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Source: MIL-OSI Submissions

Source: New Zealand Treasury
Document Date:
Friday, 28 Feb 2020
Introduction: Core Crown tax revenue was $51.3 billion, $0.4 billion (0.7%) below forecast. This is mainly owing to lower than forecast company tax and GST offset by higher than forecast results across the remaining tax types. The companies tax results are mainly due to the change in revenue recognition and these results can also fluctuate in the coming months due to these months being peak of the tax return filing season.

The interim Financial Statements of the Government of New Zealand for the seven months ended 31 January 2020 (the financial statements) were released by the Treasury today. The financial statements are compared against forecasts based on the 2019 Half Year Economic and Fiscal Update (HYEFU 2019) published on 11 December 2019.

Core Crown tax revenue was $51.3 billion, $0.4 billion (0.7%) below forecast. This is mainly owing to lower than forecast company tax and GST offset by higher than forecast results across the remaining tax types. The companies tax results are mainly due to the change in revenue recognition and these results can also fluctuate in the coming months due to these months being peak of the tax return filing season.

Core Crown expenses were $53.1 billion, which is close to forecast ($0.1 billion (0.1%) below forecast).

The operating balance before gains and losses (OBEGAL) was a $1.4 billion surplus and close to forecast ($0.1 billion lower than forecast).

When total gains and losses are added to the OBEGAL result, the operating balance was a $2.2 billion surplus, $0.4 billion stronger than forecast. ACC’s outstanding claims liability valuation losses were $0.8 billion higher than forecast primarily due to a decrease in the discount rates, but this was more than offset by favourable changes in market prices which resulted in net investment gains being higher than forecast by $1.5 billion. 

Core Crown residual cash was a deficit of $2.7 billion and close to forecast ($0.1 billion lower than forecast).

Net core Crown debt of $59.7 billion (19.5 % of GDP) was $0.4 billion lower than forecast and is largely due to a timing difference for the transfer of KiwiSaver employer contributions to scheme providers contributing to $0.2 billion of the variance. In addition, the residual cash variance of $0.1 billion has also contributed to the net core Crown debt variance.

Gross debt at $90.5 billion (29.5% of GDP) was $0.3 billion higher than forecast mainly owing to timing differences.

Total borrowings at 31 January 2020 were $120.5 billion, and in line with forecast.

Net worth attributable to the Crown was $141.3 billion, $0.3 billion higher than forecast. The majority of this variance relates to the operating balance for the first seven months of the year as discussed above.

Key indicators for the seven months ended 31 January 2020 compared to HYEFU 2019.

Key indicators for the seven months ended 31 January 2020 compared to HYEFU 2019
  Year to date Full Year
January 2020 Actual1 $m January 2020 HYEFU 2019 Forecast1 $m Variance2
HYEFU 2019 $m
Variance HYEFU 2019 % June 2020 HYEFU 2019 Forecast3 $m
Core Crown          
Core Crown tax revenue 51,274 51,642 (368) (0.7) 88,692
Core Crown revenue 55,579 55,847 (268) (0.5) 95,797
Core Crown expenses 53,054 53,113 59 0.1 93,776
Core Crown residual cash (2,668) (2,764) 96 3.5 (5,154)
Net core Crown debt4 59,732 60,143 411 0.7 62,526
as a percentage of GDP 19.5% 19.6%     19.6%
Gross debt5 90,525 90,274 (251) (0.3) 89,575
as a percentage of GDP 29.5% 29.4%     28.0%
Total Crown          
Operating balance before gains and losses 1,448 1,547 (99) (6.4) (943)
Operating balance (excluding minority interests) 2,197 1,763 434 24.6 422
Total borrowings 120,523 120,499 (24) –  122,161
Net worth attributable to the Crown 141,274 140,945 329 0.2 139,620
as a percentage of GDP 46.0% 45.9%     43.7%
  1. Using the most recently published GDP (for the year ended 30 September 2019) of $307,052 million (Source: Statistics NZ).
  2. Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.
  3. Using HYEFU 2019 forecast GDP for the year ending 30 June 2020 of $319,804 million (Source: The Treasury).
  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.
  5. Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.

MIL OSI