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Half Year Economic & Fiscal Update 2009

Specific Fiscal Risks

The matters listed below are disclosed as specific fiscal risks as they meet the rules for disclosure outlined on pages 52 and 53.

Quantified and unquantified risks are listed separately. Within each list the risks have been categorised as new or changed/unchanged since the last economic and fiscal update.

Risks are unquantified if the amount of the risk is unknown, or if the matter is partially disclosed as an unquantified risk (as full disclosure would be likely to prejudice New Zealand's substantial economic interests, security, defence or international relations; or compromise the Crown in a material way in negotiation, litigation or commercial activity; or result in a material loss of value to the Crown).

Fuller descriptions of the risks listed below are included on pages 61 to 73.

Quantified Risks

If they were to eventuate the risks outlined in these tables would, to the extent that they cannot be funded from future Budget allowances, by reprioritising existing expenditure, or through third party revenue, impact the Government's forecast financial position (as indicated in the table below).

A negative fiscal impact means an increase in net debt and possibly a decrease in the operating balance.

Quantified risks as at 25 November 2009 Impact on fiscal position Value of risk
New risks    
Economic Development - Large Budget Screen Production Fund Negative $34m in 2009/10
Justice - Family Court Professional Services Negative $8m operating in 2009/10 rising to $22m per annum by 2012/13
Changed risks    
Corrections - Community Probation and Psychological Services Negative $78m operating per annum by 2013/14 and $61m capital
Corrections - Prison Construction Negative $150m operating per annum by 2018/19 and $915m capital between 2009/10 and 2017/18
Customs - Joint Border Management System Replacement Negative $15m operating in 2011/12 reducing to $9m per annum from 2012/13 and $66m capital
Education - Additional Funding for School Property Negative $168m capital
Education - Broadband Investment: Schools Negative $116m capital
Education - Trades Academies Negative $10m to $20m capital
Immigration - Immigration New Zealand Change Programme Negative $65m capital
Justice - Review of the Legal Aid System Negative $18m operating in 2009/10 rising to $178m by 2013/14
New Zealand Defence Force - Future Operationally Deployed Forces Activity Negative $30m operating per annum from 2010/11
New Zealand Defence Force - Sale of Skyhawks and Aermacchi Trainers Positive $130m capital
Police - Digital Radio Network Full Implementation Negative $7m operating in 2011/12 rising to $18m in 2013/14 and $66m capital
Transport - NZRC Operating Support and Loans Negative Up to $260m in operating and/or capital
Unchanged risks    
Economic Development - Broadband Investment Initiative Negative $1,210m capital
Education - Early Childhood Education Ratio Changes Negative $55m operating per annum
Education - School Staffing Entitlements Negative $45m operating in 2011/12 and $50m in 2012/13 and outyears
Education - Youth Guarantee Negative Up to $51m operating per annum
Education, Social Development, Health and Revenue - Medical Training Places Negative $11m operating and $3m capital per annum by 2012/13, growing beyond the forecast period
Finance - Crown Overseas Properties Negative $150m capital between 2009/10 and 2013/14
Health - Additional WellChild Visits Negative $15m operating per annum
Health - Building Dedicated Elective Theatres Negative $20m operating in 2010/11, $40m operating per annum from 2011/12 and $36m capital
Health - Funding Increase for Subsidised Medicines Negative $60m operating in 2010/11, and $80m operating per annum from 2011/12
Immigration - Redevelopment of Mangere Refugee Centre Negative $5m operating, $25m capital one-off and $25m operating per annum
Justice - Greater Auckland Region Service Delivery Strategy Negative $265m operating or capital
Revenue - GST - Business to Business Transactions Positive $50m operating per annum
Revenue - Impairment of Crown Debt Administered by Inland Revenue Positive or Negative $200m capital decrease to $50m capital increase
Revenue - Reinstatement of Deferred Tax Cuts Negative $900m operating per annum
Social Development - Increasing the Abatement-free Income Threshold Negative $27m operating per annum
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