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Ministerial Statement

The 2016/17 Crown accounts are a direct demonstration of the benefits of a steadily growing New Zealand economy. Sensible fiscal and monetary policies combined with microeconomic settings that encourage business confidence and investment have meant New Zealand continues to achieve solid economic growth, rising employment and rising real wages, against a backdrop of low inflation. This performance is more impressive in the context of a still volatile global outlook.

As a result of our country's economic performance, in 2016/17 the New Zealand Government has achieved its third fiscal surplus in a row.

Core Crown tax revenue was $75.6 billion for the 2016/17 year, up 7.4 percent from the previous year with all major tax types increasing, reflecting the growth in the economy. Increases in the number of people in employment and profitability of businesses are key drivers to this growth in revenue. As a percentage of nominal GDP core Crown tax revenue increased to 28.2 percent, up from 27.8 percent.

Core Crown expenses continued to fall as a percentage of GDP from 29.2 percent in 2015/16 to 28.5 percent in 2016/17. In nominal terms increases in social assistance expenses and the incremental spending announced in Budget 2016 contributed core Crown expenses of $76.3 billion (up $2.4 billion from 2015/16).

Costs associated with the Kaikōura earthquakes added to expenses in 2016/17, with EQC estimating claims will cost nearly $0.6 billion and another $0.2 billion recognised so far on the rail and road transport links. Additional expenditure is expected in 2017/18 as work on the transport infrastructure continues.

With revenue growing at a faster rate than expenses, the operating balance before gains and expenses (OBEGAL) in 2016/17 reached $4.1 billion, an increase of $2.2 billion since 2015/16 and ahead of expectations.

The New Zealand Superannuation Fund recorded investment gains of $5.5 billion reflecting rising global markets which, along with the OBEGAL result, contributed to a total Crown operating balance (including gains and losses) of $12.3 billion (compared to an operating loss of $5.4 billion in 2015/16). Volatility in this measure reflects similar volatility in equity markets as well as some of the Government's long-term liabilities (ACC claims liability and Government Superannuation Fund retirement plan) whose value can move substantially over a year.

Following on from the positive core Crown operating result, the Crown recorded a residual cash surplus, leading to a decline in nominal net core Crown debt for the first time since 2008 to $59.5 billion (22.2 percent of GDP). This is a decline of $2.4 billion from 2015/16.

The Crown's assets increased by $20.9 billion to $313.6 billion at 30 June, while total Crown liabilities were relatively static at $197.1 billion. Net worth attributable to the Crown increased by $21.2 billion to $110.5 billion, reflecting the operating result for the year and an upward valuation of the Crown's property assets of $8.7 billion.

The New Zealand Government will continue to focus on economic growth and fiscal consolidation combined with further investments in public services and public infrastructure in the years ahead.


Hon Steven Joyce
Minister of Finance

29 September 2017

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