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Media Statement
Financial Statements of the Government of New Zealand for the Six Months Ended 31 December 2011

20 Feb 2012

Fergus Welsh
Chief Financial Officer
The Treasury

The Financial Statements of the Government of New Zealand for the Six Months Ended 31 December 2011 were released by the Treasury today.

The monthly financial statements are compared against monthly forecast tracks based on the 2011 Pre-election Economic and Fiscal Update (PREFU) published on 25 October 2011.

For the first six months of the financial year the operating balance before gains and losses (OBEGAL) deficit was close to forecast at $4.1 billion. 

Core Crown revenue was $743 million lower than forecast, with tax revenue $400 million (1.5%) less than anticipated.  The main tax variances were:

  • Source deductions $296 million (2.8%) below forecast 
  • GST revenue $234 million (3.3%) below forecast; partially offset by 
  • Customs and excise duties $108 million (5.1%) above forecast

The source deductions and GST revenue variances were mainly timing-related and the Treasury continues to expect that a large proportion of these variances will reverse, although some of the GST recoveries may extend into next year.

Corporate tax revenue was very close to forecast.  However, data on provisional tax assessments received during the month of December, together with slightly weaker-than-expected growth in GDP in the September quarter, indicates that corporate profits may be weaker for the full financial year to 30 June 2012 relative to PREFU forecasts.  The Treasury has revised its full year tax revenue forecast downwards in the Budget Policy Statement 2012.

Core Crown expenses were $887 million lower than expected.  Most of this difference, however, was either offset by corresponding revenue impacts, or is expected to reverse by the end of the financial year.

Including gains and losses, the operating balance deficit, at $9.5 billion, was $2.6 billion (37.8%) higher than forecast.  This was mainly due to actuarial losses on the Government Superannuation Fund ($1.0 billion) and ACC’s outstanding claims liability ($753 million), as well as higher-than-forecast investment losses ($779 million).

Gross debt, at $72.4 billion (35.6% of GDP), was $1.6 billion lower than forecast mainly due to collateral deposits which were $1.3 billion lower than expected at balance date.  As these deposits also have a corresponding impact on the Crown’s financial asset holdings, they do not affect the Crown’s net debt position. 

Net debt was $499 million (1.0%) lower than forecast at $50.1 billion (24.7% of GDP), primarily due to currency in circulation being higher than expected over the holiday period.  This gap is expected to close after the holiday period finishes.

The underlying residual cash deficit was close to forecast with capital expense delays offsetting weakness in tax receipts.



Year to date Full Year
$ million December
2011
Actual1
December
2011
PREFU
Forecast1
Variance
to PREFU
$m
Variance
to PREFU
%
June
2012
PREFU
Forecast2
Core Crown




Core Crown tax revenue 26,399 26,799
(400)
(1.5)
55,451
Core Crown revenue
28,629 29,372 (743)
(2.5)
61,165
Core Crown expenses 34,087 34,974
887
2.5
74,460
Core Crown residual cash (10,574) (10,398) (176)
(1.7)
(13,636)
Gross debt3 72,374 73,926 1,553
2.1
79,779
as a percentage of GDP 35.6% 36.4%     37.7%
Net debt4 50,134 50,633 499
1.0 53,823
as a percentage of GDP 24.7% 24.9%     25.4%
Total Crown        
Operating balance before gains and losses (4,085) (4,082) (3) (0.1) (10,809)
Operating balance (9,470) (6,872) (2,598) (37.8) (12,601)
Net worth 71,516 73,935 (2,419)
(3.3) 68,282

1 Using GDP for the year ended 30 September 2011 of $203,340 million (Source: Statistics New Zealand)

2 Using forecast GDP for the year ended 30 June 2012 of $211,773 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

Kamlesh Patel | Office of the Chief Financial Officer and Chief Accountant Portfolio
Tel: +64 4 917 6094
Email: kamlesh.patel@treasury.govt.nz
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