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Budget 2014 Home Page Budget Economic and Fiscal Update 2014

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 2014 Status [9]

Potential policy decisions affecting revenue

 
ACC - Funding Policy Review Unchanged
Revenue - Income-sharing Tax Credits Unchanged
Services Funded by Third Parties Unchanged

Potential policy decisions affecting expenses (expected to be funded from reprioritisation or Budget allowances)

 
ACC - Work-related Gradual Process Disease and Infection Unchanged
Budget Operating Initiatives Changed
Canterbury Earthquake Recovery - Christchurch Central Recovery Plan Unchanged
Christchurch City Council/Crown Cost Sharing Unchanged
Communications - Ultra-Fast Broadband Initiative Unchanged
Defence Force - Operating and Capital Costs New
Finance - Concessionary Loans New
Government Response to Wai 262 Unchanged
Housing - Reform of Social Housing Unchanged
Revenue - KiwiSaver Auto-enrolment Changed
Revenue - Transformation and Technology Renewal Unchanged
Social Development - Vulnerable Children White Paper Changed
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 Crown balance sheet, including the FIF/capital allowance)

 
Departmental Capital Intentions Changed
Earthquake Strengthening for Crown-owned Buildings Unchanged
Finance - Crown Overseas Properties Unchanged
Primary Industries - Investment in Water Infrastructure Unchanged
Transport - Auckland Transport Projects Changed
Transport - Support for KiwiRail Changed

Matters dependent on external factors

 
ACC - Levies Unchanged
ACC - Non-earners' Account Unchanged
Canterbury Earthquake Recovery - Residential Red Zone Unchanged
Caregiver Employment Conditions New
Communications - Potential Impairment in Value of Broadband Investment Unchanged
Defence Force - Potential Rationalisation, Revaluation and Disposal of NZDF Assets Unchanged
Energy - Crown Revenue from Petroleum Royalties Unchanged
Finance - EQC Unchanged
Finance - Goodwill on Acquisition Unchanged
Finance - Solid Energy New
Finance - Southern Response Earthquake Services Support Unchanged
Housing - Divestment of Housing Unchanged
Revenue - Cash Held in Tax Pools Unchanged
Revenue - Student Loans New
Treaty Negotiations - Treaty Settlement Forecasts Unchanged
Treaty Negotiations - Relativity Clause Unchanged

Potential Policy Decisions Affecting Revenue

ACC - Funding Policy Review (Unchanged)

The Government is undertaking a review of ACC's funding policy. Adopting a lower funding target band midpoint would result in a reduction in levies and reduce 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 could reduce tax revenue by $500 million a 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 Parties (Unchanged)

A wide range of government services are funded through third party fees and charges. Demand for these services can vary with a direct impact 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 services. 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

  • [9]Unchanged - risks that have not substantively 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.
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