The Financial Statements of the Government of New Zealand for the eight months ended 28 February 2013 were released by the Treasury today.
These financial statements are compared against forecast tracks based on the 2012 Half Year Economic and Fiscal Update (HYEFU), released on 18 December 2012.
The Operating Balance before Gains and Losses (OBEGAL) was in deficit by $3.0 billion, which is $556 million lower than forecast largely owing to core Crown tax revenue being $719 million higher than expected. There were two tax types contributing to the higher than forecast tax revenue:
- Tax from source deductions was $266 million above forecast owing to a higher than expected effective tax rate. Total labour force earnings were in line with forecast, however the composition of the labour force has changed with a fall in employment concentrated at the lower end of the income scale. Overall, this means the same amount of income was earned by fewer workers, increasing the average tax rate due to the progressive nature of the personal income tax scale.
- Tax from other individuals was $326 million above forecast, primarily owing to higher taxable income being declared, part of which was from investment income on the back of strong equity markets.
Core Crown expenses were $370 million below forecast at $45.0 billion. This was largely due to delays in finalising complex negotiation issues in Treaty of Waitangi settlements. Including net gains, the operating balance
was in surplus by $4.3 billion, some $4.8 billion ahead of forecast, largely owing to significant net investment gains made by the New Zealand Superannuation Fund ($1.5 billion) and ACC ($0.6 billion). In addition, ACC has recorded higher than expected actuarial gains on its outstanding claims liability of $1.5 billion, largely due to favourable changes in the discount rate and claims experience.
The residual cash deficit was $434 million smaller than expected, largely reflecting higher tax receipts than forecast.
Net debt was $614 million lower than forecast, reflecting the residual cash result and higher than forecast levels of currency in circulation.
| Year to date | Full Year | ||||
|---|---|---|---|---|---|
| $ million | February 2013 Actual1 |
February 2013 HYEFU Forecast1 |
Variance to HYEFU $m |
Variance to HYEFU % |
June 2013 HYEFU Forecast2 |
| Core Crown | |||||
| Core Crown tax revenue | 37,590 | 36,871 | 719 | 2.0 | 57,376 |
| Core Crown revenue | 40,816 | 40,342 | 474 | 1.2 | 62,939 |
| Core Crown expenses | 45,029 | 45,399 | 370 | 0.8 | 71,998 |
| Core Crown residual cash | (6,790) | (7,224) | 434 | 6.0 | (9,782) |
| Gross debt3 | 85,930 | 85,329 | (600) | (0.7) | 80,176 |
| as a percentage of GDP | 41.1% | 40.8% | 37.1% | ||
| Net debt4 | 57,737 | 58,351 | 614 | 1.1 | 59,998 |
| as a percentage of GDP | 27.6% | 27.9% | 27.8% | ||
| Total Crown | |||||
| Operating balance before gains and losses | (3,012) | (3,568) | 556 | 15.6 | (7,340) |
| Operating balance | 4,288 | (481) | 4,769 | 991.5 | (3,275) |
| Net worth attributable to the Crown | 63,642 | 58,874 | 4,769 | 8.1 | 56,285 |
1 Using GDP for the year ended 31 December 2012 of $209,324 million (Source: Statistics New Zealand)
2 Using forecast GDP for the year ended 30 June 2013 of $216,048 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 PortfolioTel: +64 4 917 6094
Email: [email protected]