Overview (continued)

National Provident Fund Defined Benefit Plan (DBP) (Annuitants) Scheme Provision

The Government has guaranteed superannuation schemes managed by NPF. As at 30 June 2011, NPF's DBP Scheme was in a net deficit position of $981 million (2010: $1,003 million) (page 102), represented by a gross estimated pension obligation of $1,020 million (2010: $1,053 million) with net investment assets valued at $39 million (2010: $50 million). No additional provision was required in the year for other pension schemes managed by NPF under the Government's guarantee under section 60 of the National Provident Fund Restructuring Act 1990.

The decrease of $22 million in the Crown's liability for the NPF DBP(A) Scheme under Crown guarantee as at 30 June 2011 was primarily owing to:

• payments made against the liability by the Crown during the year of $75 million.

Offset by:

• the actuarial loss recognised for the year (page 96) of $16 million resulting from movements in the economic assumptions used in calculating the provision, and
• the unwinding of the interest expense (appropriated under Other Expenses Incurred by the Crown - NPF Schemes - Liability under Crown Guarantee) (page 97) of $37 million.

Additional detailed note disclosures required under NZ GAAP are included in the Financial Statements of the Government for this liability.

National Provident Fund - Crown Liability for Scheme Deficiency

The Crown is liable for the deficiency in the accounts of NPF schemes established pursuant to section 38A(6) of the National Provident Fund Act 1950, authorised by section 72 of the National Provident Fund Restructuring Act 1990. There was a call against this appropriation for 2010/11 of $16,000 to 31 March 2011 and a provision of $1.500 million for the three months to 30 June 2011 (page 97). The scheme deficiency paid for the year to 31 March 2010 was $28,000. The reduction in the 2010/11 claim was a result ofimprovements in investment markets over 2011.

New Zealand House - London

Operational costs associated with New Zealand House (including depreciation) are included in Other Expenses Incurred by the Crown - Crown Overseas Properties (page 97). Expenses and revenue are less than in 2009/10 and less than those forecasted at Supplementary Estimates. This reduction is primarily owing to the change in the exchange rate between the two years and reduced occupancy rates in 2010/11.

New Zealand Productivity Commission

The New Zealand Productivity Commission was established on 1 April 2011 with an equity injection of $500,000 provided by the Crown (page 98). The operational expenses funded for the first quarter of its operations were $1.210 million (page 97). A surplus existed at 30 June 2011 and this was returned to the Crown in August 2011.

New Zealand Superannuation Fund

No contributions were made to the New Zealand Superannuation Fund in 2010/11 as a result of the Government's decision. A one-off contribution of $250 million was last made on 1 July 2009 (page 98).

New Zealand Debt Management Office

Interest from investments and other income

NZDMO's interest from investments increased by $71 million primarily owing to changes in investment activity levels of New Zealand dollar and United States dollar market bonds (page 100).

NZDMO's other income increased by $12 million primarily owing toincreased interest income on lending to DHBs and Housing New Zealand Limited (page 100).

Other expenses

Other Expenses - NZDMO largely comprises net interest on NZDMO derivatives (excluding fair value and FX gains/losses) where net revenue has decreased $19 million owing to both interest rate changes and transactional activity (page 100).

Borrowing costs

Borrowing costs have increased by $755 million primarily owing to significantly increased volumes of New Zealand Government stock issued to third parties (page 97).

Other Current Revenue

Other current revenue has increased by $126 million in 2010/11. This primarily relates to an increase in the recovery of government guarantee payments during 2010/11. Funds received from receivers of defaulted entities were $42 million above the Supplementary Estimates forecast as a result of timing difference only (page 100).

Other Fees

Other fees of $17 million were received in 2010/11. This relates to a commitment fee of $15 million paid by AMI to the Crown in relation to the Crown's purchase of equity in AMI. Other fees received were in relation to the Crown providing an Uncalled Capital facility to New Zealand Post (page 100).

Reserve Bank Surplus

Dividends received by the Crown from RBNZ decreased from $675 million in 2009/10 to $290 million in 2010/11 (page 100). The principal reason for the reduction was that the dividend received during 2009/10 was abnormally high as a result of RBNZ:

• reducing its unhedged FX position, and consequently FX gains of $434 million were realised with $390 million distributed, and
• a voluntary payment of $45 million, comprising retained earnings which were surplus to the Bank's capital requirements.

Rugby New Zealand 2011 Limited

There is no expected change in the forecast loss for Rugby New Zealand 2011 Limited in 2010/11. The 2009/10 results recognised an increase in the Crown's 67% share of forecast loss compared to the 2005/06 estimate provided when the company was established (page 97).

Taitokerau Forests Limited

Loans to Taitokerau Forests Limited of $800,000 were advanced as per the Loan Agreement during 2010/11. No impairment of the loans was necessary in 2010/11 as the valuation of the Taitokerau Forests Limited assets was higher than the valuation of the loan liability to the Crown as at 30 June 2011 (page 98).