The Treasury

Global Navigation

Personal tools

Economic and Tax Forecasting

Scope of Appropriation

This output expense is limited to the preparation of economic and tax forecasts, monitoring of and reporting on economic and tax conditions.

Significant Work Completed During 2010/11

  • The 2010 HYEFU and 2011 BEFU economic and fiscal forecasts were produced within the required deadlines. This was achieved in spite of the challenges posed by the uncertainty caused by the Canterbury earthquakes which eroded the quality and availability of data used for forecasting.
  • Economic and revenue assessments of the effects of the Canterbury earthquakes were provided to Ministers within a few days of each event occurring.
  • Improvements were made to several forecasting models such as goods and services tax (GST), pay-as-you-earn (PAYE) and resident withholding tax (RWT) (interest).
  • Resources were allocated to monitoring and analysing the economies of other countries including China and Australia, and international developments such as the European sovereign debt crisis.
Statement of Service Performance for Output Class - Economic and Tax Forecasting
Performance Dimensions for 2010/11 Target Performance for 2010/11

Tax revenue forecast error on one-year-ahead forecasts.

Tax revenue forecast root mean square error and mean error over the five years to June 2007 were 4.4% and 4.2% retrospectively.

Less than ±3%.

Not achieved. 

Provisional estimate of actual result: 4.3%. 

During the year the Canterbury earthquakes had a negative effect on economic activity which, in turn, had a negative effect on tax revenue. The Treasury estimates that if the earthquakes had not occurred our tax forecast error would have been approximately -2%.  Prior to the earthquakes, tax revenue was running below forecast, with the largest negative variances being in GST and corporate tax.  Household spending slowed more rapidly than we had expected, which directly affected GST.  This also affected business profits with a consequential effect on business income taxes. 

Cost - Economic and Tax Forecasting
2010
Actual
$000
Economic and Tax Forecasting 2011
Actual
$000
2011
Main Estimates
$000
2011
Supp. Estimates
$000
2,788 Expenses 2,517 2,691 2,481
 

Funded by:

     
2,736 Revenue Crown 2,464 2,641 2,440
52 Other revenue 53 50 41
Page top