Crown Financial Statements, 11 Months to 31 May
4 July 2008
Embargoed until 10:00am, Friday 4 July 2008
Dr Peter Bushnell Deputy Secretary to the Treasury
Financial Statements Of The Government For The Eleven Months Ended 31 May 2008
The Financial Statements of the Government of New Zealand for the eleven months ended 31 May 2008 were released by the Treasury today.
The monthly financial statements are compared against monthly forecast tracks based on the 2008 Budget Economic and Fiscal Update.
Results for the eleven months ended 31 May 2008
• The total Crown operating balance, including gains and losses, was $2.6 billion higher than forecast. The three main contributors to this higher than expected outturn were:
o $0.8 billion related to higher than expected gains on the investment portfolios of Crown financial institutions in April and May. However, early indications are that the performance of these portfolios has ebbed again during June;
o $0.7 billion related to a change in the discount rate used for valuing ACC’s outstanding claims liability; and
o $0.8 billion related to tax revenue.
• The three main contributors to the higher than expected tax revenue were:
o Corporate tax revenue was $0.7 billion higher than forecast. This mainly relates to income tax assessments lodged by a particular group of companies, for the 2007 and 2008 tax years, which were higher than expected;
o Source deductions revenue was $0.3 billion higher than forecast. This was partly due to recent wage growth which was higher than expected; and
o These were partially offset by GST revenue which was $0.3 billion lower than forecast. This was mainly due to a forecast assumption that revenue would exceed receipts. This trend was evident in returns up to March, but has subsequently unwound.
• Tax receipts were on forecast and we expect these to remain close to forecast as at 30 June. Tax revenue is expected to be around $0.5 billion higher than forecast at 30 June.
• OBEGAL was $1.6 billion higher than forecast. The variance was mainly due to:
o actuarial losses of $0.8 billion, which were incorrectly classified in ACC’s forecast as insurance expenses rather than gains and losses. This was indicated in the financial statements last month. This reclassification has no impact on the operating balance; and
o the tax revenue variances of $0.8 billion noted above.
• Core Crown residual cash and gross debt were broadly in line with forecast.