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Financial Statements of the Government of New Zealand

31 October 2018

Financial Statements of the Government of New Zealand for the three months ended 30 September 2018

The Financial Statements of the Government of New Zealand for the three months ended 30 September 2018 were released by the Treasury today. The statements are compared against forecasts based on the 2018 Budget Economic and Fiscal Update (BEFU 2018) published on 17 May 2018.

Core Crown tax revenue at $19.0 billion was in line with the BEFU 2018 forecast. Corporate tax revenue was below forecast by $0.3 billion (12.3%), mainly due to 2018 income tax assessments lodged since June, indicating taxable profits in the 2018 tax year were lower than forecast. The corporate tax revenue result should not be an indicator of growth or otherwise in recent corporate profitability. The less-volatile receipts measure of corporate tax is on forecast and 8.2% up on the same period last year.

Core Crown expenses of $21.2 billion were $0.2 billion (1.0%) below budget. This variance was largely due to the Working for Family Tax Credit being lower than expected and a lower than forecast sovereign receivables impairment.

The operating balance before gains and losses (OBEGAL) was close to forecast, at a $0.3 billion deficit. Tax revenue in the first quarter of the year tends to be less than what is recognised over the rest of the year, while expenses are generally more evenly spread across the year. As a result we expect the deficit reported in the September Financial Statements to reverse in the coming months.

When gains and losses are added to the OBEGAL result, the operating balance was a $1.1 billion deficit, $1.6 billion less than forecast. Net investment gains of $1.5 billion were recorded offset by net losses on non-financial instruments of $2.3 billion.

Core Crown residual cash was a deficit of $2.4 billion, $0.3 billion higher than the deficit forecast.

Net core Crown debt was $60.4 billion (20.9% of GDP) at the end of September 2018, $2.2 billion less than forecast. The lower than expected net debt is largely due to a stronger opening position, from the 30 June 2018 result (which was $2.9 billion less than forecast). This was partially offset by the residual cash variance of $0.3 billion.

Net worth attributable to the Crown (NWAC) was $129.3 billion, $10.6 billion higher than forecast at BEFU 2018. The majority of this variance relates to property, plant and equipment revaluations increasing NWAC by $10.7 billion at 30 June 2018.

Key indicators for the three months ended 30 September 2018 compared to BEFU 2018

$ million Year to date Full Year
September 2018
September 2018
BEFU 2018
BEFU 2018
June 2019

Core Crown
Core Crown tax revenue 19,012 19,121 (109) (0.6) 83,901
Core Crown revenue 20,831 20,896 (65) (0.3) 90,965
Core Crown expenses 21,156 21,379 223 1.0 86,720
Core Crown residual cash (2,380) (2,078) (302) (14.5) (3,875)
Gross debt4 88,879 87,415 (1,464) (1.7) 81,853
as a percentage of GDP 30.7% 30.2% 26.9%
Net debt5 60,436 62,682 2,246 3.6 64,204
as a percentage of GDP 20.9% 21.7% 21.1%
Total Crown
Operating balance before gains and losses (343) (279) (64) (22.9) 3,737
Operating balance (1,069) 483 (1,552) (321.3) 6,773
Total borrowings 115,407 116,715 1,308 1.1 112,890
Net worth attributable to the Crown 129,251 118,681 10,570 8.9 124,994
1. Using the most recently published GDP (for the year ended 30 June 2018) of $289,293 million (Source: Statistics New Zealand).
2. Favourable variances against forecast have a positive sign and unfavourable variances against forecast have a negative sign.
3. Using BEFU 2018 forecast GDP for the year ending 30 June 2019 of $304,591 million (Source: The Treasury).
4. Gross sovereign-issued debt excluding settlement cash and Reserve Bank bills.
5. Net core Crown debt excluding student loans and other advances. Net debt may fluctuate during the year largely reflecting the timing of tax receipts.


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