Expenses
Reduce the growth in government spending to ensure operating expenses are consistent with the operating balance objective (Fiscal Strategy)
|
Year ended 30 June $ million |
Actual 2005 |
Actual 2006 |
Actual 2007 |
Actual 2008 |
Actual 2009 |
Actual 2010 |
Forecast Original Budget |
Forecast Estimated Actuals |
|---|---|---|---|---|---|---|---|---|
| Social security and welfare | 14,682 | 15,598 | 16,768 | 17,877 | 19,382 | 21,185 | 21,139 | 21,234 |
| Health | 8,813 | 9,547 | 10,355 | 11,297 | 12,368 | 13,128 | 13,397 | 13,137 |
| Education | 7,930 | 9,914 | 9,269 | 9,551 | 11,455 | 11,724 | 11,284 | 11,779 |
| Core government services | 2,567 | 2,507 | 4,817 | 3,371 | 5,293 | 2,974 | 3,620 | 3,793 |
| Law and order | 1,977 | 2,235 | 2,699 | 2,894 | 3,089 | 3,191 | 3,267 | 3,276 |
| Other core Crown expenses | 8,926 | 9,519 | 10,096 | 12,007 | 12,415 | 11,811 | 12,575 | 11,572 |
| Core Crown expenses | 44,895 | 49,320 | 54,004 | 56,997 | 64,002 | 64,013 | 65,282 | 64,791 |
| Crown entities, SOEs and eliminations | 13,397 | 15,015 | 14,725 | 18,845 | 19,397 | 17,027 | 20,391 | 17,816 |
| Total Crown expenses | 58,292 | 64,334 | 68,729 | 75,842 | 83,399 | 81,040 | 85,673 | 82,607 |
| % of GDP | ||||||||
| Social security and welfare | 9.5% | 9.7% | 9.8% | 9.8% | 10.5% | 11.2% | 12.1% | 11.2% |
| Health | 5.7% | 5.9% | 6.0% | 6.2% | 6.7% | 6.9% | 7.7% | 6.9% |
| Education | 5.1% | 6.1% | 5.4% | 5.2% | 6.2% | 6.2% | 6.4% | 6.2% |
| Core government services | 1.7% | 1.6% | 2.8% | 1.8% | 2.9% | 1.6% | 2.1% | 2.0% |
| Law and order | 1.3% | 1.4% | 1.6% | 1.6% | 1.7% | 1.7% | 1.9% | 1.7% |
| Other core Crown expenses | 5.8% | 5.9% | 5.9% | 6.6% | 6.7% | 6.2% | 7.2% | 6.1% |
| Core Crown expenses | 29.1% | 30.5% | 31.5% | 31.2% | 34.7% | 33.8% | 37.3% | 34.2% |
| Crown entities, SOEs and eliminations | 8.7% | 9.3% | 8.6% | 10.3% | 10.5% | 9.0% | 11.6% | 9.4% |
| Total Crown expenses | 37.8% | 39.8% | 40.0% | 41.6% | 45.2% | 42.8% | 48.9% | 43.6% |
Total Crown expenses fell by $2.4 billion from the previous year. Significant expense decreases were experienced by the SOE sector (offsetting decreases in operating revenue) and Accident Compensation Corporation (insurance expenses decreased by $0.8 billion due to lower claims costs). Core Crown expenses, however, increased marginally compared to last year (figure 10).
- Figure 10 - Core Crown expenses
- Source: The Treasury
Core Crown Expenses
Core Crown expenses remained fairly flat compared to the previous year. Figure 11 illustrates that, although flat, there were some significant increases and decreases in different types of expenditure.
- Figure 11 - Movement in core Crown expenses
- Source: The Treasury
Increases in expenses from last year included:
- Health and education expenses increased by $1.1 billion primarily as a result of new spending initiatives.
- Benefit expenses increased by $1.5 billion across a number of benefit types. $1.2 billion of this increase was due to an increase in the number of recipients while indexation of benefits led to an increase of $0.5 billion. Policy changes and decreases in the average payment (before indexation) decreased expenses by $0.2 billion.
The largest increases were to New Zealand Superannuation and unemployment benefits (which rose by $0.5 billion and $0.3 billion respectively).
Decreases in expenses from last year included:
- Two items of extraordinary 2009 expenditure stemming from the introduction of the retail deposit guarantee scheme ($0.8 billion) and the write down of the investment in KiwiRail ($0.3 billion). Neither expense was repeated in the 2010 financial year.
- Impairments on tax receivables and student loans were $1.5 billion lower in 2010 compared to 2009. The large asset impairments in 2009 were a reflection of the recessionary impacts on debt recovery.
- The discontinuation of the KiwiSaver employer tax credit resulted in a $0.2 billion reduction to core Crown expenses.
- Figure 12 - Core Crown expenses by sector
- Source: The Treasury
Compared to the 2010 Budget, core Crown expenses were $0.8 billion lower than forecast. The largest variance from forecast relates to asset impairment expenses which were $0.3 billion lower than expected. Other underspends were across a number of departments and expense types.
