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The Treasury Statement of Intent 2012-17

Departmental capital and asset management intentions

The forecast capital expenditure will support the efficient delivery of services as set out in this Statement of Intent, which reflects the three- to four-year cycle of replacing or upgrading assets to maintain and develop our capability. Our capital asset strategy ensures we invest in a work environment that supports flexibility, mobility and efficiency, which also assists in attracting high-performing staff.

The most significant component of our capital programme relates to maintaining our computing environment and internally generated software, including the ongoing development of the NZDMO in-house system that supports the front office, middle office and back office business processes of NZDMO.

We will continue to review our capital expenditure requirements at least annually.

Capital Expenditure Requirements
Forecast Capital Expenditure 2011/12
Budget
$0
2012/13
Forecast
$0
2013/14
Forecast
$0
2014/15
Forecast
$0
2015/16
Forecast
$0
Furniture and Fittings 101 83 55 80 80
Leasehold Improvements 300 124 530 10 10
Computer Hardware 454 675 1,693 1,560 1,460
Office Machinery 585 30 42 42 42
Total Plant, Property and Equipment 1,440 912 2,320 1,692 1,592
Internally Generated Software 481 967 115 90 90
Other Software 1,470 21 653 653 653
Total Intangibles 1,951 988 768 743 743

Maintaining our current asset base from our limited capital reserves is an ongoing challenge. We will continue to reinvest in our asset base. This includes replacements, upgrades and enhancements to our information technology (IT) systems and infrastructure, software licences, computers, leasehold fit out, furniture and equipment. It also includes enhancements to existing systems that are required to deliver services or meet stakeholder demands - ahead of any investment in new systems.

The Treasury does not own land or buildings. We do fit out our leased office accommodation and we will continue to look at opportunities to reconfigure our working areas to meet the flexibility of our accommodation needs, for example investing in smaller furniture to reduce office accommodation demands per FTE. In addition, to minimise the need for significant un-forecast capital expenditure we undertake planned annual maintenance of our accommodation assets to ensure they remain fit for purpose and enhance the longevity of these assets.

The implementation of CASS will allow for capital infrastructure efficiencies over time, as resources are pooled to gain economies of scale for our core infrastructure needs (which are predominantly IT related), and a reduction in the total cost of ownership. In the medium-term the development of a CASS strategic asset management plan will ensure required levels of service are met in the most cost-effective manner and inform business planning, risk and programme management. As part of this we have introduced new governance arrangements for strategic oversight and management of the core infrastructure and information systems provided by CASS.

Work is currently underway to determine the prioritised work programme and timing. This will be partly determined by the funding constraints of the three agencies and other agency specific capital priorities, as well as the capacity of the agencies to collectively deliver on what will be a significant transformational programme in our core IT infrastructure. It is expected over time that the shared services will provide additional savings and the ability to utilise capital funds in a more effective way. We recognise the need to improve core systems. Improvements are necessary to ensure that we remain an agile and efficient organisation, which is able to respond to the needs of our stakeholders. Examples where capital investment will occur to support this include server consolidation and virtualisation technology - supporting our move towards reducing numbers of physical servers, thereby lowering ongoing investment costs.

Furthermore, as whole of government programmes are introduced, such as Infrastructure as a Service, these will enable our capital needs to be delivered through a cheaper alternative delivery model.

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