Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search


Crown accounts reflect market fall

Hon Dr Michael Cullen

Minister of Finance

6 March 2008

Crown accounts reflect market fall
Media Statement

The Financial Statements of the Government for the seven months to January 31, released by Treasury, reflect weakness in international financial markets and investor concern about the United States economy, says Finance Minister Michael Cullen.

As reported, the headline operating balance in the seven-month period was in deficit by $394 million, $4.2 billion below forecast.

That primarily reflected $2.5 billion lower-than-forecast returns on the financial asset portfolios of the NZ Superannuation Fund, the Accident Compensation Corp. and the Earthquake Commission. The second biggest negative contributor to the accounts was a $1 billion more-than-forecast loss on the re-valuation of the ACC claims’ liability.

“Today’s figures are a timely reminder, if anyone needed a reminder, of the strong need for governments to maintain prudent fiscal policy in small, open trading economies such as our own. We know from our history that international shocks can, and do, negatively impact on our economy from time to time.

“During this period of heightened international uncertainty about the outlook for the U. S, economy, the benefit of the Labour-led government’s consistent and strong management of the Crown’s accounts is, I hope, now more apparent to all New Zealanders.

“Strong fiscal management is our record during the good times - when we invested strong surpluses heavily into building-up financial assets, and building-up the infrastructure of the nation, for the benefit of current and future generations.

“Our commitment to consistent and strong fiscal management remains our strategy during the uncertain international economic times that we are now entering into,”
Dr Cullen said.

“The Labour-led government’s fiscal strategy aims to maintain gross Crown debt at around 20 per cent of gross domestic product over the medium-term and to maintain the OBEGAL balance at a sufficient level to meet the government’s annual NZ Superannuation Fund contributions.

“Today’s Crown accounts are consistent with the government’s fiscal strategy,” he said.

The accounts indicate that the NZ Superannuation Fund’s operating balance was in deficit by $910.8 million at the end of the seven-month period and Dr Cullen said taxpayers need to be aware that the Fund is a significant component of the Crown balance sheet that will continue to grow in size. The NZ Superannuation Fund’s returns for the seven months to the end of January were minus 6.18 per cent. However, over a longer-horizon, since the Superannuation Fund began investing in late-2003 until the end of January, the rate of return on taxpayers’ investment in the Superannuation Fund stands at just over 11 per cent on an annualised basis (11.03 per cent). That is 4.4 per cent above the rate of return that would have been achieved had the Guardians of the Fund instead invested solely in 90-day Treasury bills.


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Life And Times Of Peter Dunne

In the end, Mr Pragmatic calmly read the signs of impending defeat and went out on his own terms. You could use any number of clichés to describe Peter Dunne’s exit from Parliament.

The unkind might talk of sinking ships, others could be more reminded of a loaded revolver left on the desk by his Cabinet colleagues as they closed the door behind them, now that the polls in Ohariu had confirmed he was no longer of much use to National. More>>


Gordon Campbell: On Labour’s Campaign Launch

One of the key motifs of Ardern’s speech was her repeated use of the phrase – “Now, what?” Cleverly, that looks like being Labour’s response to National’s ‘steady as it goes’ warning against not putting the economic ‘gains’ at risk. More>>


Lyndon Hood: Social Welfare, Explained

Speaking as someone who has seen better times and nowadays mostly operates by being really annoying and humiliating to deal with, I have some fellow feeling with the current system, so I’ll take this chance to set a few things straight.. More>>


Deregistered: Independent Board Decision On Family First

The Board considers that Family First has a purpose to promote its own particular views about marriage and the traditional family that cannot be determined to be for the public benefit in a way previously accepted as charitable... More>>


Transport Policies: Nats' New $10.5bn Roads Of National Significance

National is committing to the next generation of Roads of National Significance, National Party Transport Spokesperson Simon Bridges says. More>>


Gordon Campbell: On Why Labour Isn’t Responsible For Barnaby Joyce

As a desperate Turnbull government tries to treat the Barnaby Joyce affair as a Pauline Hanson fever dream – blame it on the foreigners! We’re the victims of the dastardly New Zealand Labour Party! – our own government has chosen to further that narrative, and make itself an accomplice. More>>


Rail: Greens Back Tauranga – Hamilton – Auckland Service

The Green Party today announced that it will trial a passenger rail service between Auckland, Hamilton and Tauranga starting in 2019, when it is in government. More>>


Housing: Voluntary Rental Warrant Of Fitness For Wellington

Wellington City Council is partnering with the University of Otago, Wellington, to launch a voluntary Rental Warrant of Fitness for minimum housing standards in Wellington, Mayor Justin Lester has announced. More>>





Featured InfoPages

Opening the Election