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Financial Statements of the Government of New Zealand for the six months ended 31 December 2016

16 Feb 2017

Paul Helm, Chief Government Accountant

The Financial Statements of the Government of New Zealand for the six months ended 31 December 2016 were released by the Treasury today.  The statements are compared against forecasts based on the 2016 Half Year Economic and Fiscal Update (HYEFU) published on 8 December 2016.

The operating balance before gains and losses (OBEGAL) was a surplus of $9 million, compared to a forecast deficit of $666 million.  This favourable variance of $675 million was largely due to the higher than forecast core Crown tax revenue and lower than forecast core Crown expenses.

Core Crown tax revenue was $313 million (0.9%) higher than forecast.  GST revenue was $173 million (1.9%) above forecast, consistent with the higher than forecast growth in domestic consumption through the September quarter.

Core Crown expenses at $38.1 billion were $303 million lower than forecast.  The majority of this relates to forecast expected costs in relation to the Kaikōura earthquakes which have yet to be quantified with enough certainty to include in the actual results.  Over time, as reasonable estimates are able to be made, these costs will be recognised in the actual results, reducing the variance. 

Net gains at $5.9 billion, were $2.9 billion higher than forecast in the six months to 31 December.  This primarily related to an actuarial gain of $3.1 billion ($2.8 billion higher than forecast) of the ACC liability.

Net gains combined with the OBEGAL surplus, resulted in an operating balance surplus of $6.1 billion ($3.6 billion higher than forecast). Net worth attributable to the Crown was $3.7 billion ahead of forecast largely because of the operating balance result. 

The core Crown residual cash deficit was $517 million (15.3%) higher than forecast.  While core Crown tax receipts were close to forecast at $32.7 billion, personnel and operating payments were higher than forecast by $385 million, partially as a result of bringing forward some payments prior to Christmas.  This variance is therefore expected to reverse in January.  Overall net capital spending was close to forecast. 

Core Crown net debt at $65.3 billion (25.5% of GDP) was higher than forecast by $317 million (0.5%).  This was largely due to the higher than forecast residual cash deficit, partially offset by the impact of higher than forecast circulating currency, due to increased demand for currency over the Christmas period (leading to an increase in financial assets).  Gross debt, however, was $1,609 million lower than forecast largely as a result of increased repurchasing of government stock. 

$ million Year to date Full Year
December
2016
Actual1
December
2016
HYEFU 16
Forecast1
Variance
 to
HYEFU 16
$m
Variance
 to
HYEFU 16
%
June
2017
HYEFU 16
Forecast2
Core Crown




Core Crown tax revenue 35,442 35,129 313 0.9 74,224
Core Crown revenue
38,541 38,419 122 0.3 80,455
Core Crown expenses 38,066 38,369 303 0.8 78,276
Core Crown residual cash (3,905) (3,388) (517) (15.3) (2,192)
Gross debt3 86,727 88,336 1,609 1.8 91,970
as a percentage of GDP 33.9% 34.5%     34.7%
Net debt4 65,335 65,018 (317) (0.5) 64,440
as a percentage of GDP 25.5% 25.4%     24.3%
Total Crown          
Operating balance before gains and losses 9 (666) 675 101.4 473
Operating balance 6,081 2,469 3,612 146.3 3,795
Net worth attributable to the Crown
95,548 91,860 3,688 4.0 93,034
  1. Using the most recently published GDP (for the year ended 30 September 2016) of $256,191 million (Source: Statistics New Zealand).
  2. Using forecast GDP for the year ending 30 June 2017 of $264,760 million (Source: The Treasury).
  3. Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.
  4. Net core Crown debt excluding student loans and other advances. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.

ENDS

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Jayne Winfield | Office of the Government Accountant
Tel: +64 4 890 7205
Email: fiscalreporting@treasury.govt.nz
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