Expenses
|
Year ended 30 June $ million |
Actual 2008 |
Actual 2009 |
Actual 2010 |
Actual 2011 |
Actual 2012 |
Forecast 30 June 2012 |
|
|---|---|---|---|---|---|---|---|
| Budget 11 | Budget 12 | ||||||
| Social security and welfare | 17,877 | 19,382 | 21,185 | 22,005 | 22,028 | 22,935 | 22,236 |
| Health | 11,297 | 12,368 | 13,128 | 13,753 | 14,160 | 14,353 | 14,130 |
| Education | 9,551 | 11,455 | 11,724 | 11,650 | 11,654 | 12,257 | 11,883 |
| Core government services | 3,371 | 5,293 | 2,974 | 5,563 | 5,428 | 5,564 | 4,943 |
| Law and order | 2,894 | 3,089 | 3,191 | 3,382 | 3,403 | 3,555 | 3,494 |
| Other core Crown expenses | 12,007 | 12,415 | 11,811 | 14,097 | 12,403 | 14,363 | 12,947 |
| Core Crown expenses | 56,997 | 64,002 | 64,013 | 70,450 | 69,076 | 73,027 | 69,633 |
| Crown entities, SOEs and eliminations | 18,845 | 19,397 | 17,027 | 29,509 | 23,647 | 19,447 | 21,383 |
| Total Crown expenses | 75,842 | 83,399 | 81,040 | 99,959 | 92,723 | 92,474 | 91,016 |
| % of GDP | |||||||
| Social security and welfare | 9.7% | 10.5% | 11.2% | 11.1% | 10.8% | 11.5% | 10.7% |
| Health | 6.1% | 6.7% | 7.0% | 7.0% | 6.9% | 7.2% | 6.8% |
| Education | 5.2% | 6.2% | 6.2% | 5.9% | 5.7% | 6.1% | 5.7% |
| Core government services | 1.8% | 2.9% | 1.6% | 2.8% | 2.7% | 2.8% | 2.4% |
| Law and order | 1.6% | 1.7% | 1.7% | 1.7% | 1.7% | 1.8% | 1.7% |
| Other core Crown expenses | 6.5% | 6.7% | 6.3% | 7.1% | 6.1% | 7.2% | 6.2% |
| Core Crown expenses | 30.8% | 34.8% | 34.0% | 35.6% | 33.8% | 36.5% | 33.5% |
| Crown entities, SOEs and eliminations | 10.2% | 10.5% | 9.0% | 14.9% | 11.6% | 9.7% | 10.3% |
| Total Crown expenses | 41.0% | 45.3% | 43.0% | 50.6% | 45.3% | 46.3% | 43.8% |
Total Crown expenses decreased by $7.2 billion from the previous year to stand at $92.7 billion, and decreased as a percentage of GDP from 50.6% to 45.3%.
When earthquake expenses are excluded, total Crown expenses were $89.9 billion compared with $86.4 billion last year, a $3.5 billion increase.
Looking at the core Crown, expenses decreased by $1.4 billion from last year (figure 8). There were a number of contributing factors to the change in core Crown expenses, which are discussed on the next page.
- Figure 8 - Core Crown expenses
- Source: The Treasury
Excluding the earthquake expenses, operating expenses across the rest of the Crown (the SOE and CE sectors) increased by $5.0 billion from last year. The largest increase was the impairment expense recognised by KiwiRail of $1.4 billion as a result of the revaluation of their rail-related assets.
Apart from KiwiRail, the other SOE's general operating expenses increased by $2.0 billion, which was largely offset by similar increases in their operating revenue. Further, personnel expenses across all SOE's and CE's increased by $0.5 billion and the interest expenses of SOEs were $0.2 billion higher than last year due to higher debt levels (largely Kiwibank deposits).
Core Crown Expenses
As highlighted earlier, core Crown expenses decreased by $1.4 billion compared to the previous year (table 10). The main drivers of the decrease included:
- A $1.0 billion change in the expected cost of the weathertight homes financial assistance package. Last year $0.6 billion was recognised as the estimated cost of the scheme. One year on, the number of homeowners expected to take-up the scheme was lower, resulting in a $0.4 billion reduction to last year's estimate (to stand at $0.2 billion as at 30 June). When we compare the expense year on year we see a $1.0 billion change ($0.6 billion increase last year versus a $0.4 billion decrease this year).
- Fewer NZ units were issued under the Emissions Trading Scheme (ETS) and at a lower carbon price than in the previous year.
- Treaty settlements were $0.3 billion this year compared to $0.5 billion in 2011.
- Interest expenses increased compared to last year due to the higher levels of debt held.
- Increases in Health expenses of $0.4 billion primarily as a result of funding allocated in Budget 2011.
| Year ended 30 June | |
|---|---|
| 2011 core Crown expenses | 70.5 |
| Weathertight homes | (1.0) |
| ETS expenses | (0.5) |
| Treaty settlements | (0.2) |
| Finance costs | 0.4 |
| Health | 0.4 |
| Other | (0.5) |
| 2012 core Crown expenses | 69.1 |
While education expenses were very similar to last year the increased funding allocated in Budget 2011 was offset by a reversal of $0.3 billion in relation to student loan impairments reflecting changes to the student loan valuation model.
- Figure 9 - Core Crown expenses by sector
- Source: The Treasury
Compared to expectations in Budget 2012, core Crown expenses were $0.6 billion lower than forecast, mostly due to the same factors as discussed for the movement to last year: ETS ($0.3 billion) and weathertight homes ($0.2 billion). In addition, there was $0.3 billion lower impairment expenses, spread across most debt types (tax debt, child support and student loans) and benefits were $0.1 billion lower than forecast across a number of benefit types. The remainder of this under-spend in core Crown expenses was across a number of departments and expense types.
Offsetting the lower than expected expenses outlined above, there were new red zone announcements and recognition of the provision for replacing infrastructure in Canterbury that were $0.5 billion higher than expected.
