Financial Statements of the Government of New Zealand for the Three Months Ended 30 September 2012

The Financial Statements of the Government of New Zealand for the Three Months Ended 30 September 2012 were released by the Treasury today.

These financial statements are the first for the 2012/2013 financial year and are compared against monthly forecast tracks based on the 2012 Budget Economic and Fiscal Update (BEFU) on 24 May 2012.

In the three months to 30 September the operating balance before gains and losses (OBEGAL) deficit, at $2.1 billion, was $449 million higher than forecast.  Core Crown tax and interest revenue were both lower than expected, partially offset by lower core Crown expenses.

Core Crown tax revenue of $13.5 billion was $295 million or 2.1% lower than expected.  Most major types of tax revenue were below forecast, the exception being other individuals’ tax revenue, which was higher than expected.  In summary:

• wage growth and private consumption below forecast led to lower than forecast source deductions and GST of $166 million for each of these tax types
• lower than forecast provisional tax resulted in $103 million lower than forecast corporate tax, and
• other individuals’ tax was $329 million higher than expected, reflecting an increase in the effective tax rate paid by non-incorporated businesses.

Other core Crown revenue was slightly higher than forecast, with dividend revenue from SOEs $248 million higher than forecast, primarily due to dividends received earlier than forecast.  This revenue source is within the Crown so is not included in the total Crown OBEGAL result.  Offsetting the increased dividends, interest revenue was $147 million lower than forecast primarily due to lower interest rates compared to those at the time of the forecast.

Core Crown expenditure of $17.3 billion was $201 million or 1.1% lower than forecast.  The most significant under-spending was in welfare, education and finance costs ($86 million, $63 million and $45 million respectively).  Offsetting these under-spends were earthquake expenses (which were $114 million higher than forecast) due to the recent land zoning decisions that were announced subsequent to the forecast being finalised.

While the OBEGAL deficit was higher than forecast, for the three months to September 2012, gains on New Zealand Superannuation Fund and ACC’s investment portfolios were greater than expected ($1.1 billion and $0.6 billion respectively), leading to an operating balance surplus of almost $0.1 billion, $1.2 billion higher than the forecast operating deficit.

Gross debt at $79.3 billion, or 38.8% of GDP was lower than forecast, reflecting government stock repurchased on the secondary market which reduced the amount held by parties outside the core Crown.

Net debt was close to forecast at $54.9 billion or 26.9% of GDP.

1    Using GDP for the year ended 30 June 2012 of $204,551 million (Source: Statistics New Zealand)
2    Using forecast GDP for the year ended 30 June 2013 of $217,870 million (Source:  Treasury)
3    Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills
4    Net core Crown debt excluding student loans and other advances

ENDS