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Preview of 2017 government finance statistics improvements
This page outlines the key improvements to New Zealand's 2017 government finance statistics (GFS). The improvements will appear in Government Finance Statistics (General Government): Year ended June 2017, which will be published on 24 November 2017.

GST methodology change

We have revised goods and services tax (GST) upward, which caused a level shift in general government revenue across the time series. The revision is a result of improved methodology underpinning the GST receipts recognised under the GFS framework.

The GFS GST values differ from those reported by Inland Revenue (IRD). This is because we record government social assistance benefits in kind (SABIK) expenditure as GST inclusive, to ensure a single purchaser price for any good or service regardless of the portion paid by government and households. Due to this treatment we do not net out the corresponding GST credit claim of the government supplier to IRD. This has the effect of increasing both SABIK expenditure and GST revenue for general government, which leaves the operating balance unaffected by this presentation.

Reclassification of public sector units

We have looked into the classification of units within the public sector and moved some entities from general government to the public corporations sector as a result. This has an impact on the consolidation of financial flows and stock positions within the general government GFS release.

We have revised Income and expenditure down slightly for general government due to the reclassifications. The unit’s non-financial assets are no longer recognised in the balance sheet of general government. However, the values are now implicitly recorded as an equity accounted investment under financial assets. This means that general government net worth is unaffected by the change.

Capital transfer changed to an equity withdrawal

We have reviewed the transfer of social housing earmarked for redevelopment. As a result of the review, capital transfer income received by general government for the year ended June 2016 is reclassified to an equity withdrawal. This has a large downward effect on the operating surplus during the period.

ACC outstanding claims liability

The outstanding claims liability of the Accident Compensation Company (ACC) has been removed from the core balance sheet of general government and is instead featured as a memorandum item below the line. This has a large impact on general government net worth and debt due to this downward revision to insurance liabilities.

The change in treatment is to better align with international best practice for the treatment of social security schemes under the GFS framework and to be consistent with the System of National Accounts. Including social security scheme obligations in the core accounts has an undesirable impact on the household sector which would hold the financial claim as the counterparty. In the case of ACC, it would mean that an approved accident insurance claim to cover the loss of work into the foreseeable future could result in a short-term spike in household wealth and income, which doesn’t reflect the reality of the transaction or the dampening effect it would have on consumption.

Local Authority Census data for 2016

We replaced the local government provisional estimates for the year ended June 2016 with final data from the Local Authority Census (LAC). The resulting revisions are minor. Revisions of this nature are expected as we continue to model provisional estimates for the local government sector in the absence of LAC data for the latest published year.

Due to the lag in availability of LAC data, it is necessary to model provisional estimates for the local government sector for the latest published year.

Published 10 November 2017

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