Statement of Specific Fiscal Risks
Context of the specific fiscal risks
The Statement of Specific Fiscal Risks sets out all government decisions, contingent liabilities or contractual obligations known to the government and subject to specific materiality requirements that may have a material effect on the economic or fiscal outlook[9].
The risks outlined in this chapter, should they eventuate, would only have an effect on the operating balance and/or net debt to the extent that they were not funded from within budget allowances, by reprioritising existing expenditure or through third-party revenue.
Policy options for many risks require further development, and the quantum of the risk is often uncertain. Consequently, the final cost or saving may differ from the amounts disclosed in this chapter.
Categories of risk
Previously, risks were grouped according to whether or not they were quantified. To improve the presentation of the information, they are now categorised to help explain the impact the risk would have if it were to occur. The categories of risk are explained and listed below.
- Pending policy decisions affecting revenue: Changes to tax policy or ACC levies could reduce or increase Government income from taxes or levies.
- Pending policy decisions affecting expenses: Costs of policy proposals could increase or decrease depending on decisions taken and they are risks to the extent that they cannot be managed within baselines or budget allowances.
- Pending capital decisions: Capital investment decisions are risks to the extent that they cannot be managed within balance sheets or budget allowances.
- Matters dependent on external factors: The liability of the Government for costs is sometimes dependent on external factors such as the outcome of negotiations or international obligations.
Summary table
The matters listed below are disclosed as specific fiscal risks because they meet the rules for disclosure outlined in the next section. Full descriptions of the risks listed below are set out following the rules for disclosure.
| Specific fiscal risks as at 22 November 2010 | Status | Value of risk |
|---|---|---|
Pending policy decisions affecting revenue |
||
| ACC - Levies and Non-earners' Account | Changed | Unquantified |
| Revenue - Income-sharing Tax Credits | New | $500m per annum by 2014/15 |
| Revenue - Potential Tax Policy Changes | Changed | Unquantified |
| Risk to Third Party Revenue | Unchanged | Unquantified |
Pending policy decisions affecting expenses |
||
| Corrections - Community Probation Services Capacity | Changed | $25m per annum operating expenditure and $20m capital expenditure |
| Education - Early Childhood Education Funding | Changed | Unquantified |
| Education - Operating Funding for New Schools | New | Unquantified |
| Education - Inflation Adjustment for School Operating Funding | Unchanged | Unquantified |
| Education - Repairing Leaky Schools | Unchanged | Unquantified |
| Finance - Electricity Reforms | Changed | Unquantified |
| State Sector Employment Agreements | Unchanged | Unquantified |
| Housing - Housing Shareholders' Advisory Group | New | Unquantified |
| Justice - Review of the Legal Aid System | Unchanged | Unquantified |
| Revenue - Child Support | Unchanged | Unquantified |
| Revenue - Redesigning Business Processes at Inland Revenue | Unchanged | Unquantified |
Pending capital decisions |
||
| Corrections - Prison Capacity | Changed | $600m capital expenditure and $90m per annum operating expenditure |
| Communications - Broadband Investment Initiative | Changed | $1,010m |
| Education - Broadband Investment: Schools | Changed | $205m |
| Education - School Property | Changed | $1,950m |
| Finance - Crown Overseas Properties | Unchanged | $150m |
| Housing - Weathertight Homes | Changed | Unquantified |
| Justice - Auckland Region Property Strategy | Changed | $150m over three years |
| Police - Digital Radio Network Full Implementation | Changed | $170m capital expenditure and $5m rising to $30m per annum operating expenditure |
| Transport - Support for New Zealand Railways Corporation (KiwiRail) | Changed | $950m |
Matters dependent on external factors |
||
| Canterbury Earthquake - Land | New | Unquantified |
| Canterbury Earthquake - Local Authorities | New | Unquantified |
| Climate Change - ETS and International Climate Change Obligations | Unchanged | Unquantified |
| Climate Change - Finance for Developing Countries | Changed | Unquantified |
| Defence Force - Future Operationally Deployed Forces Activity | Unchanged | $30m per annum |
| Defence Force - Sale of Skyhawks and Aermacchi Trainers | Changed | Unquantified |
| Energy - Crown Revenue from Petroleum Royalties | New | Unquantified |
| Finance - Original Crown Retail Deposit Guarantee Scheme | Changed | Unquantified |
| Finance - Extended Crown Retail Deposit Guarantee Scheme | New | Unquantified |
| Finance - Government Commitments to International Financial Institutions | Unchanged | Unquantified |
| Health - Caregiver Employment Conditions | Changed | $100m per annum |
| Health - Payment of Family Caregivers | Unchanged | Unquantified |
| Revenue - Cash Held in Tax Pools | Unchanged | Unquantified |
| Reviews of the Delivery of Public Services | Unchanged | Unquantified |
| State Services - KiwiSaver Contribution | Unchanged | Unquantified |
| Treaty Negotiations - Treaty of Waitangi Claims - Settlement Relativity Payments | New | Unquantified |
Notes
- [9]The Statement of Specific Fiscal Risks is a requirement set out in sections 26Q and 26U of the Public Finance Act 1989.
