Statement of Specific Fiscal Risks
Summary Table
The matters listed below are disclosed as specific fiscal risks because they meet the rules for disclosure outlined after this Statement. Full descriptions of the risks listed below are set out in the next section. Where quantification is possible, this is included in the description of the risk.
| Specific fiscal risks as at 29 April 2013 | Status [12] |
|---|---|
Potential policy decisions affecting revenue |
|
| ACC - Levies | Unchanged |
| ACC - Review of Funding Policy | Changed |
| Revenue - Income-sharing Tax Credits | Unchanged |
| Services Funded by Third Party Revenue | Unchanged |
Potential policy decisions affecting expenses (expected to be funded from reprioritisation or Budget allowances) |
|
| ACC - Work-related Gradual Process Disease and Infection | Unchanged |
| Canterbury Earthquake Recovery - Christchurch City Council/Crown Cost Sharing | Changed |
| Canterbury Earthquake Recovery - Christchurch Central Recovery Plan | New |
| Defence Force - Funding Track Evaluation | New |
| Government Response to Wai 262 | Unchanged |
| Health - Payment of Family Caregivers | Changed |
| Housing - Reform of Social Housing | Unchanged |
| Revenue - KiwiSaver Auto-enrolment | Unchanged |
| Revenue - Transformation and Technology Renewal | Changed |
| Social Development - Vulnerable Children White Paper | Unchanged |
| Social Development - Welfare Reform Costs | Changed |
| Social Development - Welfare Reform Forecast Benefit Savings | Unchanged |
| State Sector Employment Agreements | Unchanged |
Potential capital decisions (expected to be funded from the existing Crown balance sheet, including the Future Investment Fund) |
|
| Departmental Capital Intentions | Unchanged |
| Earthquake Strengthening for Crown-owned Buildings | Unchanged |
| Finance - Crown Overseas Properties | Unchanged |
| Justice - Christchurch Justice and Emergency Services Precinct | New |
| Primary Industries - Investment in Water Infrastructure | Changed |
| Transport - Support for KiwiRail | Changed |
Matters dependent on external factors |
|
| ACC - Non-earners' Account | Unchanged |
| Canterbury Earthquake Recovery - Residential Red Zone | Unchanged |
| Communications - Potential Impairment in the Value of Broadband Investment | Unchanged |
| Defence Force - Potential Rationalisation, Revaluation and Disposal of NZDF Assets | Unchanged |
| Energy - Crown Revenue from Petroleum Royalties | Unchanged |
| Environment - Post-2012 International Climate Change Obligations | Changed |
| Finance - EQC | Unchanged |
| Finance - Goodwill on Acquisition | Unchanged |
| Finance - Government Commitments to International Finance Institutions | Unchanged |
| Finance - New Zealand Aluminium Smelters Contract | New |
| Finance - Sale of Part of the Crown's Shareholding in Certain Companies | Changed |
| Finance - Solid Energy | New |
| Finance - Southern Response Earthquake Services Support Package | Unchanged |
| Health - Litigation in the Disability Support and Aged Care Sectors | New |
| Housing - Divestment of Housing | Unchanged |
| Revenue - Cash Held in Tax Pools | Unchanged |
| Treaty Negotiations - Treaty Settlement Forecast | Unchanged |
| Treaty Negotiations - Relativity Clause | Unchanged |
Potential Policy Decisions Affecting Revenue
ACC - Levies (Unchanged)
Levy rates for the Work, Earners' and Motor Vehicle accounts are set by Cabinet following a public consultation process. Claims experience, ACC performance and economic assumptions (particularly discount rates) can impact insurance expenditure, both in the current year and the estimated future liability. If any of these factors differ from what is forecast the revenue collected may be more or less than required to cover the costs of claims, resulting in unplanned savings or costs that could have a corresponding impact on the operating balance.
ACC - Review of Funding Policy (Changed)
The Government is undertaking a review of ACC's funding policy. An estimate of the cost of adopting a lower funding target band midpoint has been included in the fiscal forecasts. If levy rates differ from those assumed in the forecasts, this would impact Crown revenue and Crown assets, with a flow-on impact to the operating balance.
Revenue - Income-sharing Tax Credits (Unchanged)
The Government has introduced legislation to establish an income-sharing tax credit. If passed as introduced, the legislation will allow couples with children under the age of 18 to pool their earnings for income tax purposes if they meet certain criteria. If implemented, the changes will reduce tax revenues by $500 million per year once the scheme is fully operational. The Finance and Expenditure Committee has recommended that the significant fiscal cost of the package be addressed before the Bill proceeds further.
Services Funded by Third Party Revenue (Unchanged)
A wide range of government services are funded through third party fees and charges. Demand for these services can vary, leading to a direct effect on revenue received. There is a risk the Government may need to provide additional funding if revenue collected is lower than the total costs of providing the service. There is also a risk that changes will be required to the way government services are delivered, which could result in costs to the Crown.
Notes
- [12]Unchanged - risks that have not materially changed since the previous Economic and Fiscal Update. Changed - risks that have changed substantively from the previous Economic and Fiscal Update. New - risks that have not been disclosed in the previous Economic and Fiscal Update.
