Financial Statements of the Government of New Zealand for the eight months ended 28 February 2017

Paul Helm, Chief Government Accountant

The Financial Statements of the Government of New Zealand for the eight months ended 28 February 2017 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 $1,410 million, compared to a forecast surplus of $498 million.  This favourable variance of $912 million was largely due to higher than forecast core Crown tax revenue and lower than forecast core Crown expenses.

Core Crown tax revenue was $462 million (1.0%) higher than forecast for the eight months ended 28 February 2017.  Corporate tax was the largest driver of this favourable result with revenue being $551 million ahead of forecast.  This increase was across both provisional and terminal tax, indicating that profits in the 2016 tax year were higher than forecast and that this has continued into the 2017 tax year.  This favourable result was partially offset by source deductions revenue being $147 million (0.8%) lower than forecast.  The seasonal dip in February’s source deductions was larger than forecast but is largely timing related and should reverse out in the coming months.

Core Crown expenses at $50.3 billion were $395 million (0.8%) lower than forecast.  The majority of this variance 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 $9.0 billion were $5.6 billion higher than forecast, primarily relating to an actuarial gain of $3.2 billion and $1.5 billion on the ACC and GSF liabilities ($2.9 billion and $1.5 billion higher than forecast respectively).  Net gains combined with the OBEGAL surplus, resulted in an operating balance surplus of $10.6 billion ($6.5 billion higher than forecast). 

Net worth attributable to the Crown was $6.6 billion ahead of forecast, largely owing to the operating balance result. 

Core Crown residual cash was a surplus of $1.3 billion, $676 million higher than forecast mostly as a result of core Crown tax receipts being $439 million higher than forecast. Reflecting the residual cash result, core Crown net debt at $61.3 billion (23.5% of GDP) was $865 million lower than forecast.  Gross debt was $3.0 billion lower than forecast, largely as a result of increased repurchasing of government stock and the timing of a government bond issuance forecast for February but undertaken in March.

1. Using the most recently published GDP (for the year ended 31 December 2016) of $261,169 million (Source: Statistics New Zealand).
2. Using forecast GDP for the year ending 30 June 2017 of $264,760 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. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.

ENDS