2 Fiscal Outlook (continued)
Operating Results
Total Crown OBEGAL (excluding the NZS Fund retained revenue)
OBEGAL is the operating balance before gains and losses for the total Crown. By excluding gains and losses, the OBEGAL gives a more direct indication of the underlying stewardship of the Government than the operating balance. The OBEGAL (excluding the NZS Fund retained revenue) is a measure of the operating balance that recognises that the NZS Fund has been set up to meet future spending pressures and as a result the returns it earns are not available to the Crown to meet current spending requirements.
OBEGAL deficits expected …
- Figure 2.5 - Total Crown OBEGAL (excluding the NZS Fund retained revenue)
- Source: The Treasury
The OBEGAL (excluding the NZS Fund retained revenue) shifts into a deficit position in the current year of $31 million which worsens to $3.2 billion by the end of the forecast period.
As discussed earlier, slower growth in tax revenue and increases in government spending are the key factors driving the downward trend in the OBEGAL (excluding the NZS Fund retained revenue).
Table 2.5 provides a detailed reconciliation of the changes since the Budget Update, while Table 2.6 shows the changes since the Budget Update by the key drivers.
| Year ended 30 June $million |
2009 Forecast |
2010 Forecast |
2011 Forecast |
2012 Forecast |
|---|---|---|---|---|
| OBEGAL (excluding the NZS Fund retained revenue) | ||||
| Budget Update | 1,354 | 1,048 | 543 | 207 |
| Core Crown changes | ||||
| Tax revenue | (465) | (813) | (1,051) | (819) |
| Benefit expenses | (358) | (629) | (678) | (543) |
| Education expense changes | (239) | (111) | (208) | (254) |
| KiwiSaver expense changes | (71) | (105) | (197) | (280) |
| Treaty settlements | 25 | (440) | (130) | (130) |
| Net finance costs | (435) | (284) | (390) | (675) |
| Expense transfers[1] | (914) | (10) | (7) | - |
| Top-down adjustment[2] | 1,095 | 40 | (35) | (110) |
| Emissions Trading Scheme expense rephasing | 422 | (599) | (107) | (120) |
| Technical baseline changes | (54) | (3) | (19) | (33) |
| Rail funding decision | (148) | 148 | - | - |
| Other movements | (13) | 125 | 35 | 18 |
| Core Crown OBEGAL change | (1,155) | (2,681) | (2,787) | (2,946) |
| Net SOE/CE change (including impact of eliminations) | (230) | (32) | (132) | (223) |
| Total OBEGAL (excluding the NZS Fund retained revenue) change | (1,385) | (2,713) | (2,919) | (3,169) |
| Pre-election Update | (31) | (1,665) | (2,376) | (2,962) |
|
Year ended 30 June $million |
2009 Forecast |
2010 Forecast |
2011 Forecast |
2012 Forecast |
|---|---|---|---|---|
| OBEGAL (excluding the NZS Fund retained revenue) | ||||
| Budget Update | 1,354 | 1,048 | 543 | 207 |
| Economic-driven changes | ||||
| Tax revenue | (465) | (813) | (1,051) | (819) |
| Benefit expenses | (358) | (629) | (678) | (543) |
| Total economic-driven changes | (823) | (1,442) | (1,729) | (1,362) |
| Changes due to policy costs | ||||
| Education expense changes | (239) | (111) | (208) | (254) |
| KiwiSaver expense changes | (71) | (105) | (197) | (280) |
| Treaty settlements | 25 | (440) | (130) | (130) |
| Total changes due to policy costs | (285) | (656) | (535) | (664) |
| Debt servicing change | ||||
| Net finance costs | (435) | (284) | (390) | (675) |
| Total debt servicing change | (435) | (284) | (390) | (675) |
| Other changes | 158 | (331) | (265) | (468) |
| Total OBEGAL (excluding the NZS Fund retained revenue) change | (1,385) | (2,713) | (2,919) | (3,169) |
| Pre-election Update | (31) | (1,665) | (2,376) | (2,962) |
Notes:
- [1]Expense transfers represent underspends from 2007/08 financial year which have been transferred into the forecast period.
- [2]The top-downadjustment compensates for the fact that departments tend to use appropriations as the basis for their forecasts. Appropriations will overstate expenditure as they are upper limits.
