3 Risks and Scenarios (continued)
Fiscal Sensitivities
Table 3.1 provides some “rules of thumb” on the sensitivities of the fiscal position to changes in specific variables. It is important to note that this analysis does not take into account the fact that some tax types such as corporate tax and other persons tax have a larger variability than nominal GDP over business cycles. This difference in variability exists because firms can build up losses in the downswing of the business cycle and utilise these losses in the upswing.
|
Year ending 30 June ($million) |
2009 Forecast |
2010 Forecast |
2011 Forecast |
2012 Forecast |
2013 Forecast |
|---|---|---|---|---|---|
| 1% lower nominal GDP growth per annum | |||||
| Revenue | (549) | (1,106) | (1,691) | (2,332) | (3,040) |
| Addition to financing costs | 18 | 69 | 158 | 280 | 436 |
| Impact on the operating balance | (567) | (1,175) | (1,849) | (2,612) | (3,475) |
| Revenue impact of a 1% decrease in the growth rates of: | |||||
| Wages and salaries | (250) | (515) | (795) | (1,100) | (1,455) |
| Taxable business profits | (135) | (275) | (435) | (600) | (775) |
| One percentage point lower interest rates | |||||
| Interest income | (84) | (26) | (50) | (65) | (39) |
| Expenses | (88) | (148) | (218) | (305) | (393) |
| Impact on the operating balance | 5 | 122 | 168 | 240 | 354 |
The forecasts of capital contributions to the NZS Fund are sensitive to the rate of return assumed on the Fund's assets.
| Variable |
Marginal change |
Effect on net return after tax |
Effect on capital contribution ($million) |
|||
|---|---|---|---|---|---|---|
| (%age points) | (%age points) | 2009/10 | 2010/11 | 2011/12 | 2012/13 | |
| Expected gross rate of return | -1 | -0.76 | 231 | 243 | 256 | 269 |
