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Notes to the Financial Statements (continued)

Note 7: Personnel Expenses
Forecast Actual
Original
Budget
$m 		Estimated
Actuals
$m 		30 June 2008
$m 		30 June 2007
$m
By type  
14,494 15,035 Salaries and wages 14,948 14,088
637 764 Costs incurred on GSF and other defined benefit plans 711 661
214 195 Costs incurred on SSRSS and other defined contribution plans 274 180
312 428 Other personnel expenses 545 355
15,657 16,422 Total personnel expenses 16,478 15,284
By source  
5,434 5,621 Core Crown 5,584 5,092
8,213 8,624 Crown entities 8,741 8,183
2,011 2,186 State-owned Enterprises 2,164 2,018
(1) (9) Inter-segment eliminations (11) (9)
15,657 16,422 Total personnel expenses 16,478 15,284
Key management personnel compensation  
Salaries and other short-tem employee benefits 7 7
7 7

Key management personnel are Ministers of the Crown who are members of Cabinet.

The Cabinet Manual sets out guidance in respect of Ministers' conduct, public duty, and personal interests. Ministers are responsible for ensuring that no conflict exists or appears to exist between their personal interests and their public duty. Therefore, there is a clear expectation that Ministers will not influence or affect any transactions and outstanding balances between the Government and themselves or their family, whanau, and close associates.

Note 8: Depreciation and Amortisation
Forecast Actual
Original
Budget
$m 		Estimated
Actuals
$m 		30 June 2008
$m 		30 June 2007
$m
Depreciation expense  
989 1,000 Buildings 980 936
87 89 Electricity distribution network 136 110
276 294 Electricity generation assets 266 228
215 253 Aircraft (excluding military) 166 192
255 256 State highways 302 299
177 177 Rail network 163 149
286 224 Specialist military equipment 222 238
854 816 Other plant and equipment 819 743
-  16 Specified cultural and heritage assets 20 16
3,139 3,125 Total depreciation expense 3,074 2,911
157 493 Amortisation and impairment of non-financial assets 596 486
3,296 3,618 Total depreciation and amortisation 3,670 3,397
Note 9: Other Operating Expenses
Forecast Actual
Original
Budget
$m 		Estimated
Actuals
$m 		30 June 2008
$m 		30 June 2007
$m
By type  
-  -  Inventory expenses 300 280
2,085 3,061 Donations and ex gratia payments 3,190 2,580
10 6 Fees paid to audit firms (refer below) 3 4
133 1,407 Impairment of financial assets 1,189 2,904
231 215 Impairment of inventory 2 15
412 417 Lottery prize payments 432 414
823 909 Rental and leasing costs 952 907
518 628 Write-down on initial recognition of financial assets 559 629
24,785 22,574 Other operating expenses 24,029 20,109
28,997 29,217 Total other operating expenses 30,656 27,842
By source  
28,785 29,564 Core Crown 29,219 28,951
14,323 13,478 Crown entities 14,391 12,452
8,168 8,353 State-owned Enterprises 9,853 7,363
(22,279) (22,178) Inter-segment eliminations (22,807) (20,924)
28,997 29,217 Total operating expenses 30,656 27,842

Operating expenses relate to those expenses incurred in the course of undertaking the functions and activities of entities included in the Government financial statements, excluding those expenses separately identified in the statement of financial performance and other notes. Items disclosed separately are those required by Financial Reporting Standards.

Other operating costs is the large residual item. Most of these costs represent payments made for services provided by third parties (roading maintenance for example) or for raw materials (fuel, medicines or inventory for example). They also include other day-to-day operating costs.

Actual
30 June 2008
$m 		30 June 2007
$m
Audit related expenses  
Office of the Auditor General fees (including Audit NZ)  
Fees for the audit of financial statements1 30 26
Fees for assurance and related services 1 1
Fees for other services 2 1
Other auditors' fees  
Fees for assurance and related services 1 2
Fees for tax services 1 1
Fees for other services 1 1
Inter-segment eliminations (33) (28)
Fees paid to audit firms 3 4

1 The audit of financial statements are those of the Government reporting entity and its sub-entities.

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