A Snapshot of the 2014 Financial Statements of the Government

Contents#

A Snapshot of the 2014 Financial Statements of the Government (Part 1)#

The economy continued to grow

Real gross domestic product growth accelerated to an annual average rate of 3.5%, with strong growth in construction, primary industries and some services. Nominal activity strengthened 7.8%, as export prices increased.

Annual average % change in GDP

Facts and figures – June Year

• $229.1 billion nominal GDP (up 7.8%)
• $154.0 billion real GDP (up 3.5%)
• $68.5 billion export receipts (up 9.8%)
• 1,399,200 average full-time employees (38,500 more)
• $28.11 average hourly rate (up 2.6%)
• 5.9% average unemployment (0.8% lower)
• 1.5% annual average inflation (0.8% in 2013)

Where does the Government's money come from?

• 68% of revenue was from collection of tax ($2.7 billion more than last year)
• 83% of sales of goods and services were from SOEs (eg, NZ Post, electricity companies, Air New Zealand)
• 14% was from other sources (eg, ACC, EQC, and fire service levies)

Who pays income tax, and how much?

• Next March tax year 3.5 million New Zealanders are expected to pay tax of $28.6 billion – an average of $8,171 each

Your tax dollar - where was it spent?

• $71.5 billion core Crown expenses
• 55% of all spending on welfare, education and health
• 22% of all spending by SOEs and Crown entities

Crown expenses

Total Crown expenses were $1.2 billion more than last year with Health and New Zealand Superannuation expenditure having increased.

Your dollar provided...

$50.5 billion on welfare, health, education

Social welfare

$10.9 billion to provide 640,000 super-annuitants with income support and $4.5 billion to 312,000 people receiving Jobseeker Support and Emergency Benefit, Sole Parent Support and Supported Living Payment.

Health

$11.2 billion of funding to District Health Boards, which contributed to a range of hospital- and community-based services, including almost 162,000 elective surgeries and 92% of eight-month-olds being immunised.

Education

$12.3 billion helped to fund over 200,000 enrolments in early childhood education, over 750,000 school students and 350,000 tertiary students.

Rebuilding Canterbury

• $12.4 billion total cost so far, $9.1 billion of that was recorded in 2011, $1.9 billion in 2012, $0.5 billion last year and $0.9 billion this year
• Nearly 63% are the costs of EQC, with 424,651 building claims, with $1.9 billion paid this year
• 7,687 red zone properties with only 6% yet to be settled

A Snapshot of the 2014 Financial Statements of the Government (Part 2)#

Gap between spending and income narrows

Operating balance before gains and losses (OBEGAL)

$2.9 billion deficit

• Third year of reduced deficit
• Largest deficit was $18.4 billion in 2011
• Economic growth and continued spending are the key drivers

Core Crown net debt

$59.9 billion core Crown net debt

• $4.1 billion increase from last year due to continuing cash deficits
• 0.1% decrease as a percentage of GDP

What does the Government owe?

• $103.4 billion
  of borrowings, $7.7 billion issued with $2.2 billion used to repurchase debt and $0.9 billion to reduce Treasury bills outstanding. Overall net cash from borrowing was $4.6 billion
• $35.8 billion
  of insurance liabilities, $1.8 billion less than last year, as earthquake claims continue to be settled

Liabilities trend

Total Crown liabilities increased by $0.9 billion as the Government borrowed money to meet the cash deficit. This was offset somewhat by lower insurance and retirement plan liabilities.

In addition to the Crown liabilities, the Crown is exposed to a number of contingent liabilities and implicit risks. These contingent liabilities may, if crystalised, increase the Crown's liabilities.

What does the Government own?

Total Crown assets

• $132.4 billion
  of social assets (eg, schools, hospitals and social housing) have increased by $8.1 billion from last year
• $74.6 billion
  of financial assets with a $2.3 billion increase from last year
• $49.0 billion
  of commercial assets (mainly SOEs) with a $1.3 billion increase from last year