Net operating balance surplus continues to grow
Government finance statistics for general government show the net operating surplus was $7.0 billion in the year ended June 2016. This was an improvement from the June 2015 year, when the net operating balance was a surplus of $3.2 billion. The 2016 surplus was due to large and continuing income growth (up 7.0 percent from 2015), driven by an increase in tax intake, combined with relatively low growth in expenses (up 2.9 percent).
Operating income rose by $6.4 billion to a total of $97.9 billion in the year ended June 2016. The main drivers for the increase in 2016 were:
- Taxation revenue was up $4.3 billion (up 5.8 percent) due to strong growth in all three major tax types.
- Capital transfers received was up $1.6 billion, due to some of Housing New Zealand's ownership of land and buildings being transferred to central government.
- Dividends received was up $0.6 billion, mostly due to a large dividend paid out to central government by the Reserve Bank of New Zealand.
Operating expenses increased by $2.6 billion to a total of $90.9 billion in the year ended June 2016. Social benefits (up $1.0 billion from 2015) and employee expenses (up $0.8 billion) were the main drivers.
General government net lending in the June 2016 year was $2.8 billion, compared with a net borrowing figure of $0.9 billion in the year ended June 2015. The change from net borrowing to net lending for general government is due to a large operating surplus combined with relatively low growth in the net acquisition of non-financial assets.
Slower rise in net worth
General government net worth totalled $196.1 billion at 30 June 2016, up $5.4 billion from 2015. This $5.4 billion increase compares with the $14.8 billion increase in the previous year. The slower growth in 2016 is due to a relatively large increase in central government liabilities, up $10.5 billion from 2015. Local government net worth grew by $2.7 billion in 2016, which compares with $3.5 billion in 2015. Local government makes up 57.6 percent of total general government net worth.
Net debt to GDP ratio increases
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 general government net debt to nominal GDP increased from 30.6 percent to 33.7 percent for the year ended June 2016. The increased net debt was mostly due to increases for central government insurance and retirement plan liabilities as a result of changes to the actuarial assumptions, such as the expected future interest rates and inflation. Central government net debt has been decreasing in nominal terms since the last Canterbury earthquake in 2012, with the exception of 2016. Local government net debt has been increasing in nominal terms across the time series due to the rebuild in Christchurch and the expansion of core infrastructure in Auckland. Nominal GDP increased from $241.6 billion to $251.8 billion during the year.
For more detailed data, see the Excel tables in the 'Downloads' box.