(Bloomberg) -- New Zealand may adjust how it reports the budget balance in future years as it weighs whether certain government-owned agencies should be included, Finance Minister Nicola Willis said.
Speaking to a parliamentary select committee Tuesday in Wellington, Willis said she was assessing whether self-sustaining entities like the state-owned accident insurer ACC should be included in the Operating Balance Before Gains and Losses, or OBEGAL.
ACC is required to be self funding over time because the levies it collects from employees are designed to offset its future liabilities. Still, the agency can report a significant deficit in some single years when claims surge or levy income drops.
In the year ended June 30 the budget deficit was NZ$12.9 billion ($7.6 billion), which included ACC’s deficit of NZ$4.1 billion.
Willis said a fiscal strategy report in May identified that having large crown entity deficits in the headline operating balance indicator “risks undesirable fiscal strategy responses, especially if those crown entities are self-funding and financially sustainable.”
“The fiscal strategy report said there is an argument to exclude those sorts of entities, of which ACC is the prime and key example, from the headline indicator,” she said. “I will have more to say about our review of those indicators in the budget policy statement later this month.”
Willis said she was concerned that a future government could decide to cut money out of ACC in order to make the books look better.
“So when you think about those self-sustaining financially sustainable entities, I think we do need to consider them differently in terms of the OBEGAL measure,” she said. The budget policy statement is released on Dec. 17.
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