A Snapshot of the 2015 Financial Statements of the Government

Contents#

The 2015 Snapshot [of the Financial Statements of the Government] (Part 1)#

The economy#

Real gross domestic product growth annual average rate was 3.0% mainly due to robust growth in construction, household consumption and tourism.

In current dollar terms, the value of output increased 2.8% in the June 2015 year, down from 8.1% growth in the previous June year.

Annual average % change in GDP

Facts and figures – June year (compared to 2014)

• $240.6 billion nominal GDP (up 2.8%)
• $217.5 billion real GDP (up 3.0%)
• $67.6 billion export receipts (up 0.8%)
• 1,443,700 average full time employees (44,600 more)
• $28.79 average hourly rate (up 2.4%)
• 5.7% average unemployment (0.3% lower)
• 0.6% annual average inflation (0.9% lower)

Where does the Government's money come from?#

Total revenue: $95.0b (39.5% of GDP)

• 70% of revenue was from collection of tax ($5.1 billion more than last year)
• 84% of sales of goods and services were from SOEs (eg, NZ Post and listed companies)
• 13% of total revenue was from other sources (eg, ACC, EQC, and fire service levies)

Who pays income tax, and how much?

• Next March tax year 3.6 million New Zealanders are expected to pay tax of $29.3 billion – an average of $8,138 each

How was the money spent?#

Total expenses: $94.3b (39.2% of GDP)

• $72.4 billion core Crown Expenses increased by $1.2 billion since last year
• 23% of all spending was by SOEs and Crown Entities

$51.5 billion was spent on welfare, health and education

Social welfare

$11.6 billion to provide 665,000 super annuitants with income support and $4.4 billion to 302,000 people receiving Jobseeker Support and Emergency Benefit, Sole Parent Support and Supported Living Payment.

Health

$11.4 billion of funding to District Health Boards, which contributed to a range of hospital and community-based services, including around 167,000 elective surgeries and 92.9% of eight-month-olds being immunised.

Education

$12.9 billion helped to fund 96.1% participation in early childhood education, 81.2% of 18 year olds to achieve NCEA Level 2 or equivalent.

OBEGAL returns to surplus#

Operating balance before gains and losses (OBEGAL)

• $0.4 billion surplus
• Growth in tax revenue has outpaced growth in expenditure
• First surplus since 2008
• Core Crown tax revenue was $5.1 billion more than last year
• Core Crown expenses increased $1.2 billion from last year

• Core Crown tax revenue was 0.8% higher than forecast
• Core Crown expenses were 0.7% less than forecast
• While core Crown tax and core Crown expenses were close to forecast (within 1%), combined they had a significant impact on OBEGAL

The 2015 Snapshot [of the Financial Statements of the Government] (Part 2)#

Capital spending increases core Crown net debt#

• OBEGAL surplus contributed to core Crown operating cash surplus of $1.6 billion
• $4 billion of capital spending (offset by $0.6 billion from the second Meridian instalment)
• Overall cash deficit of $1.8 billion

Core Crown net debt

$60.6 billion core Crown net debt

• $0.7 billion increase from last year due to continuing cash deficits
• Relatively flat as a percentage of GDP (0.4% decrease on last year)

The Crown balance sheet#

• The Crown balance sheet grew over the year with total assets reaching $279 billion
• Total liabilities were $186 billion
• Financial assets and liabilities are particularly sensitive to changes in market rates such as share prices

Balance sheet sensitivities

Impact on operating balance of change in key market rates

Balance sheet composition#

• Social sector net worth $121.7 billion
  $138.8 billion of social sector assets (eg, schools, hospitals and social housing) have increased by $5.6 billion from last year.
  Social sector liabilities were similar to last year at $17.1 billion, a $0.1 billion increase.
• Financial sector net worth -$49.9 billion
  $87.4 billion of financial sector assets with a $12.8 billion increase from last year.
  $137.3 billion of financial sector liabilities, an increase of $7.7 billion from last year.
• Commercial sector net worth $20.4 billion
  $52.5 billion of commercial sector assets (mainly SOEs) with a $3.5 billion increase from last year.
  $32.1 billion of commercial sector liabilities (including Kiwibank), an increase of $2.6 billion from last year.