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Budget 2006 Home Page Half Year Economic & Fiscal Update 2006

Time-limited Funding

Time-limited funding does not meet the definition of a “risk” under the PFA, but is further information that is prepared to increase transparency about initiatives with funding profiles that cease or decrease during the forecast period.

The following table outlines those areas where initiatives have time-limited funding that decreases or ceases at some point and may potentially be extended, using a $5 million materiality threshold. Time-limited funding often relates to pilot programmes, and in some cases Multi Year Appropriations (MYAs) if they are likely to require further funding in the future.


Vote
Description of Initiative Operating Impact ($million)
Community and Voluntary SectorDigital Strategy – Community Partnerships Fund17 from 2005/06 to 2008/09 (MYA)
CommunicationsDigital Strategy – High-speed Connectivity for Growth20 from 2005/06 to 2008/09 (MYA)
Economic, Industry and Regional DevelopmentRegional Partnerships and Facilitation for Sustainable Economic Growth57 from 2004/05 to 2006/07 (MYA)
EnergyAcquisition of Petroleum Exploration Data21 from 2004 to 2007 (MYA)
EnergyElectricity Efficiency Programme8 in 2005/06 and 10 in 2006/07
HousingRural Housing Programme9 in each of 2005/06 and 2006/07, 7 in 2007/08
Internal AffairsSignificant Community-based Projects Fund40 from 2005/06 to 2008/09 (MYA)
LandsLand Tenure Reform40 from 2005/06 to 2007/08 (MYA)
PoliceRegional Assistance Mission Solomon Islands and Solomon Island executive support7 in each of 2005/06 and  2006/07
Sport & RecreationChildren’s and Young People’s Lifestyles8 in 2006/07, 10 in 2007/08, 6 in each of 2008/09 and 2009/10
TourismTourism Demand Subsidy Scheme7 in 2006/07

The following table shows the impact on the operating balance if funding were to be appropriated to maintain funding levels for these initiatives (ie, extend the initiatives beyond their current scheduled completion dates). These amounts would need to be managed within the forecast operating spending.

Operating Impact ($million) 2006/07 2007/08 2008/09 2009/10 2010/11 and Outyears
Funding to extend initiatives-50778894

Quantified Risks

The risks outlined in these tables would, if they eventuated, impact on the Government’s forecast new operating and/or capital spending amounts.

The Minister of Finance has yet to fully consider the quantum of these risks.

Quantified Risks as at
8 December 2006
Operating Balance Gross Debt Value of Risk
($million)
Funding Received in or since Budget 2006
($million)
New Risks     
Education – Early Childhood Education Ratio ChangesDecrease-90 per annum-
Social Development – New Zealand Superannuation – Rate AdjustmentDecrease-23 in 2006/07, 90 in 2007/08, 68 in 2008/09 and 28 in 2009/10 only-
Changed Risks     
Culture and Heritage – Broadcasting InitiativesDecrease-27 per annum6 per annum
Education – School PropertyDecreaseIncrease180 capital in each of next 4 years, and operating of 10 per annum from 2007/08158 capital and 27 operating from 2006/07 to 2010/11
Education (Tertiary) – Centres of Research ExcellenceDecreaseIncrease20 capital in 2007/08 and 10 per annum operating-
Health – Indicative Funding for Budgets 2007 and 2008Decrease-691 in 2007/08 and 1,441 per annum from 2008/09-
Justice – New Supreme Court – Cost EscalationDecreaseIncreaseUp to 45 capital and 4 per annum operating-
New Zealand Defence Force – Defence – Capital Injections-Increase257 capital from 2007/08 to 2010/11297 capital in 2006/07
Police – Increases to Police StaffDecreaseIncreaseOperating of 63 in 2007/08, 105 in 2008/09, 116 in 2009/10 and 117 per annum from 2010/11 and capital of 122 from 2007/08 to 2010/1132 per annum operating and 49 capital from 2006/07 to 2010/11
Unchanged Risks     
Economic Development – Venture Investment Fund-Increase40 capital in 2009/10 and 2010/1160 capital from 2006/07 to 2008/09
Education (Tertiary) – Vocational TrainingDecrease-8 in 2007/08, 23 in 2008/09 and 30 per annum from 2009/1016 from 2006/07 to 2010/11
Finance – National Rail Network – Obligations of Rail Agreement-Increase60-70 per annum capital from 2007/0850 capital in 2006/07
Finance – National Rail Network – Reconfiguration of Land-Increase30 capital in 2007/08, unclear thereafter53 capital in 2006/07
New Zealand Defence Force – Sale of Skyhawks and Aermacchi Trainers -Decrease120 capital -
Research, Science and Technology – Multi-year Funding ProfileDecrease-30 in 2007/08, 60 in 2008/09 and 90 per annum from 2009/1025 per annum operating and 5 capital in 2006/07

Unquantified Risks

The risks outlined in these tables would, if they eventuated, impact on the Government’s forecast new operating and/or capital spending amounts.

Unquantified Risks as at
8 December 2006
Operating Balance Gross Debt Funding Received
in or since Budget 2006
($million)
New Risks    
Economic Development – Increasing Stadium Capacity for the Rugby World Cup-Increase-
Economic Development – Radio Spectrum RightsIncrease--
Revenue – Extending the Specified Superannuation ContributionDecrease--
Revenue – International Financial Reporting StandardsUnclear--
Revenue – Life InsuranceUnclear--
Revenue – Tax Incentives for Giving to Charities and Other Non-Profit OrganisationsUnclear--
Transport – Extending the State Highway Construction and Revenue Guarantee-Increase-
Changed Risks    
Corrections – Capital ProjectsDecreaseIncrease121 operating
Education (Tertiary) – Tertiary Education Expenditure ReviewUnclearUnclear-
Education (Tertiary) – Tertiary Education Institutions – Capital Injections-Increase-
Education (Tertiary) – Wananga Capital Injections-Increase-
Environment – Climate Change PoliciesUnclear-16 in 2006/07
Health – District Health Board DeficitsDecreaseIncrease-
Revenue – Business Tax ReviewUnclear--
Social Development – Working New Zealand – Work Focused SupportDecrease--
State Services Commission – State Sector Retirement Savings SchemeDecrease--
Unchanged Risks    
Conservation – Lease of Taupo Property Rights from TuwharetoaDecrease--
Education – Schools ICT Network Infrastructure UpgradeDecreaseIncrease4 capital
Education – Year One Class SizesDecreaseIncrease-
Education (Tertiary) – Partnerships for Excellence-Increase-
Education (Tertiary) – Tertiary Student Support ChangesDecreaseUnclearOperating expenditure of 1 in 2006/07, 2 in 2007/08, 3 in 2008/09 and 4 per annum from 2009/10; capital savings of 13 in 2006/07, 22 in 2007/08 and 25 in 2008/09 and 2009/10
Finance – Crown Overseas Properties-Increase-
Finance – National Rail Access Agreement AmendmentsUnclearUnclear-
Finance – SOE Long-term Hold Reviews-Decrease-
Fisheries – Civilian Maritime Aerial SurveillanceDecreaseIncrease-
Fisheries – Māori Interest in Marine FarmingDecrease--
Housing – State Housing Project at Hobsonville-Increase-
Immigration – New Immigration Service Delivery StrategyUnclear--
Justice – Strengthening the National Court InfrastructureDecreaseIncrease-
National Library – National Library Building Extension-Increase-
Revenue – Family Assistance Indexation and Review of RatesDecrease--
Revenue – Rebuild of the Student Loan IT SystemDecreaseIncrease-
Revenue – Taxation of Partnerships ReviewUnclear--
Social Development – Child, Youth and Family Services – Reviewing Levels of Funding and Service DeliveryUnclearUnclear-
Social Development / Housing – Accommodation Supplement ReviewDecreaseIncrease-
Social Development – New Zealand Superannuation – International Mobility IssuesUnclear--

Risks Removed Since the 2006 Budget Update

The following risks have been removed since the 2006 Budget Economic and Fiscal Update.

Expired Risks Reason Funding Received
($million)
Conservation – Foreshore and Seabed CompensationNo longer meets criteria for disclosure-
Corrections – Collective Employment Contract NegotiationsIn forecasts-
Education – Expansion of NZ Diploma in Specialist SubjectsIn forecasts11 in 2006/07 and 10 in 2007/08 only
Energy – Oil Security – Meeting International Energy Agency ObligationsIn forecasts-
Justice Sector Agencies – Potential Flow-on Impact of Extra PoliceIn forecasts96 from 2006/07 to 20010/11
Labour – Department of Labour Strategic Baseline ReviewExpired        -
New Zealand Defence Force – Environmental Clean-up of Devonport Seabed ContaminationNo longer meets criteria for disclosure-
Police – Wage NegotiationsIn forecasts40 in 2006/07, 83 in 2007/08, 90 in 2008/09 and 91 per annum thereafter
Reserve Bank of New Zealand – Liquidity Management PolicyIn forecasts-
Revenue – Fringe Benefit Tax ReviewExpired-
Revenue – Tax and DepreciationNow part of Business Tax Package-
State Services Commission – All-of-Government AuthenticationIn forecasts11 in 2006/07, 7 in 2007/08 and 4 in each of 2008/09 and 2009/10
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