A Snapshot of the 2012 Financial Statements of the New Zealand Government (Part 2)
Government spending exceeded income
Operating deficit → Cash deficit → Borrowing
Operating balance before gains and losses (OBEGAL) trend:
The OBEGAL deficit halved from $18.4 billion last year to $9.2 billion, largely due to the fall in earthquake costs.
Excluding earthquake costs, the OBEGAL deficit was $1.9 billion lower than last year.
- Operating balance before gains and losses (OBEGAL)
- Net debt
If the Government spends more cash than it receives, there are two options to meet the shortfall: borrowing, or selling financial assets. Generally there is a mix of the two, but borrowings is the most common way the Government funds its cash requirements.
Facts and figures
- The Government received $15.1 billion from issuing domestic market bonds, or $302 million per week, based on 50 weekly tenders during the year.
- Net of maturing bonds, the Government's Gross Debt increased $7.2 billion from 2011 to just under $80 billion, or 38.9% of GDP.
What does the Government owe?
Borrowings
Government bonds make up the bulk of the Crown's borrowing programme, with most of the remainder through Treasury Bills.
"Other" borrowings are mostly undertaken by SOEs. $11.6 billion (30%) was Kiwibank's customers' deposits.
Insurance liabilities
The Government is committed to meet the expected cost of claims by New Zealanders through ACC, EQC and Southern Response.
Other liabilities
Includes accounts payable, currency issued by the Reserve Bank, and provisions (eg, earthquake related and weathertight homes).
Retirement plan liability
This liability represents the expected cost of funding the 64,768 members of the Government Superannuation Fund.
- What does the Government owe?
Liabilities trend:
Liabilities grew this year as the Government borrowed money to meet the cash deficit. There were also increases in the Crown's long-term liabilities (ACC and GSF).
- Liabilities
Discount rates
- The long term liabilities (eg, ACC and GSF) are particularly sensitive to discount rates to estimate the present value of the liability.
- A 1% decrease in the discount rate would increase the ACC liability by $3.8 billion and the GSF liability by $1.8 billion.
What does the Government own?
$109 billion worth of property, plant and equipment (PPE)
- 25 hospitals
- 30,000 school buildings
- 3,200 police cars
- 66,544 state houses
- 4,192km railway tracks
- 8,771m hectares of conservation estate
- 19 prisons
- 11,000km of state highways
- What does the Government own?
Assets trend:
The Crown owns assets worth $240 billion, $5 billion less than last year, as PPE values fell.
- Assets
Facts and figures
- 54% of PPE is land and buildings ($59 billion).
- 53% of financial assets were held in New Zealand, and 16% in each of Europe and the USA.
- The Government lent $1.6 billion in student loans in 2012 to over 200,000 students.
