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Media StatementFinancial Statements of the Government of New Zealand for the Six Months Ended 31 December 2010

18 Feb 2011

Struan Little
Deputy Secretary to the Treasury

The Financial Statements of the Government of New Zealand for the six months ended 31 December 2010 were released by the Treasury today.

The monthly financial statements are compared against monthly forecast tracks based on the 2010 Half Year Economic and Fiscal Update published in December 2010.

The financial statements show that in the first six months of the financial year, core Crown tax revenue was close to forecast at $25.0 billion or 0.7% above forecast.  Within this result, source deductions (PAYE) were $271 million or 2.6% higher than forecast and GST revenue was $125 million or 1.9% lower than forecast.  With the complexity of forecasting the October tax changes, the recent volatility in labour market data and uncertainty whether subdued consumer spending is reflected in GST outturns, it is too early to predict whether the PAYE and GST variances will persist. 

Core Crown expenses were 0.5% below forecast at $32.9 billion, due to individually small variances across several departments.  

The operating balance before gains and losses deficit stood at just over $5.9 billion at the end of the six month period, a 2.8% smaller deficit than forecast.  The operating balance deficit (inclusive of gains and losses) was significantly less than forecast, however, at just over $1.3 billion.  This was driven in part by the NZS Fund which recorded gains in its investment portfolio that were $1.7 billion higher than forecast, while ACC recorded an actuarial gain on their outstanding claims liability of $911 million, $1.8 billion above its forecast actuarial loss. 

The residual cash deficit at $13.2 billion was $555 million higher than forecast mainly due to payments that occurred in late December which had not been anticipated to occur until January.  As a result, this residual cash variance is expected to reverse in January.

Although the residual cash deficit was 4.4% higher than forecast, net debt was only 0.4% higher than expected as the increased cash deficit was partially offset by changes in the market value of the underlying financial assets and liabilities.

At 31 December, gross debt was $62.1 billion (32.5% of GDP), $1.8 billion higher than forecast across a number of debt instruments.  This variance did not translate into a corresponding increase in net debt because there were similar increases in financial assets during the period.  Net debt stood at $39.5 billion (20.7% of GDP) at the end of December, very close to forecast.

Year to date Full Year
$ million December
2010
Actual1
December 2010
HYEFU
Forecast1
Variance
to HYEFU
$m
Variance
to HYEFU
%
June 2011
HYEFU
Forecast2
Core Crown
Core Crown tax revenue 25,028 24,865 163 0.7 52,527
Core Crown revenue 27,239 27,411 (172) (0.6) 58,446
Core Crown expenses 32,933 33,095 162 0.5 70,560
Core Crown residual cash (13,184) (12,629) (555) (4.4) (15,602)
Gross debt3 62,050 60,290 (1,761) (2.9) 67,400
as a percentage of GDP 32.5% 31.6%     33.3%
Net debt4 39,545 39,396 (149) (0.4) 42,078
as a percentage of GDP 20.7% 20.7%     20.8%
Total Crown        
Operating balance before gains and losses (5,968) (6,137) 169 2.8 (11,098)
Operating balance (1,346) (4,907) 3,561 72.6 (9,116)
Net Worth 93,633 90,006 3,627 4.0 85,809

1 Using GDP for the year ended 30 September 2010 of $190,740 million (Source: Statistics New Zealand)

2 Using forecast GDP for the year ended 30 June 2011 of $202,398 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

Officer for Enquiries

Nicola Haslam | Macroeconomic and Fiscal Environment Portfolio
Tel: +64 4 917 6943
Fax: +64 4 471 5956
Email: nicola.haslam@treasury.govt.nz
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