Fergus Welsh, Acting Chief Government Accountant
The Financial Statements of the Government of New Zealand for the nine months ended 31 March 2014 were released by the Treasury today. These statements are compared against forecasts based on the Half Year Economic and Fiscal Update (HYEFU), released on 17 December 2013.
Core Crown tax revenue was $44.5 billion in the latest nine month reporting period, up 6.3% compared with the same period a year earlier. Tax revenue, however, was 1.8% less than forecast (a narrowing from the 2.8% variance against forecast reported a month ago) reflected across most tax types and continuing the pattern of recent months.
Updated tax revenue forecasts will be released as part of the Budget Economic and Fiscal Update on 15 May. Tax revenue outturns in the current fiscal year are not expected to impact on the forecast return to OBEGAL surplus for 2014/15 as the variance-against-forecasts are offset by a stronger outlook for the economy than had been anticipated at HYEFU.
While core Crown revenue was $743 million lower than forecast, this was partly offset by core Crown expenses which were also lower than forecast by $423 million and reduced net insurance expenses of $151 million. Overall the operating balance before gains and losses (OBEGAL) was in deficit by $1.7 billion, which was $199 million more than expected.
Continued strength in equity markets saw gains recorded on financial instruments of $3.2 billion, which was $1.5 billion ahead of forecast. As a result, the operating balance surplus was $1.3 billion higher than forecasts at $3.3 billion.
Net debt was 0.5% higher than forecast at $61.2 billion, equivalent to 27.6% of GDP. This variance was primarily due to a higher than forecast residual cash deficit. While operating cash flows were close to forecast, net capital payments were higher than expected.
At 31 March, total Crown assets were $246.5 billion and liabilities were $171.5 billion and the Crown’s share of net worth of $70.5 billion was 1.4% stronger than forecast.
| Year to date | Full Year | ||||
|---|---|---|---|---|---|
| $ million | March 2014 Actual1 |
March 2014 HYEFU Forecast1 |
Variance to HYEFU $m |
Variance to HYEFU % |
June 2014 HYEFU Forecast2 |
| Core Crown | |||||
| Core Crown tax revenue | 44,493 | 45,322 | (829) | (1.8) | 62,491 |
| Core Crown revenue | 49,002 | 49,745 | (743) | (1.5) | 68,493 |
| Core Crown expenses | 52,042 | 52,465 | 423 | 0.8 | 72,181 |
| Core Crown residual cash | (4,937) | (4,584) | (353) | (7.7) | (4,076) |
| Gross debt3 | 84,034 | 82,819 | (1,214) | (1.5) | 81,628 |
| as a percentage of GDP | 38.0% | 37.4% | 35.8% | ||
| Net debt4 | 61,178 | 60,856 | (322) | (0.5) | 59,983 |
| as a percentage of GDP | 27.6% | 27.5% | 26.3% | ||
| Total Crown | |||||
| Operating balance before gains and losses | (1,664) | (1,465) | (199) | (13.6) | (2,320) |
| Operating balance | 3,332 | 2,055 | 1,277 | 62.1 | 1,639 |
| Net worth attributable to the Crown | 70,503 | 69,558 | 945 | 1.4 | 69,165 |
1 Using GDP for the year ended 31 December 2013 of $221,417 million (Source: Statistics New Zealand).
2 Using forecast GDP for the year ended 30 June 2014 of $227,793 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
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Kamlesh Patel | Office of the Government AccountantTel: +64 4 917 6094
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