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Government Finance Statistics (Central Government): Year ended June 2012
Embargoed until 10:45am  –  21 June 2013

About government finance statistics

Government finance statistics (GFS) is a set of concepts and principles developed by the International Monetary Fund (IMF) specifically for measuring government financial activity. These concepts and principles allow the entire public sector to be analysed. That is:

  • all levels of government (both central and local government in New Zealand, and state government in countries like Australia and the United States of America)
  • all sectors of government (general government, public non-financial corporations, and public financial corporations).

Unlike accounting-based financial statements, GFS is an economic representation of a government's financial activity. It is the IMF's preferred standard for publishing financial statistics on government.

Central government: This sector includes all core Crown departments and most Crown entities. Some Crown entities, such as Housing New Zealand, are excluded because they operate as market entities. A market entity provides goods or services at prices that are economically significant.

State-owned enterprises are public non-financial corporations and are therefore not included in the scope of the central government sector. However, equity ownership of the market-operating Crown entities and state-owned enterprises is included in the balance sheet as a financial asset. This is consistent with the GFS manual but may differ from the GFS estimates produced by the Treasury.

See the appendix section of Update on release of government finance statistics for central government for a list of New Zealand units of central government departments and entities included in this sector.

More definitions

Assets: are what government owns. They represent a store of value, and can be a source of income or generate economic benefit when used. Assets are either current or non-current.

Balance sheets: measure the values of stocks of assets or liabilities. They are typically compiled at the beginning and end of the accounting period.

Capital transactions: relate to establishing or owning an asset. Capital transactions must be linked to a particular purpose. For example, charges for development work (eg building new subdivisions or buildings) to cover additional infrastructure costs incurred by government.

Capital transfer: a transaction in which one institutional unit provides a capital asset to another unit without receiving anything in return.

Change in inventories: the change in the value of inventories of raw materials, work-in-progress, and finished goods, over a given period. The change is measured in the appropriate prices in the market at the time additions and withdrawals are made.

COFOG: the Classification of Functions of Government is a detailed classification of the functions or socioeconomic objectives, that government units aim to achieve through various outlays. This is displayed in table 3.

Current transfer: a transaction in which one unit provides goods, a service, or an asset to another unit for the purposes of current expense without receiving anything in return.

Depreciation: the gradual writing-off over time of the value of a physical asset such as infrastructural assets, restricted assets, buildings, mobile equipment, and other plant, machinery and office equipment.

Employee expenses: the gross earnings of all paid employees. Includes overtime, sick and holiday pay, severance and redundancy payments, levies paid to the Accident Compensation Corporation, and employer contributions to superannuation schemes.

Financial assets: consist of financial claims, monetary gold, and special drawing rights (SDRs) allocated by the IMF. Examples include: cash and bank deposits, stocks held, short-term accounts receivable, pre-payments, Treasury bills, and short-term loans.

Liabilities: debts that establish an obligation to provide economic benefits to another party that holds the corresponding financial claims.

Market entity: provides goods or services at prices that are economically significant.

Net financial worth: equal to the total value of all financial assets less the total value of all liabilities. It is an important component of total net worth.

Net lending/borrowing position: an indicator of the financial impact of government activity on the rest of the economy. It shows a government's financing requirement and is calculated as the net operating balance less the net acquisition of non-financial assets.

A positive net lending/borrowing position indicates a net lending position. After accounting for all operating transactions and their net acquisition of non-financial assets, a government is still in surplus and has funds it can invest or lend.

A negative net lending/borrowing position indicates a net borrowing position. After accounting for all operating transactions and their net acquisition of non-financial assets, a government will need to borrow (or run down its financial investments) to fund all its expenditure.

Net operating balance: change in the net worth of government due to transactions, rather than provisions and valuation or other changes. It is equal to total operating income less total operating expenses, and is important when measuring the ongoing sustainability of government operations. Provisions and valuation or other changes are treated as other economic flows in government finance statistics rather than transactions.

Net worth: the difference between the total value of all assets and the total value of all liabilities.

Non-financial assets: all economic assets other than financial assets. These can be fixed assets, such as infrastructure and buildings, inventories, valuables, or non-produced assets.

Operating expenditure: the amount spent on providing core services.

Operating income: funding earned to provide core services.

Social benefits: transfers in cash or kind to protect the entire population, or specific segments of it, against certain social risks. Examples of social benefits include the provision of medical services and unemployment compensation.

Social security contributions: actual or imputed receipts from either employers on behalf of their employees or from employees, on their own behalf, that secure entitlement to social benefits for the contributors, their dependants, or their survivors. The contributions may be voluntary or compulsory.

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