Commentary on the Financial Statements

Overview

The Crown financial statements show:

Table 1 – Key fiscal indicators
$ million	30 June 2005		30 June 2004		30 June 2005
	Actual	Ratio to GDP%[1]	Actual	Ratio to GDP%	Estimated actual forecast	Ratio to GDP%[1]
Net cash flow from core operating and investing activity	3,104	2.1	520	0.4	3,156	2.1
Gross sovereign-issued debt	35,045	23.5	35,527	25.3	35,055	23.5
Net core Crown debt	10,771	7.2	15,204	10.8	10,758	7.2
Total Crown debt	36,864	24.7	36,825	26.3	36,366	24.4
Operating balance	6,247	4.2	7,424	5.3	5,776	3.9
OBERAC	8,873	5.9	6,629	4.7	8,317	5.6
Net worth	49,983	33.5	35,463	25.3	41,857	28.1
Net core Crown debt with NZS Fund assets	4,216	2.8	11,248	8.0	4,203	2.8

[1] Calculated using Treasury PREFU forecast of nominal expenditure based GDP for the year to 30 June 2005.

an operating balance of $6.2 billion (4.2% of GDP) and an OBERAC of $8.9 billion (5.9% of GDP)
the OBERAC was higher than last year’s $6.6 billion (4.7% of GDP), reflecting:
- growth in taxation revenue of 9.6%, which has been driven by growth in wages, employment, corporate profits and consumption, giving total tax revenue of 31.3% of GDP (30.3% of GDP in 2004)
- offset by growth in core Crown expenses (excluding liability valuation movements) of 6.9% (30.0% of GDP, compared to 29.9% of GDP in 2004), largely reflecting the additional policy spending introduced in the 2004 Budget (consistent with the Government’s spending intentions), benefit indexation and some increases to demand-driven spending in areas such as education
the core Crown cash equivalent of the OBERAC was $8.6 billion, which has been applied to the Government’s investment strategy (such as contributions to the New Zealand Superannuation Fund and purchasing physical assets) leaving cash available for debt repayment of $3.1 billion
gross sovereign-issued debt was $35 billion, which has decreased by around $0.5 billion from last year
net worth was $50 billion, which was an increase of around $14.5 billion from last year, reflecting the operating balance of $6.2 billion and physical asset revaluations of $8.2 billion.

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