Statement of Specific Fiscal Risks (continued)
Education - Early Childhood Education Participation (unchanged, unquantified risk)
The Government is considering ways in which early childhood education participation of groups that are currently under-represented might be increased. Any costs would depend on the option chosen and the ability of the proposal to be funded within existing baselines. Currently, the Ministry's Performance Improvement Actions expect increased participation amongst under-represented groups. This is to be funded from savings from the Budget 2009 forecast Early Childhood Education expenditure. However, the Ministry has yet to realise the necessary savings. Because the final costs for a package depend on behavioural changes, this risk is unquantifiable at present, and may vary from costs agreed in Budget 2010.
Education, Social Development, Health and Revenue - Medical Training Places (changed, quantified risk)
The Government has considered funding 200 additional medical training places over five years. Sixty additional medical places were funded in Budget 2009, with a further twenty in Budget 2010. Proceeding with the remaining 120 places would require additional funding, although final costs would depend on the option chosen and the ability of the proposal to be funded within existing baselines. The estimated impact would be $12 million operating per annum by the end of 2014/15, and this grows beyond the forecast period.
Finance - Crown Overseas Properties (unchanged, quantified risk)
The Government holds New Zealand House in London on a long-term lease from the Crown Estate (UK). Depending on the Government's future intentions for this building, an upgrade may be required. Preliminary cost estimates for this upgrade total $150 million over the period 2010/11 to 2013/14.
Finance - Crown Retail Deposit Guarantee Scheme (unchanged, unquantified risk)
The Government operates an opt-in Retail Deposit Guarantee Scheme over financial institution deposits. The objective of the scheme is to ensure ongoing retail depositor confidence in New Zealand’s financial system, given the international financial market turbulence. A total of 73 financial institutions have been approved under the scheme. These are listed on the Treasury website. Deposits totalling $133 billion are under guarantee. The Crown also continually updates the likelihood of further default actions triggering the guarantee and assesses the expected loss given default. Based on these assessments, the Crown has provided for $881 million as at 31 March for future payments under this scheme after expected recoveries. The policy decision to extend and amend the Retail Deposit Guarantee Scheme to 31 December 2011 was announced on Tuesday 25 August 2009 and as at 30 April 2009, 4 financial institutions had been approved under the extended guarantee. This reflects the significant uncertainty as to the value that can be realised from an entity’s assets following an event of default. Except as provided on the Treasury website, further information on the Retail Deposit Guarantee Scheme cannot be provided due to commercial sensitivity.
Finance - Electricity Reforms (new, unquantified risk)
In December 2009, the Government announced a series of measures related to improving the operation of the electricity market, including reconfiguring State-Owned Enterprises' assets (virtual and physical asset swaps), a liquid hedge market, and measures to improve security of supply. Some details of these measures are yet to be decided; for example, the timing for the SOE asset reconfiguration. Given this, the impact of the reforms on the individual SOEs cannot currently be estimated. While some aspects of the measures, such as the physical asset swaps between Meridian and Genesis, should be fiscally neutral for the Crown as owner of the SOEs, other aspects may not be, but this cannot currently be quantified. There are also implementation costs associated with the reforms, estimated to be between $6 million and $12 million.
Finance - Government Commitments to International Financial Institutions (unchanged, unquantified risk)
The forecast level of government commitments to international financial institutions is subject to change, depending on the Government's response to any changed financial plans on the part of these institutions.
Finance - New Zealand Post Equity Injection to Fund Expansion (unchanged, unquantified risk)
A decision to fund New Zealand Post's business expansion through equity injection or other form of financial support is currently being sought.
Health - Additional WellChild Visits (unchanged, quantified risk)
The Government is considering providing funding for three additional WellChild visits during the first nine weeks of a baby's life. The initiative has not been funded in Budget 2009 or Budget 2010, and has been deferred for consideration in future Budgets. If approved, the indicative cost of this initiative would be $15 million operating in 2011/12 and outyears.
Health - Caregiver Employment Conditions (changed, unquantified risk)
The Employment Court has made a judgement in favour of two third-party employed caregivers regarding their sleepover employment conditions. Although the third-party employer is appealing the decision, an unsuccessful result would require consideration of the repercussions for the Crown.
Health - District Health Board Deficits (unchanged, unquantified risk)
Several District Health Boards (DHBs) have projected operating deficits in 2010/11. The Government has stated that it does not view projected DHB operating deficits as acceptable, and the Ministry of Health is working with DHBs to develop financial recovery plans. The Government has set aside funding in Vote Health to meet deficit requirements in 2010/11, anticipating that the DHB deficit position will improve in future years.
Health - H1N1 Pandemic (changed, unquantified risk)
In the event of a second wave H1N1 pandemic, there may be fiscal impacts as a result of an increase in demand for Tamiflu and antibiotics, and an increase in the utilisation of medical facilities.
Health - Payment of Family Caregivers (changed, unquantified risk)
The Human Rights Tribunal has declared that the Ministry of Health's policy of not employing family members to provide care to disabled relatives is in breach of S19 of the New Zealand Bill of Rights. An appeal has been lodged in the High Court.
Housing - Hobsonville Urban Development (unchanged, unquantified risk)
The Government has commenced the development of an integrated urban community at Hobsonville within an area known as the Buckley precinct. Funding was provided in Budget 2008 for this precinct, as well as any other costs that will be incurred concurrently in order to enable broader site works and whole of project infrastructure. Additional capital funding may be required for the subsequent precincts in future Budgets. This would increase net debt until 2013 when the development will begin providing a return to the Crown. This risk is unquantified as disclosure could compromise the Government in negotiations with potential private sector partners.
Housing - State Housing Tenancy Management (new, unquantified risk)
The Government is considering changing tenancy management practices for state house tenants, with the aim of increasing the proportion of houses that are occupied by high needs tenants. This is likely to result in higher costs to the Crown for the Income Related Rent subsidy paid to the Housing New Zealand Corporation and the Accommodation Supplement. The changes could also increase public expectations that all high needs applicants are housed, which could lead to pressure to increase the size of the state housing portfolio.
Housing - Weathertight Homes (unchanged, unquantified risk)
The Government is considering options to facilitate assistance to homeowners to repair homes affected by the weathertightness issues that occurred as a result of changes to building regulations and industry practices in the late 1990s and early 2000s.
Immigration - Immigration New Zealand Change Programme (changed, quantified risk)
The Immigration New Zealand Change Programme proposes an integrated approach to upgrading immigration services. Work is underway and further work is proposed, particularly a significant upgrade of existing ICT systems. Were the ICT component to proceed, estimated Crown capital costs are up to $62 million over four years from 2010/11 to 2013/14. Ongoing costs of the project would be funded from fees.
Immigration - Re-development of Mangere Refugee Centre (unchanged, quantified risk)
The existing refugee facilities at Mangere may need refurbishment. Initial estimated costs of the refurbishment are $5 million operating and $25 million capital.
Justice - Auckland Courthouse Capital Programme (new, quantified risk)
Forecast level of demand for court services under current policy settings indicates there may be a need for additional courthouse capacity in the greater Auckland region. If additional funding is provided, the overall estimated cost will be up to $160 million with $20 million in 2011/12, $25 million in 2012/13 and $115 million in 2013/14. The Minister of Finance has yet to fully consider the quantum of this risk.
Justice - Review of the Legal Aid System (changed, quantified risk)
The Government has already taken a number of steps to improve the administration of the legal aid system. The Government is developing further options for delivering legal aid services in a sustainable and affordable way. Final costs will depend on the further decisions that are expected to be taken in early 2011.
Ministerial Services - Rugby World Cup Visits Programme (new, quantified risk)
It is expected that the costs of the guest of government and state functions programme will be higher than usual during the year of the Rugby World Cup. It is currently estimated that, beyond the annual budget of $4 million, a further $12 million will be spent on showcasing New Zealand to a wide range of overseas visitors coming to New Zealand in connection with the event. These costs include official events, accommodation and hospitality for the guests of government.
Police - Digital Radio Network Phase 2 (changed, quantified risk)
The Government has previously funded the partial implementation of a Digital Radio Network in Wellington, Auckland and Christchurch, to be completed by December 2010. Police are still considering options for the further rollout of a National Digital Radio Network, possibly beginning in the 2011/12 fiscal year. Earlier estimates suggested costs of up to $150 million, comprising $28 million in capital in 2011/12, rising to $38 million in 2013/14; and $7 million of operating in 2011/12, rising to $18 million in 2013/14.
Research, Science and Technology - Research Infrastructure (new, unquantified risk)
The Government is considering a five year Research Infrastructure Strategy for Vote Research, Science and Technology. Current planning indicates this will cost $130 million to $200 million over five years. Any costs that are not able to be funded within baselines will decrease the operating allowance.
