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Provision of Financial Operations Services and Operational Advice

What is intended to be achieved with this appropriation

This appropriation is intended to improve economic performance and financial stewardship across the State sector, export and financial markets, through provision of relevant and timely operational support, services and advice.

What was achieved with this appropriation

Performance measure Target for 2015/16 Performance for 2015/16 Forecast for
2016/17
All new significant operating expenditure proposals received during the Budget process are subject to cost benefit analysis (or similar). This analysis should cover: problem definition, intervention logic, options analysis, evaluation of the initiative's contribution to the agency's/sector's outcomes and result areas, how the new initiative will be implemented and evaluated and options for scaling the initiative. 100%

73%

This is an improvement on the 2014/15 result of 44%.  This has been achieved through the introduction of a new spreadsheet tool designed to help agencies undertake cost benefit analysis (called CBAx) and a requirement in Budget 2016 that all social sector initiatives (excluding cost pressures) use this tool. We are continuing to build on this in Budget 2017 with CBAx being required for all social sector and other initiatives outside of the Business Growth Agenda package required to use CBAx (unless exempted).

All submitted Budget initiatives were accompanied by a cost benefit analysis, where required.

Target: 100%

Audit opinion issued by the Controller and Auditor-General on the Financial Statements of Government. Unqualified Unqualified Unqualified
Two Economic and Fiscal Updates produced, clearly explained and with conclusions tested with external panels. Achieved Achieved

Required Economic and Fiscal Updates efficiently produced with key judgements and uncertainties clearly articulated and key assumptions have been appropriately tested.

Target: Achieved

Monthly Financial Statements of Government produced in accordance with the Public Finance Act 1989 requirements and free from material error. Achieved Achieved Achieved

Management of liabilities and investigation of mechanisms to discharge the Crown's obligations in a timely manner ensuring any costs from the materialisation of liabilities are contained.

This output class covers the management and resolution of contingent or actual liabilities associated with various Crown commitments and assets - for instance, gas and geothermal reserves, Treaty settlements and New Zealand House. In some cases, the Treasury is a provider of second-opinion advice rather than a lead agency on these matters.

Achieved

Achieved

Achieved
Compliance with risk management policies and parameters for management of Crown lending and Crown bank accounts. No breaches No breaches No breaches
Percentage of Four-year Plans submitted by agencies that meet the criteria expected of a credible medium-term strategic plan. 75%

59%

This is an increase from 2014/15 when only 48% produced a credible plan. In 2013/14 only 44% produced a credible plan. Alongside this positive trend, the majority of Four-year Plans improved from the previous year.

75%
Investment Management and Asset Performance       
All investment-intensive agencies in 2015/16 have identified meaningful performance measures for implementation in 2016/17. Achieved Not achieved. At 30 June work was still in progress to confirm appropriate measures. Subsequently most investment-intensive agencies have provided the Treasury with measures that will be used in annual reporting for 2016/17.

Expired. 

Replaced with new measure (see the next line below).

Tier 1 and 2 investment-intensive agencies comply with Cabinet's investment management rules and standards. 100%

67%

High level of compliance observed for significant investments but compliance is inconsistent across investment proposals with either a small amount of capital or where decisions are made under urgency.

100%
Percentage of Ministers and agency chief executives who believe project monitoring activities provide them with valuable information on the status of their major projects. 85%

This was not measured in 2016.

A planned survey related to major projects monitoring was not undertaken in 2015/16.

Expired.

Increasingly we are focusing on providing broader ‘investment advice' to these audiences, including the results of project monitoring.

Key agency stakeholders with a project monitored through the Gateway programme agree with the statement:  “Project monitoring advice provides me with valuable information on the status of my major projects”. 85%

This was not measured in 2016.

A planned survey related to major projects monitoring was not undertaken in 2015/16.

85%
Number of Gateway reviews completed for major capital investments. 24 24

Expired.

The Treasury is moving to a wider range of review options in future and these reviews would provide only a partial picture.

Senior Responsible Owners of major projects reviewed in the Gateway programme agree that the “review was beneficial and will impact positively on the outcome of the programme/project” and the “report's recommendations will enable me to achieve improvements in the project's outcomes”. 85% 100% of Senior Responsible Owners agreed that the “review was beneficial and will impact positively on the outcome of the programme/project” and 99% agreed the “report's recommendations will enable me to achieve improvements in the project's outcomes”. 85%
New Zealand Export Credit Office      
Number of new export credit policies underwritten. 70

Not met (46 policies).

This result is lower than expected owing to a mix of stronger private sector capacity and risk appetite, as well as reduced trade finance flows.

70
Value of new exports supported. $320 million

Not met ($193 million).

NZECO's policies primarily supported small-to-medium enterprises exporters and/or smaller-value export contracts.  Our larger-value commitments were not utilised owing to postponed or declined contracts, or lower than forecast demand and prices from international buyers. The value of last year’s export was $513,410.

$320 million
Value of new exposure of export credit policies. $120 million Met ($131 million) $120 million
Forecast total external engagements. 420 Met (556) 420
Compliance with International Guidelines (OECD and World Trade Organization) and Delegated Mandate.   100% Met (100%) 100%
Five-year Expense Ratio (Operating Expenses/Premium Earned). Lower than 60% Met (47%) Lower than 60%
Five-year Loss Ratio (Claims Paid and Reserved/Premium Earned). Lower than 35%

Not met (180%)

(see footnote[8])

Lower than 40%

Further information on what has been achieved with this appropriation is provided in the reporting against the following Strategic Intentions:

  • New Zealand has an internationally connected and competitive business environment.
  • People have the capability and opportunities to participate in society and the economy.
  • The State sector efficiently and effectively delivers results for New Zealanders.
  • The economic cycle is managed in a way that supports sustainable growth.
  • The Crown balance sheet is managed effectively and efficiently.
2015
Actual
$000
Management and Administration of Financial Operations on behalf of the Crown 2016
Actual
$000
2016
Main Estimates
$000
2016
Supp. Estimates
$000
2017
Unaudited Forecast
as per BEFU 2016
$000
29,198 Expenses 29,484 28,840 30,709 30,950
Funded by:    
26,235 Revenue  Crown 26,688 26,639 26,688 27,325
4,295 Other revenue 4,167 2,201 4,021 3,625

Note:

The main elements of this variance include an underspend against NZECO, owing to variable demand-related costs and lower governance costs associated with CERA.

Notes

  • [8]NZECO charges risk-weighted premiums and fees in respect of its export credit insurance and financial guarantee solutions. A key performance measurement is that NZECO's premiums and fees cover its operating costs and claims paid. Typical of an export credit agency whose role is to underwrite risks on countries, markets and businesses where the private sector's risk appetite is limited, NZECO's risks and claims can be lumpy and, accordingly, this measurement has a longer-term perspective.
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