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Prior Year Comparison

This section compares the 2006/07 financial results for the key indicators with the 2005/06 financial results.

Table 6 – Comparison to 2005/06 results
 

30 June 2007
actual

30 June 2006
actual

Variance  
  $million $million $million %
Statement of Financial Performance        
Core Crown revenue        
Taxation revenue 53,411 52,782 629 1.2
Other revenue 7,469 6,726 743 11.0
Total core Crown revenue 60,880 59,508 1,372 2.3
Core Crown expenses        
Social security and welfare 16,853 15,598 (1,255) (8.0)
GSF pension expenses 302 1,671 1,369 81.9
Health 10,327 9,547 (780) (8.2)
Education 9,289 9,914 625 6.3
Other functional classifications 14,213 11,447 (2,766) (24.2)
Forecast for future new spending -  -  -  - 
Finance costs and FX losses/(gains) 2,758 2,061 (697) (33.8)
Total core Crown expenses 53,742 50,238 (3,504) (7.0)
ACC liability expenses 1,020 1,321 301 22.8
Net surplus of SOE/Ces 2,545 3,524 (979) (27.8)
Core Crown Operating Balance 8,663 11,473 (2,810) (24.5)
OBERAC 7,920 7,380 540 7.3
Cash available 2,648 2,985 (337) (11.3)
Statement of Financial Position        
Property, plant and equipment 96,543 79,441 17,102 21.5
Financial assets 66,384 56,446 9,938 17.6
Other assets 22,049 22,384 (335) (1.5)
Total Assets 184,976 158,271 26,705 16.9
Total debt 41,385 39,427 (1,958) (5.0)
Other liabilities 47,755 47,441 (314) (0.7)
Total Liabilities 89,140 86,868 (2,272) (2.6)
Net Worth 95,836 71,403 24,433 34.2
Debt indicators        
Gross sovereign-issued debt 36,150 35,461 (689) (1.9)
Net core Crown debt 3,433 7,745 4,312 55.7
Net debt with NZS Fund assets (9,556) (2,116) 7,440 351.6

Revenue and Expenses

The key revenue and expenses changes since the 2005/06 financial year are as follows:

  Variance Key drivers
Core Crown    
Tax revenue +$0.6 billion

Source deductions +$1.1 billion – Due to employment and wage growth.

GST +0.5 billion – Due to growth in consumption during the year.
   

RWT +$0.4 billion – Primarily due to growth in the deposit base and higher interest rates in 2006/07 compared to 2005/06.

The above increases in tax revenue since last year are offset by the fact that the prior year tax revenue numbers included a one-off adjustment relating to changes in provisional tax revenue recognition.
Other revenue +0.7 billion Investment income +$0.6 billion – higher returns on the NZS Fund and GSF assets.
Expenses +2.7 billion

Social security and welfare +$1.3 billion – The main factors resulting in the increase were:

  • annual indexation of welfare benefits
  • policy decisions made as part of Budget 2006, in particular the extension to the Working for Families package, and
  • write off of benefit debts.

GSF Pension -$1.4 billion  – The main driver was changes in the unfunded liability due to discount rate movements.

Health +$0.8 billion – Relates to increase in funding (as part of Budget 2006) allocated to maintain and increase existing services levels and the impact of demographic changes.

Education -$0.6 billion – There are two main offsetting factors:

  • last years accounts included  a one-off write of the Student Loan debt to fair value of $1.4 billion, offset by
  • increases due to roll growth and new policy initiatives.

Other functional expenses +2.8 billion – The key drivers were:

  • core government services expenses were higher by $1.9 billion compared to last year, primarily due to the one-off write-off of tax receivables and an increase in the tax provision for doubtful debts this year
  • transport expenses were higher by $0.6 billion compared to last year, due to increases in funding to maintain and improve state highways and rail assets
  • heritage and culture expenses were lower by $0.4 billion.  Last years accounts included an one-off expense in relation to the Kyoto Protocol obligation resulting from the government’s decision not to proceed with introducing a carbon tax
  • the remaining increase is primarily driven by policy decisions made as part of previous year Budget packages.
Finance cost and FX +$0.7 billion

Foreign exchange losses +0.4 billion – Due to movement in foreign exchange rates since last year.

Finance cost +0.3 billion – Combination of higher interest rates and increase in debt holding since last year.
Total core Crown -$2.1 billion  

Net SOE/CE returns (excluding valuation changes)

-$0.7 billion

 
  • EQC -$0.7 billion – Lower investment income earned this year and also large foreign exchange losses incurred due to an appreciation in the NZ dollar against the US dollar since last year.
  • Air New Zealand -$0.5 billion – Lower returns this year due to devaluation of aircraft assets (a gain of $0.3 billion was recorded last year).
Total Crown operating balance - $2.8 billion  

Other indicators

Gross sovereign issued debt was $0.7 billion higher than last year. The main changes in debt this year were:

  • An increase of around $5.5 billion due to the Reserve Bank raising the Settlement Cash Levels.
  • A reduction of around $2.8 billion due to a reduction in the issuance of Treasury Bills.
  • A reduction in debt due to repayments made during the year.

Net core Crown debt was $4.3 billion lower than last year due primarily to the flow on impact of the residual available from the current year cash flow.

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