Glossary of Guidance Terms

Annual reports

Annual reports are prepared in accordance with the requirements of the Companies Act. The annual report and audited consolidated financial statements of an SOE must be delivered to the shareholding Ministers within three months of balance date. The Responsible Minister for an SOE is required to present the annual report and audited financial statements to the House of Representatives

Appropriation

A parliamentary authorisation for the Crown or an Office of Parliament to incur expenses or capital expenditure.

Appropriation Bill

A bill seeking authority from Parliament for the Crown and Offices of Parliament to incur expenses or capital expenditure, or in the case of an Appropriation (Financial review) Bill, a bill seeking Parliament’s confirmation or validation of matters relating to the previous financial year.

Balance sheet

A statement of assets, liabilities and net worth. Termed the Statement of Financial Position in the Public Finance Act 1989.

Baselines

The level of funding approved for any given spending area (eg, Education). All amounts within baselines are included in the forecasts.

Budget

The Minister of Finance or Treasurer’s Financial Statement in moving the second reading of the first Appropriation Bill for a financial year; also the name given to documents and statements released by the Minister of Finance or Treasurer which outline the Government’s proposed economic and financial policies.

Budget Policy Statement (BPS)

Budget Policy Statement includes information about the Government’s short-term fiscal intentions, longterm fiscal objectives and priorities for the coming Budget; sets the stage for an informed debate in the House on the parameters and priorities for the coming Budget; is reviewed by the FEC whose report is debated in the House before final Budget decisions are taken; The Budget Policy Statement is required to be published no later than 31 March each year

Capital charge

Ensures that prices for goods and services produced by government departments reflect full production costs; allows comparison of the costs of output production with those of other producers (whether in the public or private sector); creates an incentive for departments to make proper use of working capital and to dispose of surplus fixed assets.

Consolidated financial statements

The financial statements of a group presented as if they were those of a single economic entity.

Contingent Liabilities

Contingent liabilities are costs, which the Crown will have to face if a particular uncertain and not probable event occurs. Typically, contingent liabilities consist of guarantees and indemnities, legal disputes and claims, and uncalled capital.

Core Crown

The core Crown represents the revenues, expenses, assets and liabilities of the Crown, departments, Offices of Parliament, the Reserve Bank, and the NZS Fund.

Core Crown expenses

The day-to-day spending (eg, salaries, welfare benefit payments, finance costs and maintaining national defence etc) that does not build physical assets for the Government. This is an accrual measure of expenses and includes items such as depreciation on physical assets.

Core Crown revenue

Core Crown revenue mostly consists of tax revenue collected by the Government, but also includes investment income, sales of goods and services and other revenue.

Cost

Total price to be paid by an organisation (being the sum of direct and indirect, tangible and intangible charges).

Crown

Includes all Ministers of the Crown and all departments, but does not include an Office of Parliament, a crown entity, or a state enterprise.

Crown bank account

The main bank account of the Crown opened, maintained and operated by the Treasury at a bank(s) directed by the Minister of Finance. Departmental Bank accounts are separate from the Crown Bank Account.

Crown entities

Organisations listed in schedule 1 or 2 of the Crown Entities Act 2004; a subsidiary of an organisation listed there, a school board of trustees and tertiary education institutions. The term crown entity covers a wide range of very different organisations that collectively undertake a range of different functions: regulatory, advisory, service delivery, devolved purchase and ownership. Most Crown entities exist under their own governing legislation. They form part of the crown reporting entity, but are not part of the Crown itself.

Crown reporting entity

Crown financial statements are prepared for the Crown reporting entity specified in the Public Finance Act 1989. The Crown reporting entity comprises: Ministers of the Crown; Departments; Offices of Parliament; State-owned enterprises; Crown entities; Reserve Bank of New Zealand

Cyclically adjusted or structural fiscal balance

An estimate of the fiscal balance (eg, operating balance (before gains and losses)) adjusted for short-term fluctuations of actual GDP around trend GDP. The estimate provides a picture of the underlying trend fiscal position and an indication of the effects of policy decisions. Because it is based on a number of assumptions and is sensitive to new information, the estimate is subject to some uncertainty.

Department

The departments that comprise the Public Service are listed in the First Schedule to the State Sector Act. In addition to those departments, the Public Finance Act includes the New Zealand Defence Force, New Zealand Police, Office of the Clerk, Parliamentary Counsel Office, Parliamentary Service, and New Zealand Security Intelligence Service. The latter six departments are also referred to as “Non-State Sector Act departments” or “Non-Public Service departments”.