Financial Statements Summary
This commentary should be read in conjunction with the audited financial statements on pages 37 to 155. The Financial Statements of the Government received an unmodified auditor’s opinion for the year ended 30 June 2025.
The financial results of the Government in 2024/25 show that both total revenue and total expenses have grown since last year. However, as the growth in total revenue was slightly less than the growth in total expenses, the operating balance before gains and losses excluding ACC (OBEGALx) deficit of $9.3 billion was slightly higher than the OBEGALx deficit last year. When including the results of ACC, along with favourable valuation movements (primarily on financial instruments) the operating balance deficit was $4.4 billion, compared to an operating balance deficit of $8.4 billion last year. Net worth was $189.1 billion at 30 June 2025, $1.9 billion lower than last year, as the 2024/25 operating balance deficit described above, along with an increase to veterans’ disability entitlements, was partially offset by revaluation gains on physical assets.
In summary:
- Total revenue at $169.8 billion in the 2024/25 year was $2.5 billion higher than in 2023/24 and $0.2 billion higher than expected at the Budget Economic and Fiscal Update 2025 (Budget 2025) forecast. These variances were due in part to higher tax revenue (page 8).
- Total expenses at $183.5 billion in the 2024/25 year were $3.4 billion higher than in 2023/24 and $0.6 billion lower than expected at the Budget 2025 forecast. These variances were spread across several expenditure types (page 10).
- The operating balance was a deficit of $4.4 billion. While expenses exceeded revenue by $13.7 billion (page 14), this was offset by net gains on financial and non-financial instruments of $8.9 billion.
- The operating balance before gains and losses excluding ACC (OBEGALx) deficit of $9.3 billion was slightly higher than the deficit reported in the 2023/24 year (page 16), but $0.9 billion smaller than the deficit expected in the Budget 2025 forecast (page 27).
- Net worth of $189.1 billion has decreased by $1.9 billion since the 2023/24 year (page 26) but was $6.0 billion higher than the level forecast at Budget 2025 (page 28).
- Net core Crown debt at $182.2 billion increased by $6.7 billion since last year (page 19) but was $3.5 billion lower than the expected in the Budget 2025 forecast (page 28). As a share of GDP net core Crown debt remained unchanged since last year at 41.8% of GDP.
Year ended 30 June |
Actual2 2025 $ millions |
Actual2 2024 $ millions |
Variance | Forecast | |||
|---|---|---|---|---|---|---|---|
| Budget 20253 2025 $ millions |
Variance | ||||||
| $ millions | % | $ millions | % | ||||
| Total revenue | 169,811 | 167,347 | 2,464 | 1.5 | 169,651 | 160 | 0.1 |
| Total expenses | 183,502 | 180,061 | 3,441 | 1.9 | 184,112 | (610) | (0.3) |
| Core Crown residual cash | (5,996) | (19,302) | 13,306 | 68.9 | (9,990) | 3,994 | 40.0 |
| Operating balance1 | (4,400) | (8,365) | 3,965 | 47.4 | (5,493) | 1,093 | 19.9 |
| Total net worth | 189,128 | 191,049 | (1,921) | (1.0) | 183,130 | 5,998 | 3.3 |
| OBEGALx1 | (9,306) | (8,773) | (533) | (6.1) | (10,175) | 869 | 8.5 |
| Net core Crown debt | 182,171 | 175,464 | 6,707 | 3.8 | 185,644 | (3,473) | (1.9) |
| % of GDP | |||||||
| Total revenue | 38.9 | 39.8 | (0.9) | 39.0 | (0.1) | ||
| Total expenses | 42.1 | 42.9 | (0.8) | 42.3 | (0.2) | ||
| Core Crown residual cash | (1.4) | (4.6) | 3.2 | (2.3) | 0.9 | ||
| Operating balance | (1.0) | (2.0) | 1.0 | (1.3) | 0.3 | ||
| Total net worth | 43.4 | 45.5 | (2.1) | 42.1 | 1.3 | ||
| OBEGALx | (2.1) | (2.1) | – | (2.3) | 0.2 | ||
| Net core Crown debt | 41.8 | 41.8 | – | 42.7 | (0.9) | ||
Source: The Treasury |
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Overall, most key fiscal indicators are showing some signs of recovery…
Following a period of large deficits and debt rising sharply, many of the Government’s key fiscal indicators this year are showing signs of improvement. The year-on-year growth in total expenses was the lowest it has been since 2021. Consequently, total expenses as a percentage of GDP declined from 42.9% of GDP last year to 42.1% of GDP for 2024/25. The core Crown residual cash deficit, which broadly represents the cash shortfall to be funded by the Government, also reduced. The cash deficit was $6.0 billion for the 2024/25 year compared to a deficit of $19.3 billion last year. The smaller cash deficit meant that, in nominal terms, net core Crown debt did not increase as much as in recent years. Net core Crown debt has been increasing as a percentage of GDP since 2019/20, however, it remained unchanged since last year at 41.8% of GDP. Despite these signs of recovery, total expenses continue to exceed total revenues, meaning the OBEGALx deficit has widened slightly to $9.3 billion, although it remained stable as a percentage of GDP at around 2.1%.
Total revenue at $169.8 billion has increased by $2.5 billion compared to last year, with just under half of the increase coming from tax revenue. While growth in the economy has provided some lift to tax revenue, the impact was offset slightly by policy decisions reducing tax revenue, such as income tax threshold changes introduced from 31 July 2024. Most of the remainder of the increase in total revenue came from higher sales of goods and services revenue, driven by the higher wholesale prices on electricity.
Total expenses at $183.5 billion were $3.4 billion more than last year. The year-on-year movement in expenses predominately relates to the impact of indexation on most main benefit types, which are generally indexed to wage growth or inflation. Demographic changes associated with an ageing population has also driven the increase in New Zealand superannuation expenses. Offsetting these increases were decreases in some expense types relating to one-off expenditure in the 2023/24 year, such as impairments.
With the increase in total revenue and total expenses of similar amounts, the OBEGALx deficit of $9.3 billion remained broadly in line with the deficit recorded last year. In addition, the net gains from the valuation on financial and non-financial instruments were $4.2 billion more than last year. While returns on the Government’s investment portfolio were slightly weaker, this was more than offset by the lower losses on the valuation of ACC’s outstanding claims liability and the New Zealand Emissions Trading Scheme (NZ ETS) liability. Higher net gains during the year have resulted in the operating balance deficit of $4.4 billion being $4.0 billion stronger than the result last year.
The Government’s net worth was $189.1 billion, a reduction of $1.9 billion from prior year as the operating balance deficit reported in the 2024/25 year and the increase to the veterans’ disability entitlements were not fully offset by net revaluation gains on physical assets. The revaluation gains were largely due to upward valuations of state highways and electricity generation assets.
Net core Crown debt was $182.2 billion, an increase of $6.7 billion since last year. The increase predominantly reflects the additional funding requirement to cover the cash shortfall in the year, which is illustrated by the residual cash deficit of $6.0 billion. As a share of the economy, net core Crown debt has remained unchanged since last year at 41.8% of GDP.
…and were favourable against the forecasts at Budget 2025.
While most of the key fiscal indicators came in favourable to forecast, total revenue was in line with forecast at $169.8 billion. Despite tax revenue coming in $0.9 billion higher than expected, this was largely offset by lower than forecast revenue from the NZ ETS. The variance in tax revenue was mostly due to strength in corporate tax, on the back of stronger-than-expected provisional tax revenue and stronger investment returns impacting Portfolio Investment Entities (PIE) revenue. The weaker NZ ETS revenue was owing to fewer NZ ETS units being surrendered for emissions obligations than had been assumed in the forecasts.
Total expenses were lower than forecast by $0.6 billion with the variance predominantly driven by Crown entities, particularly in the transport and health sectors (discussed further on page 27). Overall net gains were slightly lower than forecast owing to net losses on non-financial instruments which were $0.2 billion larger than expected. As a result of the variances discussed above, both the OBEGALx deficit and the operating balance deficit were favourable to the forecast at Budget 2025, by $0.9 billion and $1.1 billion respectively.
The residual cash deficit was $4.0 billion smaller than forecast, which broadly mirrors the operating variances described above which impact cash, along with capital cashflows which were $1.6 billion lower-than-expected. This lower than forecast cash deficit flowed through to net core Crown debt, which was $3.5 billion lower than forecast at 30 June 2025.
The results are compared against the 2023/24 year and the forecasts for the 2024/25 year at the Budget 2025 published in May 2025. A comparison of the results against the forecasts for the 2024/25 year at the Budget Economic and Fiscal Update 2024 are discussed in Note 3: Explanation of Major Variances against Budget 2024 Forecasts.
