Media StatementFinancial Statements of the Government of New Zealand for the Nine Months Ended 31 March 2010

Colin Lynch
Deputy Secretary to the Treasury

The Financial Statements of the Government of New Zealand for the nine months ended 31 march 2010 were released by the Treasury today.

The monthly financial statements are compared against monthly forecast tracks based on the 2009 Half Year Economic and Fiscal Update (Half-Year Update) published in December 2009.

Excluding the impact of gains (which are not immediately available to the Crown) and one-off revenue items recorded during the year, the March result was broadly in line with the Half-Year Update.  Although tax revenue was lower than forecast this shortfall was more than offset by core Crown expenditure which was also lower than expected. 

Results for the nine months ended 31 March 2010:

• Core Crown tax revenue was $530 million (1.4%) lower than forecast.  Excluding certain one-off (non-recurring) items, the underlying tax revenue result was approximately $930 million (2.4%) lower than forecast.
  
  The underlying Corporate tax revenue result was $349 million, or 8.2% lower than forecast, with approximately $400 million of one-off revenue from structured finance settlements and the reassessment of non-resident withholding tax liabilities excluded.  Lower-than-expected business profitability drove both the Corporate tax and Other Individuals tax revenue results (with the latter being $309 million (12.8%) lower than forecast).  Source deductions were also $537 million (3.2%) below forecast.
  
  Partly offsetting these shortfalls, GST revenue was $314 million (3.7%) higher than forecast.
• Core Crown expenses were $809 million (1.7%) lower than forecast due in a large part to Treaty of Waitangi settlements ($385 million) being later than forecast and these are now expected to take place in the next financial year. 
  
  Most of the remainder of the lower-than-forecast expenditure was due to small variances across a number of departments.  We expect these variances will result in a lower-than-forecast level of spending at the end of the year and this expectation has been factored into the 2010 Budget forecast.
• The variances in core Crown tax revenue and expenses generated a deficit in the operating balance before gains and losses that was $522 million smaller than expected.  This result was mainly due to the one-off tax revenue items mentioned above and expenditure levels that were lower than forecast.
• Including the impact of gains and losses, the operating balance deficit was $2,006 million smaller than forecast at $1,327 million.  This was mainly due to gains on the Crown’s investment portfolios (held by the NZS Fund, ACC and EQC) that were $1,501 million larger than expected, and an actuarial gain of $173 million that was made on the valuation of ACC’s insurance liability when a small loss had been forecast.
• Net debt was close to forecast at $25.6 billion (13.8% of GDP) and core Crown residual cash was on forecast.
• These results were a continuance of the trends from last month.  We expect these trends to impact the result at the end of the year and they have been factored into the 2010 Budget forecast due to be released on 20 May.

1. Using GDP for the year ended 31 December 2009 of $185,549 million (Source: Statistics New Zealand).
2. Using forecast GDP for the year ended 30 June 2010 of $184,466 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