2.6 | 1.1 | 0.9 | 0.9 | 0.9 | 1.0 |
| Net core Crown debt (incl NZS Fund) | (4.9) | (7.4) | (8.7) | (10.0) | (11.3) | (12.4) |
[3]Source: The Treasury
New Zealand International Financial Reporting Standard (NZ IFRS) - “New GAAP”
The financial statements presented in the 2007 HYEFU have been prepared in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS). All comparatives including the 30 June 2007 are also produced on an NZ IFRS basis, which means they will differ to what was published in the Financial Statements of the Government of New Zealand for the year ended 30 June 2007 released 10 October 2007. The 30 June 2007 comparatives are provisional and have not yet been subject to audit.
With the adoption of NZ IFRS there is a series break in the graphs and tables presented in the fiscal chapter. For some indicators there is no comparable trend series.
Notes
- [2]Detailed tables of the key indicators for the Half Year Economic and Fiscal Update and Budget Economic and Fiscal Update (BEFU) are located on pages 57 and 58.
- [3]The operating balance before gains and losses (OBEGAL) less NZS Fund revenue represents the residual of operating revenue and expenses minus the portion of net revenue earned by the NZS Fund. The indicator does not take into account any gains and losses which are now reported in a separate section of the Statement of Financial Performance (refer page 115).
