Comparison with 2005 Pre-Election Update and 2004 Budget Update
The following table provides a breakdown of the movements from the budgeted results:
| $ million | 2005 PREFU | 2004 Budget |
|---|---|---|
| 2004/05 Operating Balance per 2005 PREFU and 2004 Budget | 5,776 | 5,671 |
| Core Crown Revenue Movements | ||
| Taxation revenue | 122 | 2,428 |
| Investment income | 1 | 605 |
| Other income | 8 | 122 |
| 131 | 3,155 | |
| Core Crown Expense Movements | ||
| Social security and welfare | (9) | 105 |
| GSF pension expenses | (4) | (1,457) |
| Health | - | 14 |
| Education | 189 | 39 |
| Core government services | (4) | (399) |
| Other functional expenses | (73) | (376) |
| Finance costs | - | (162) |
| Net foreign-exchange losses/(gains) | (16) | 35 |
| Forecast for future new spending | - | 441 |
| 83 | (1,760) | |
| Net SOE and Crown Entity Movements (after dividends) | ||
| Movement in ACC outstanding claims liability | - | (1,429) |
| Other movements in net surplus of SOEs and Crown entities | 257 | 610 |
| 257 | (819) | |
| Total Change | 471 | 576 |
| Operating Balance per 30 June 2004 | 6,247 | 6,247 |
Compared to the Pre-Election Update (PREFU) the operating balance was around $0.5 billion higher than forecast. This was due to
- higher SOE/Crown entities surpluses of $0.3 billion (mainly resulting from improved investment income earned by EQC and the recognition of a vested asset by Transit New Zealand)
- higher than forecast tax revenue of $0.1 billion, and
- delays in spending of $0.1 billion.
Compared to the 2004 Budget Update the operating balance was around $0.6 billion higher than forecast. All of the items outlined above contributed to the variance against the 2004 Budget forecasts. There were a number of other significant influences driving the change in the operating balance since the 2004 Budget Update. Significant influences include tax revenue which was higher than forecast by around $2.4 billion. The increase was mainly due to:
- source deductions, which were higher than forecast by $0.6 billion, largely reflecting higher-than-expected growth in wages and employment
- corporate tax, which was higher than forecast by $1.3 billion reflecting stronger-than-expected corporate profitability throughout 2005
- goods and services tax, which was higher than forecast by $0.2 billion due to slightly stronger-than-forecast consumer spending.
Investment income was higher than forecast by $0.6 billion due to stronger investment returns by NZDMO, NZS Fund and GSF.
SOE/Crown entities surpluses were higher than forecast by $0.6 billion, which was spread over a number of entities.
This has been partially offset by an increase in the GSF and ACC unfunded liabilities of $2.9 billion and the recognition of the Kyoto Protocol liability of $0.3 billion.
| $ million | 30 June 2005 Actual | 2005 Pre-EFU Forecast | Variance against Pre-EFU | 2004 Budget Forecast | Variance against 2004 Budget |
|---|---|---|---|---|---|
| Gross Sovereign-Issued Debt | 33,777 | 33,787 | (10) | 31,693 | 2,084 |
| % of GDP | 22.6 | 22.6 | (0.0) | 22.6 | 0.0 |
| Net Core Crown Debt | 10,771 | 10,758 | 13 | 15,336 | (4,565) |
| % of GDP | 7.2 | 7.2 | 0.0 | 10.9 | (3.7) |
| Net core Crown debt with NZS Fund assets | 4,216 | 4,203 | 13 | 9,013 | (4,797) |
| % of GDP | 2.8 | 2.8 | 0.0 | 6.4 | (3.6) |
Gross sovereign issued debt and net debt were in line with the Pre-Election Update.
When compared to the 2004 Budget Update, gross sovereign issued debt was $2.4 billion higher. This is mainly due to the higher starting position from 2003/04 (net debt neutral as the value of financial assets had a corresponding increase).
The net core Crown debt was $4.6 billion lower than the 2004 Budget Update, largely driven by the higher cash available for debt repayment and investment in assets during 2005.
