The Crown accounts for the year to June show a surplus of $1.8 billion in 2015-16, up from $414 million in 2014-15.
Presenting the accounts yesterday, Finance Minister Bill English said they also showed core Crown expenses were under 30% of gdp for the first time since 2006, net debt had stabilised to 24.6% of gdp and net worth had grown to $89.4 billion.
Mr English said the $1.8 billion operating balance before gains & losses (OBEGAL) in 2015-16 was a significant turnaround from the $18.4 billion deficit in 2011 following the global financial crisis & Canterbury earthquakes. A $176 million had been forecast in the 2015 Budget.
“The New Zealand economy has made significant progress over the past 8 years. This delivers more jobs & higher incomes for New Zealanders, and also drives a greater tax take to help the Government’s books.”
Core Crown tax revenue was $1.6 billion higher than forecast in the 2015 Budget.
“We’ve also been getting on top of our spending, exercising fiscal restraint while still investing responsibly in our growing economy & public services. Core Crown expenses were $73.9 billion, below the forecast of $74.5 billion at the beginning of the year.
“We’ve focussed on results and are starting to address the drivers of dysfunction by investing in better public services. We remain committed to maintaining rising operating surpluses and reducing net debt to around 20% of gdp in 2020.
“If there is any further fiscal headroom, we may have the opportunity to reduce debt faster and, as we’ve always said, if economic & fiscal conditions allow we will begin to reduce income taxes.
“The outlook for the economy is positive, the Government’s books are in good shape and we are addressing our toughest social problems. However, we also need to bear in mind that there are a lot of risks globally and that is why it is important to get our debt levels down.
“Budget 2017 will make positive long-term choices to strengthen the economy & our communities.”
Mr English will release the half-year economic & fiscal update on Thursday 8 December.
While the OBEGAL chart (operating balance before gains & losses) shows a $1.8 billion surplus, after gains & losses it shows a $12.6 billion turnaround from 2014-15 to a $7.2 billion net loss. Treasury said valuations of long-term liabilities resulted in large losses for the ACC insurance liability and the Government Superannuation Fund retirement liability: “These losses combined with the OBEGAL surplus resulted in a $5.4 billion operating balance deficit.”
The $1.3 billion cash deficit increased net core Crown debt to $61.9 billion, up $1.2 billion from last year, but core Crown debt shrank by half a percent as a proportion of gdp, to 24.6%.
13 October 2016: Government financial statements for June 2016 year
Attribution: Ministerial release, Treasury.