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Media StatementFinancial Statements of the Government of New Zealand for the Six Months Ended 31 December 2008

20 Feb 2009

Dr Peter Bushnell
Deputy Secretary to the Treasury

The Financial Statements of the Government of New Zealand for the six months ended 31 December 2008 were released by the Treasury today.

December results are measured against the Pre-election Update

We are required under the Public Finance Act 1989 to report the monthly Financial Statements of Government against the latest full economic and fiscal update, which is the Pre-Election Update released last October rather than the December Update.

However, with the exception of investment losses, there is little difference between the two updates’ estimates of the year to date results to December.  This difference will widen in subsequent months.

Results for the six months ended 31 December 2008

  • Tax revenue is tracking below forecast by around $1.0 billion.
  • The lower tax revenue means the operating balance before gains and losses (OBEGAL) at $0.1 billion is $1.1 billion lower than forecast and the residual cash deficit at -$8.3 billion is $0.9 billion lower than forecast.
  • Including gains and losses the operating balance of -$6.2 billion is $8.4 billion lower than forecast (approximately $2.4 billion lower than forecast compared to the December Update).  The main contributors to this lower than expected result were: 
    • Tax revenue was $1 billion lower than forecast.
    • Investment losses were $4.9 billion higher than forecast.
    • ACC recorded losses of $2.4 billion as a result of a change in the discount rate used to measure the ACC unfunded liability.
  • While gross debt (GSID) is higher than forecast due to unforecast issues of Residential Mortgage Backed Securities and Treasury Bills as well as higher than forecast derivative liabilities, net core Crown debt remains lower than forecast at $5.5 billion.
Year to date Full Year
December
2008
Actual[2]
December
2008
Forecast[2]
Variance
$m
Variance
%
PREFU
June 2009
Forecast[3]
DEFU
June 2009
Forecast[4]
$ million
Core Crown
Core Crown revenue (excl. NZS Fund) [1] 29,344 30,529 (1,185) (3.9) 61,102 60,406
Core Crown expenses 30,044 29,873 (171) (0.6) 62,359 62,741
NZS Fund operating balance (2,724) 467 (3,191) (683.3) 986 (2,119)
Core Crown residual cash (8,261) (7,405) (856) (11.6) (5,909) (6,633)
GSID (excl. settlement cash) 40,005 29,773 (10,232) (34.4) 32,087 34,786
as a percentage of GDP 22.3% 16.6% 17.4% 19.2%
Net Core Crown debt 5,546 7,050 1,504 21.3 5,207 5,631
as a percentage of GDP 3.1% 3.9% 2.8% 3.1%
Net Core Crown debt (incl. NZS Fund) (5,501) (7,085) (1,584) (22.4) (10,430) (7,244)
as a percentage of GDP (3.1)% (3.9)% (5.7)% (4.0)%
Total Crown
OBEGAL 98 1,201 (1,103) (91.8) (64) (550)
Net gains / (losses) and other items (6,322) 987 (7,309) 1,973 (3,779)
Operating Balance (6,224) 2,188 (8,412) (384.5) 1,909 (4,329)

1  For the purposes of this indicator, the NZS Fund is treated as a third party (i.e. its revenue is not included but the tax it pays is).

2  Using GDP for the year ended 30 September 2008 of $179,538 million (Source: Statistics New Zealand).

3  Using forecast GDP for the year ended 30 June 2009 of $184,390 million (Source: Treasury).

4  Using forecast GDP for the year ended 30 June 2009 of $181,139 million (Source: Treasury).

ENDS

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Kamlesh Patel | Macroeconomic Group
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