Supplementary Financial Schedules – Non-Departmental for the year ended 30 June 2007

The following supplementary financial schedules record the expenses, revenue and capital receipts, assets and liabilities that the Department manages on behalf of the Crown. These supplementary financial schedules include NZDMO balances reported on pages 88 to 99.

The Department administered $3,732 million of expenses, $4,998 million of revenue, $159 million of capital receipts, $23,926 million of assets and $47,565 million of liabilities on behalf of the Crown for the year ended 30 June 2007.

The financial information reported in these schedules is consolidated into the Crown financial statements, and therefore readers of these schedules should also refer to the Crown financial statements for the year ended 30 June 2007.

Overview

Borrowing expenses:

NZDMO’s debt servicing expenses decreased by $245 million from 2005/06, primarily as a result of reduced Treasury bill issuance, relating to the Reserve Bank of New Zealand’s new liquidity management regime, and also lower levels of New Zealand Government Bonds (page 79).

Capital charge:

Capital charge receipts in 2006/07 increased by 7% compared with 2005/06. This was due to an increase in the capital base of departments, primarily as a result of revaluations of property, plant and equipment, which was partially offset by a reduction in the capital charge rate from 8% to 7.5% (page 81).

Dividends:

SOE dividends decreased by $469 million from 2005/06 (page 81), primarily as a result of a special dividend from Meridian Energy in 2005/06 due to the sale of an Australian subsidiary. This reduction was partially offset by an increase in dividends received from Air New Zealand in 2006/07.

Crown entity dividends decreased by $66 million, as a special dividend had been received from Television New Zealand during 2005/06.

CRI dividends decreased by $17 million, due to a reduction in the level of dividends received from NIWA and AgResearch.

Foreign-exchange losses/(gains):

Foreign-exchange losses were $37 million in 2006/07, compared with gains of $26 million in 2005/06, as a result of movements in exchange rates affecting the value of New Zealand’s shareholding in the Asian Development Bank and the World Bank (page 78). The reduction in value of these investments is also reflected in “Other Investments” (page 83).

GSFA – Subsidies to GSF Schemes:

GSF benefit payments were 11% lower than 2005/06, as a greater number of Police members transferred their funds to a dedicated Police scheme during the prior year (page 79).

GSF unfunded liabilities:

The GSF unfunded liability as at 30 June 2007 was $10,311 million (page 84), a decrease of $1,129 million compared with 30 June 2006 (page 81). The primary reason for the decrease was movements in the economic assumptions used in calculating the liability.

International financial institutions:

No capital contributions to the International Monetary Fund (IMF) were required in 2006/07 (page 80), whilst returns of capital totalled $100 million (page 82). This reflects the cyclical nature of the IMF lending programme.

Maui Gas Contract:

The Crown’s revenues from Maui Gas Contracts have decreased by $50 million as the gas drawn reduces as the contract nears expiry. In addition the revaluation of the Crown’s margin and reduction in sales of prepaid gas has decreased both “Other Current Revenue” and “Sales of Goods and Services” by $11 million (page 81).The decrease in revenues is offset by a reduction in “Other Expenses Incurred by the Crown” for Maui Gas Contracts of $56 million (page 79).

 NPF Defined Benefit Plan (Annuitants) Scheme liability movement:

The NPF DBP (A) Scheme liability as at 30 June 2007 was $949 million (page 84), a decrease of $49 million compared with 30 June 2006. The primary reason for the decrease was movements in the economic assumptions used in calculating the liability.

NZDMO other income:

NZDMO’s other income decreased by $56 million primarily due to a reduction in market valuation gains on advances to RBNZ which were partly offset by increased interest income from greater lending to Housing New Zealand Corporation and the Crown Financing Agency. In addition, a market valuation methodology change applied to advances to RBNZ resulting in a one-off increase in other income in 2005/06 (page 81).

Reserve Bank surplus:

The Reserve Bank’s “notional surplus income” payable to the Crown increased from $139 million to $410 million. The notional surplus income is calculated under section 158 of the Reserve Bank Act 1989. This calculation excludes unrealised gains and losses. As foreign-currency loans do not mature on a regular basis, the amount of notional surplus income will vary from year to year, often quite substantially (page 81).

Rugby World Cup:

In 2005/06, the Crown agreed to underwrite the 2011 Rugby World Cup. The estimated net present value of this cost has increased by $3 million due to the reforecast of costs, changes in discount rate and the time value of money (page 84).

Under a joint venture agreement between the Crown and New Zealand Rugby Union Incorporated (NZRU), a capital contribution by way of investment in Rugby New Zealand 2011 Limited of $20 million was made during the 2006/07 year (page 80). The Crown’s share of losses for the period decreases the value of the investment, which is included within “Other Investments” (page 83).

Rail issues:

During the year, the Crown:

• continued the structural upgrade of Wellington Railway Station, at a cost of $4 million in 2006/07 (page 80)
• spent a further $32 million (GST inclusive) on upgrading the national rail network (page 79)
• provided $80 million long-term loans to ONTRACK (page 80)
• spent $98 million of the $600 million committed in the 2006 Budget to the development of rail services in Auckland (page 79). This was approved via a multi-year appropriation and the unspent balance is carried forward as per the Schedule of Commitments (page 85).

Wellington Regional Council Loan: