Crown accounts show $8.7b deficit as net debt rises to $186.8b
The government ran an $8.7 billion deficit on its main operating measure in the year to 30 June 2026, according to Treasury's audited Financial Statements of the Government.
Treasury released the statements at 1pm on Thursday 8 October. They are the final audited figures for 2025/26. Secretary to the Treasury Iain Rennie and Finance Minister Nicola Willis signed them on 29 September. Willis said that, in her opinion, they fairly reflect the government's financial position at 30 June 2026.
The main measure is OBEGALx, the operating balance before gains and losses, excluding ACC. Treasury describes it as the government's headline operating balance indicator. The statements say OBEGALx has been in deficit every year since 2019/20 because total expenses have kept running ahead of total revenue.
Most of the shortfall came from the core Crown, which ran a $7.7b deficit. Crown entities other than ACC added $0.6b, and state-owned enterprises made a $0.8b surplus. Inter-segment eliminations, the accounting adjustments that remove transactions between different parts of the state, added a further $1.2b to the deficit.
Revenue rose to $172.4b from $169.8b, and tax brought in $125.1b of it. Expenses fell slightly, to $182.8b from $183.5b.
Of the $182.8b in spending, welfare was the largest item at $58.2b, followed by health ($31.8b), education ($22.9b), transport and communications ($17.5b) and economic and industrial services ($12.8b).
Net core Crown debt rose $4.6b to $186.8b. As a share of GDP it fell, from 41.8% to 40.9%. The economy grew faster than the debt did.
The core Crown ran a $2.2b operating cashflow deficit, meaning it paid out more in day-to-day cash than it collected. Its capital cashflow deficit was $2.7b. Together, after $0.3b of other movements, those account for the $4.6b rise in net debt.
On the broader operating balance, the books look much better. The government recorded a $1.1b surplus, against a $4.4b deficit in 2024/25. Day-to-day finances didn't drive the turnaround. Net gains on financial instruments came to $13.2b, and gains on non-financial instruments added $0.2b. Once other items are included, net gains and losses came to $11.4b, up from $9.3b the year before. Gains like these move with markets and valuations.
Net worth, excluding minority interests, fell to $188.4b from $189.1b. As a share of GDP the fall was larger, from 43.4% to 41.2%. Assets climbed to $620.3b, up from $598.0b, but liabilities grew faster, reaching $431.9b against $408.8b a year earlier. Borrowings made up $294.0b of the total, and insurance liabilities $74.5b.
The government has committed to reducing core Crown expenses and net core Crown debt as a proportion of GDP, and to returning to an operating surplus, the statements say. Its short-term intention is to get OBEGALx back into surplus by 2028/29.