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Government Finance Statistics (Central Government): Year ended June 2014
Embargoed until 10:45am  –  01 May 2015


Net operating balance returns to surplus

Government finance statistics for central government show the net operating surplus was $0.1 billion in the year ended June 2014. This was an improvement from the June 2013 year, when the net operating balance was a deficit of $2.3 billion. The 2014 surplus is the first recorded since the year ended June 2009. It was due to large and continuing growth of revenue (up 4.8 percent from 2013) and relatively low growth in expenses (up 1.5 percent).

Graph, Net operating balance, year ended June 2009 to 2014.

Total revenue up as tax intake rises

Total revenue increased 4.8 percent in the year ended June 2014. As a share of the economy, total revenue was 33.6 percent of nominal gross domestic product (GDP). The rise was mainly driven by increased revenue from taxation, up $2.9 billion (4.8 percent) from 2013. Non-taxation revenue also rose, up $0.7 billion (5.0 percent) from 2013.

Three major tax types contributed to the increase in tax revenue in 2014.

  • The largest driver was individual income tax, which rose $1.4 billion (5.0 percent) from 2013. This is consistent with the 3.6 percent increase in the number of people employed for the June 2014 year. 

        See: Employment and unemployment labour market tables

  • Goods and services tax intake was $1.0 billion higher, up 4.7 percent from 2013. A 3.6 percent increase in household consumption expenditure for the year ended June 2014 was the main driver.
  • Corporate tax increased $0.5 billion. This compares with June-year increases of $0.9 billion for 2013 and $1.8 billion for 2012.

Graph, Major tax revenue, year ended June 2009 to 2014.

Small growth in expenses as superannuation payments rise

Total operating expenses rose $1.2 billion (up 1.5 percent) in the year ended June 2014. As a share of the economy, expenses were 33.5 percent of nominal GDP.

Three major drivers contributed to the operating expenses' increase in 2014.

  • Social benefit payments were $0.9 billion higher, up 2.8 percent from 2013. The Ministry of Social Development represents $0.6 billion of the increase, largely due to rising superannuation payments. The Accident Compensation Corporation (ACC) made up most of the remaining $0.3 billion, through rehabilitation and compensation expenditure.
  • Employee expenses rose $0.5 billion, up 2.7 percent from 2013.
  • The purchase of goods and services increased $0.4 billion in the year ended June 2014.

Partly offsetting these increases was a $0.2 billion reduction in interest expense paid for market government bonds held by the Debt Management Office (DMO).

Net borrowing lower than in June 2013 year

Central government net borrowing in the June 2014 year was $2.7 billion, compared with $4.3 billion in the year ended June 2013. The reduced borrowing is due to the net operating balance returning to surplus, which then required only the net acquisition of non-financial assets to be financed through borrowing or the reduction of financial assets.

Diagram, Operating statement, year ended June 2014.

Total net acquisition of non-financial assets increased to $2.8 billion for the year ended June 2014, which was partly driven by a $0.4 billion increase in the acquisition of fixed assets. The remaining $0.4 billion was mostly due to an increase in land acquisitions by the Canterbury Earthquake Recovery Authority.

Rising increase in net worth

Central government net worth totalled $73.5 billion at June 2014, up $8.4 billion from 2013 due to both an increase in assets and a reduction in liabilities.

Flow, GFS balance sheet 2014.

Total assets increased $7.9 billion, to $210.8 billion at 30 June 2014 – mainly due to a $5.3 billion increase in non-financial assets. 

Non-financial assets can be broken down to increases in:

  • buildings and structures – up $3.2 billion, largely due to $1.4 billion more in state highway additions
  • land – up $1.5 billion, mostly due to a $0.9 billion increase in state highway land
  • other fixed assets – up $0.6 billion.

Financial assets increased by the remaining $2.6 billion, which can be broken down to increases in:

  • securities – up $3.7 billion, mostly held by the DMO, ACC, and the NZ Super Fund
  • shares and other equity – up $3.3 billion, driven by a large increase in the NZ Super Fund's holdings
  • loans – up $0.5 billion.

Partly offsetting the increases in financial assets were reductions in:

  • cash and deposits – down $2.0 billion
  • equity accounted investments – down $1.7 billion, driven by the partial sales of state-owned enterprises
  • other non-equity assets – down $1.3 billion.

Total liabilities fell $0.6 billion, to $137.4 billion at 30 June 2014. The fall was primarily due to a reduction in retirement plan liabilities (down $1.4 billion from 2013), and a reduction in insurance liabilities (down $1.8 billion) due to insurance claim payments made during 2014 to households affected by the Canterbury earthquakes. These movements more than offset the $2.3 billion increase in security liabilities.

Graph, Assets and liabilities, year ended June 2009 to 2014.

Net debt to GDP ratio falls

Net debt in the Government Finance Statistics system includes all financial assets and liabilities, except for shares and other equity and equity accounted investments. The ratio of net debt to nominal GDP decreased from 30.4 to 27.5 percent for the year ended June 2014. Net debt dropped due to both a small decrease in liabilities and a large increase in cash and cash equivalents, while nominal GDP increased significantly from $216.6 billion to $234.2 billion.

Graph, Net debt and percent of GDP, year ended June 2009 to 2014.

For more detailed data, see the Excel tables in the 'Downloads' box.


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