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6 May 2013

MEDIA STATEMENT

Embargoed until 10.00am, Monday 6 May 2013

Fergus Welsh
Chief Financial Officer
The Treasury

Financial Statements of the Government of New Zealand for the Nine Months Ended 31 March 2013

The Financial Statements of the Government of New Zealand for the nine months ended 31 March 2013 were released by the Treasury today.

These financial statements are the last to be compared against forecasts based on the Half Year Economic and Fiscal Update (HYEFU), released on 18 December 2012.

The Operating Balance before Gains and Losses (OBEGAL) was in deficit by $5.0 billion, which was $273 million lower than forecast largely owing to core Crown tax revenue being $535 million higher than expected. Continuing the pattern of recent months:

• Other individuals tax revenue was $406 million (14.8%) above forecast, likely the result of solid investment incomes, driven by recent strength in equity markets; and

• Source deductions was $187 million (1.1%) above forecast due to a higher effective tax rate. Recent economic data suggests that aggregate labour incomes have been consistent with forecast, but that the composition of the labour force has changed (a decrease in the proportion of low income workers). This change increased the revenue collected because of the progressive nature of the income tax scale.

Core Crown expenses were close to forecast at $52.2 billion. While underspends relating to delays in treaty settlements and New Zealand’s aid programmes were recorded, these were largely offset by higher than expected costs associated with an earthquake-related provision for horizontal infrastructure (wastewater, storm water and freshwater) in Canterbury.

Including net gains, the operating balance was in surplus by $2.5 billion, some $4.5 billion above the forecast deficit, largely owing to significant net investment gains made by the New Zealand Superannuation Fund and ACC ($1.7 billion and $0.7 billion above forecast respectively). In addition, favourable actuarial valuations were recorded on the Government Superannuation Fund’s retirement liability and ACC’s outstanding claims liability of $0.7 billion and $0.6 billion above forecast respectively, driven by discount rate movements and favourable payments/claims experience.

The residual cash deficit was $1.3 billion smaller than expected, mainly reflecting higher than expected tax receipts and underspending on capital programmes.

Gross debt was $1.8 billion below forecast at $84.2 billion (40.2% of GDP), mostly due to the Reserve Bank purchasing $2.7 billion more Government bonds than forecast, reducing the amount of debt owed by the Crown to third parties.

Net debt was $1.5 billion lower than forecast largely reflecting the residual cash result.

	Year to date				Full Year
$ million	March 2013 Actual1	March 2013 HYEFU Forecast1	Variance to HYEFU $m	Variance to HYEFU %	June 2013 HYEFU Forecast2
Core Crown
Core Crown tax revenue	41,864	41,329	535	1.3	57,376
Core Crown revenue	45,832	45,297	535	1.2	62,939
Core Crown expenses	52,168	52,223	55	0.1	71,998
Core Crown residual cash	(7,632)	(8,948)	1,316	14.7	(9,782)
Gross debt3	84,243	86,014	1,771	2.1	80,176
as a percentage of GDP	40.2%	41.1%			37.1%
Net debt4	58,483	59,936	1,453	2.4	59,998
as a percentage of GDP	27.9%	28.6%			27.8%
Total Crown
Operating balance before gains and losses	(4,950)	(5,223)	273	5.2	(7,340)
Operating balance	2,518	(1,979)	4,497	227.2	(3,275)
Net worth attributable to the Crown	61,900	57,377	4,523	7.9	56,285

1 Using GDP for the year ended 31 December 2012 of $209,324 million (Source: Statistics New Zealand)
2 Using forecast GDP for the year ended 30 June 2013 of $216,048 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

[Documents:
fsgnz9mthsmar13.pdf
fsgnz9mthsmar13.xls]

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