Media statement

Financial Statements of the Government of New Zealand for the Four Months Ended 31 October 2018

Paul Helm, Chief Government Accountant

The Financial Statements of the Government of New Zealand for the four months ended 31 October 2018 were released by the Treasury today. The statements are compared against forecasts based on the 2018 Budget Economic and Fiscal Update (BEFU 2018) published on 17 May 2018.

The operating balance before gains and losses (OBEGAL) was a $0.3 billion deficit, $0.3 billion lower than the small forecast surplus and primarily due to the core Crown activity.

Core Crown tax revenue at $26.1 billion was ahead of forecast by $0.2 billion. Source deductions were $0.2 billion above forecast, with higher than forecast employment growth. GST was $0.1 billion (1.7%) above forecast, mainly due to stronger-than-forecast residential investment.

Core Crown expenses of $28.3 billion were $0.3 billion (1.2%) above budget. This variance was spread across a number of entities.

In cash terms, tax receipts were $0.2 billion ahead of forecast, in line with revenue, while operating payments were $0.8 billion more than forecast. The operating payment variance is larger than the core Crown expenses due to timing of cash payments. In addition to the net core Crown operating cash outflows of $1.1 billion , net core Crown capital cash outflows were $2.4 billion, $0.2 billion more than forecast. As a result of the operating and capital cash flows, the core Crown residual cash was a deficit of $3.5 billion, $0.8 billion higher than the deficit forecast.

Net core Crown debt was $61.0 billion (21.1% of GDP) at the end of October 2018, $1.5 billion less than forecast.  The lower than expected net debt is largely due to a stronger opening position from the 30 June 2018 result (which was $2.9 billion less than forecast).  This was partially offset by the residual cash variance of $0.8 billion.

When the core Crown results discussed above are combined with total gains and losses along with SOE and CE results, the operating balance was a $4.2 billion deficit, $5.2 billion less than forecast. This variance was mostly due to net investment losses (driven by market rates) of $1.3 billion, being $2.3 billion below forecast gains, in addition to net losses on non-financial instruments of $2.7 billion, which are not forecast.

Net worth attributable to the Crown (NWAC) was $126.1 billion, $6.9 billion higher than forecast at BEFU 2018.  The majority of this variance relates to property, plant and equipment (PPE) revaluations increasing NWAC by $10.7 billion at 30 June 2018 offset by the current operating balance deficit.

Key indicators for the four months ended 31 October 2018 compared to BEFU 2018

$ million Year to date Full Year
October 2018
October 2018
BEFU 2018
BEFU 2018
BEFU 2018
June 2019
BEFU 2018
Core Crown          
Core Crown tax revenue 26,116 25,919 197 0.8 83,901
Core Crown revenue 28,593 28,406 187 0.7 90,965
Core Crown expenses 28,336 27,992 (344) (1.2) 86,720
Core Crown residual cash (3,451) (2,656) (795) (29.9) (3,875)
Gross debt4 88,450 87,505 (945) (1.1) 81,853
as a percentage of GDP 30.6% 30.2%     26.9%
Net debt5 61,033 62,573 1,540 2.5 64,204
as a percentage of GDP 21.1% 21.6%     21.1%
Total Crown          
Operating balance before gains and losses (258) 29 (287) 3,737
Operating balance (4,188) 1,048 (5,236) (499.6) 6,773
Total borrowings 116,084 117,146 1,062 0.9 112,890
Net worth attributable to the Crown 126,138 119,250 6,888 5.8 124,994
  1. Using the most recently published GDP (for the year ended 30 June 2018) of $289,293 million (Source: Statistics New Zealand).
  2. Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.
  3. Using BEFU 18 forecast GDP for the year ending 30 June 2019 of $304,591 million (Source: The Treasury).
  4. Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.
  5. Net core Crown debt excluding student loans and other advances. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.



Jayne Winfield | Office of the Government Accountant
Tel: +64 4 890 7205
Email: [email protected]