Financial Statements of the Government of New Zealand for the Eleven Months Ended 31 May 2015

Paul Helm, Chief Government Accountant

The Financial Statements of the Government of New Zealand for the eleven months ended 31 May 2015 were released by the Treasury today.  The statements are compared against forecasts based on the Budget Economic and Fiscal Update (BEFU) published in May.

Once minority interests’ share of revenues and expenses are removed, the total Crown’s operating balance before gains and losses (OBEGAL) was a surplus of $1,176 million in the eleven-month period.  This compares to a forecast surplus of $193 million. This result reflects total Crown revenue of $87.0 billion and total Crown expenses of $85.5 billion.

The core Crown, which consists primarily of government departments, had higher than forecast tax revenue and lower than anticipated expenses.

Core Crown tax revenue, at $61.2 billion, was 0.7% or $401 million stronger than forecast, with some tax types performing above expectations while others performed below:

• Higher than forecast tax revenue largely related to corporate tax ($395 million) and other individuals tax ($112 million) mainly owing to higher-than-expected provisional tax and above forecast tax from Portfolio Investment Entities. The bulk of these positive variances is expected to persist through to the end of June.
• Offsetting this result, GST was $261 million lower than forecast, implying downside risk to the full-year GST result.

Core Crown expenses, at $66.0 billion, were $433 million (0.7%) lower than forecast with the variance spread across a number of departments.  A large portion related to education expenses which were $205 million lower than forecast.  While a large portion of this variance is timing in nature, some of the variance may persist until year end.

Net losses on non-financial instruments were $3.0 billion lower than forecast, mainly due to lower than forecast actuarial losses on the ACC claims liability, mostly reflecting the impact of higher interest rates on discount rates and changes in inflation assumptions.

Net gains on financial instruments were $558 million higher than forecast. When these gains and losses are combined with the OBEGAL result, the operating balance was a surplus of $4.6 billion ($4.5 billion stronger than forecast).

The core Crown residual cash position, at a deficit of $1.3 billion, was $155 million stronger than forecast, mainly due to capital payments being $142 million less than forecast.  As a result net debt, at $60.4 billion, (equivalent to 25.3% of GDP) was $164 million lower than forecast, largely reflecting the residual cash result. Core Crown tax receipts were close to forecast.

At 31 May, total Crown assets were valued at $269.7 billion and liabilities were $184.4 billion while the Crown’s share of net worth stood at $80.0 billion.

1. Using GDP for the year ended 31 March 2015 of $239,065 million (Source: Statistics New Zealand).
2. Using forecast GDP for the year ended 30 June 2015 of $239,771 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