Estimates of appropriations

Vote Defence - External Sector - Estimates 2016/2017

APPROPRIATION MINISTER(S): Minister of Defence (M22)

APPROPRIATION ADMINISTRATOR: Ministry of Defence

RESPONSIBLE MINISTER FOR MINISTRY OF DEFENCE: Minister of Defence

Overview of the Vote#

The Minister of Defence is responsible for appropriations in the Vote for the 2016/17 financial year covering the following:

  • a total of $2.393 million for evaluations, audits and assessments of the New Zealand Defence Force and Ministry of Defence
  • a total of $8.637 million for managing procurement or refurbishment, on behalf of the Crown, of various items of equipment contributing to a capability of the New Zealand Defence Force
  • a total of $6.985 million for policy advice, management of international defence relations and services to the Minister
  • a total of $350,000 for the purchase or development of assets for use by the Ministry, and
  • a total of $260.529 million for the purchase, modification or refurbishment of major items of defence equipment for the New Zealand Defence Force.

Details of these appropriations are set out in Parts 2-4.

Details of Appropriations and Capital Injections#

Annual and Permanent Appropriations#

  2015/16 2016/17
Titles and Scopes of Appropriations by Appropriation Type Final
Budgeted
$000
Estimated
Actual
$000
Budget
$000

Departmental Output Expenses

     

Evaluation, Audit & Assessment of Performance (M22)

This appropriation is limited to the evaluations, and audits and assessments of the New Zealand Defence Force and the Ministry of Defence.
2,393 2,343 2,393

Management of Equipment Procurement (M22)

Managing procurement or refurbishment, on behalf of the Crown, of various items of equipment contributing to a capability of the New Zealand Defence Force.
6,603 4,920 8,637

Total Departmental Output Expenses

8,996 7,263 11,030

Departmental Capital Expenditure

     

Ministry of Defence - Capital Expenditure PLA (M22)

This appropriation is limited to the purchase or development of assets by and for the use of the Ministry of Defence, as authorised by section 24(1) of the Public Finance Act 1989.
480 480 350

Total Departmental Capital Expenditure

480 480 350

Non-Departmental Capital Expenditure

     

Defence Equipment (M22)

This appropriation is limited to the purchase, modification or refurbishment of major items of defence equipment for the New Zealand Defence Force.
219,837 219,837 260,529

Total Non-Departmental Capital Expenditure

219,837 219,837 260,529

Multi-Category Expenses and Capital Expenditure

     

Policy Advice and Related Outputs MCA (M22)

The overarching purpose of this appropriation is to provide policy advice, other support to Ministers in discharging their policy decision-making and other portfolio responsibilities.
6,485 6,410 6,985
Departmental Output Expenses
     
Ministerial Services
This category is limited to the provision of services to Ministers to enable them to discharge their portfolio (other than policy decision-making) responsibilities.
779 770 839
Policy Advice
This category is limited to the provision of advice (including second opinion advice and contributions to policy advice led by other agencies) to support decision-making by Ministers on government policy matters relating to defence and national security.
3,903 3,858 4,204
Policy Support
This category is limited to the provision of services (other than defence policy) that support the development and procurement of military capability, and the conduct of international defence relations.
1,803 1,782 1,942

Total Multi-Category Expenses and Capital Expenditure

6,485 6,410 6,985

Total Annual and Permanent Appropriations

235,798 233,990 278,894

Capital Injection Authorisations#

  2015/16 2016/17
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Ministry of Defence - Capital Injection (M22) - - -

Supporting Information#

Part 1 - Vote as a Whole#

1.1 - New Policy Initiatives

Policy Initiative Appropriation 2015/16
Final Budgeted
$000
2016/17
Budget
$000
2017/18
Estimated
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
Special Operations Vehicles Replacement Project

Defence Equipment:

Non-departmental capital expenditure
16,000 12,000 - - -
Individual Weapons Replacement Project

Defence Equipment:

Non-departmental capital expenditure
15,000 42,734 1,500 - -
Total   31,000 54,734 1,500 - -

Summary of Financial Activity#

  2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
  Actual
$000
Actual
$000
Actual
$000
Actual
$000
Final Budgeted
$000
Estimated
Actual
$000
Departmental
Transactions
Budget
$000
Non-
Departmental
Transactions
Budget
$000
Total
Budget
$000
Estimated
$000
Estimated
$000
Estimated
$000

Appropriations

                       
Output Expenses 5,914 7,853 7,404 5,881 8,996 7,263 11,030 - 11,030 12,511 12,576 12,576
Benefits or Related Expenses - - - - - - N/A - - - - -
Borrowing Expenses - - - - - - - - - - - -
Other Expenses - - - - - - - - - - - -
Capital Expenditure 102,463 132,834 273,604 387,413 220,317 220,317 350 260,529 260,879 135,739 25,808 103,869
Intelligence and Security Department Expenses and Capital Expenditure - - - - - - - N/A - - - -
Multi-Category Expenses and Capital Expenditure (MCA)                        
Output Expenses 5,205 5,434 6,174 5,941 6,485 6,410 6,985 - 6,985 7,185 7,185 7,185
Other Expenses - - - - - - - - - - - -
Capital Expenditure - - - - - - N/A - - - - -

Total Appropriations

113,582 146,121 287,182 399,235 235,798 233,990 18,365 260,529 278,894 155,435 45,569 123,630

Crown Revenue and Capital Receipts

                       
Tax Revenue - - - - - - N/A - - - - -
Non-Tax Revenue 455 273 362 297 89 89 N/A - - - - -
Capital Receipts 154,331 176,315 273,572 386,929 219,837 219,837 N/A 260,529 260,529 135,389 25,458 1,360

Total Crown Revenue and Capital Receipts

154,786 176,588 273,934 387,226 219,926 219,926 N/A 260,529 260,529 135,389 25,458 1,360

Note - where restructuring of the vote has occurred then, to the extent practicable, prior years information has been restated as if the restructuring had occurred before the beginning of the period covered. In this instance Total Appropriations for the Budgeted and Estimated Actual year may not equal Total Appropriations in the Details of Appropriations and Capital Injections.

Adjustments to the Summary of Financial Activity Table Due to Vote Restructuring#

There have been no restructuring adjustments to prior year information in the Summary of Financial Activity table.

The departmental appropriations in Vote Defence, which are detailed in the Summary of Financial Activity table in Part 1.2 above, show the significant changes discussed below.

Departmental Output Expense Appropriations

Year-on-year underlying individual output expenses up to 2014/15 are largely constant. The variation in overall expenses is primarily due to the fluctuating costs of pre-acquisition activities undertaken by the Ministry and project management costs relating to the Protector Remediation project.

Higher costs from 2015/16 onwards are the result of additional funding for the Enhancements to Defence Capability Development and Acquisition initiative. This funding allows the Ministry of Defence to grow its capability workforce and make one-off investments in systems to successfully deliver on Crown's anticipated capital spend in Defence.

Multi-Category Expense Appropriations

The primary impact on this appropriation was increased funding commencing 2011/12 to strengthen resources that would provide a greater governance oversight during the development of capability proposals, and the subsequent acquisition of those capability resources. Higher costs from 2015/16 onwards are the result of additional funding for the Enhancements to Defence Capability Development and Acquisition initiative.

Departmental Capital Expenditure

The majority of the capital expenditure over the years relates to the maintenance of the Ministry of Defence's asset base, primarily IT software and equipment required by the Ministry to deliver its stated outcomes and outputs. Increased departmental capital expenditure over 2013/14 to 2015/16 is largely due to modernisation of the workplace environment.

Non-Departmental Capital Expenditure

The movements in non-departmental capital expenditure relates to the volume of capital projects underway in each financial year and changes in the forecast timing in achieving the project milestones and associated changes in the timing of supplier payments for those milestones.

Capital Receipts

The Ministry of Defence purchases and develops items of major military equipment for the New Zealand Defence Force. The ministry's capital receipts fluctuates in line with non-departmental capital expenditure due to the purchase of developed assets by the New Zealand Defence Force.

Part 2 - Details of Departmental Appropriations#

2.1 - Departmental Output Expenses#

Evaluation, Audit & Assessment of Performance (M22)

Scope of Appropriation

This appropriation is limited to the evaluations, and audits and assessments of the New Zealand Defence Force and the Ministry of Defence.

Expenses and Revenue

  2015/16 2016/17
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 2,393 2,343 2,393
Revenue from the Crown 2,393 2,343 2,393
Revenue from Others - - -

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the completion of an approved schedule of evaluations, audits and assessments as required by the Minister of Defence.

How Performance will be Assessed and End of Year Reporting Requirements

  2015/16 2016/17
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard
Ministerial Direction
     

Evaluations, audits and assessments are in accordance with work priorities identified and advised by the Minister of Defence.

Standard met Standard met Standard met

A review of the evaluations, audits and assessments confirm that they meet acceptable standards based on pre-determined criteria. The standard for this measure is based on a continuum of standard not met, standard met and standard exceeded.

Standard met Standard met N/A
Process Quality
     

All evaluations, audits and assessments meet the Ministry's pre-determined quality criteria.

New measure N/A 100%

All major evaluations, audits and assessments are externally quality assured. (Note 1)

New Measure N/A 100%

Note 1 - Small simple reviews may be peer reviewed by qualified Ministry of Defence staff from outside the Evaluation Division. All medium, large and/or complex reviews are reviewed by qualified persons external to the Ministry.

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Defence in its Annual Report.

Conditions on Use of Appropriation

Reference Conditions
Authority The evaluation, audit or assessment will be undertaken as and when required by the Minister of Defence or in accordance with a work plan approved by the Minister.

Management of Equipment Procurement (M22)#

Scope of Appropriation#

Managing procurement or refurbishment, on behalf of the Crown, of various items of equipment contributing to a capability of the New Zealand Defence Force.

Expenses and Revenue#

  2015/16 2016/17
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 6,603 4,920 8,637
Revenue from the Crown 5,345 4,324 8,637
Revenue from Others 1,258 596 -

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve the management of procurement of major military equipment in a transparent and fair way, and in accordance with government procurement policies.

How Performance will be Assessed and End of Year Reporting Requirements#

  2015/16 2016/17
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Cost: Each procurement or refurbishment project will be managed within its approved budget, inclusive of approved variations to the contract price and project budget. The measure is the % of all project-related expenditure incurred in the year that is in excess of the approved project expenditure.

- - Measure restated (refer below)

Quality of Deliverable: Each procurement or refurbishment project will achieve on delivery the agreed/contracted specifications that are critical to acceptance. The measure is the number of accepted projects that do not meet all specifications that are critical to acceptance.

- - Measure restated (refer below)

Schedule: Each procurement or refurbishment project will be managed to schedule, without avoidable schedule over-run. The measure is the % of all projects where, during the year, the project delivery schedule is extended by more than 10%.

- 17% Measure restated (refer below)

Cost: Each procurement or refurbishment project will be managed within its approved budget, inclusive of approved variations to the contract price and project budget (see Note 1).

Restated measure 100% 100%

Quality of Deliverable: Each procurement or refurbishment project will achieve on delivery the agreed/contracted specifications, inclusive of approved variations, that are critical to acceptance (see Note 2).

Restated measure 100% 100%

Schedule: Each procurement or refurbishment project will be managed to schedule, without avoidable schedule over-run (see Note 3).

Restated measure 83% 85%

Measures for this appropriation have been restated to an achievement basis. Previously measures were reported on a deficit (failure) basis.

Note 1 - Measured by the percentage of all projects that have total project-related expenditure incurred in the year within the approved project expenditure budget.

Note 2 - Measured by the percentage of accepted projects that meet all specifications that are critical to acceptance.

Note 3 - Measured by the percentage of all projects where, during the year, the project delivery schedule is not extended by more than 10%.

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Ministry of Defence in its Annual Report.

Current and Past Policy Initiatives#

Policy Initiative Year of
First
Impact
2015/16
Final Budgeted
$000
2016/17
Budget
$000
2017/18
Estimated
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
Maritime Sustainment Capability 2014/15 620 - - - -
Enhancements to Defence Capability Development and Acquisition 2015/16 3,330 4,830 7,200 7,260 7,260

Reasons for Change in Appropriation#

The appropriation increases in 2016/17 and onwards due to the Enhancements to Defence Capability Development and Acquisition initiative.

2.3 - Departmental Capital Expenditure and Capital Injections#

Ministry of Defence - Capital Expenditure PLA (M22)#

Scope of Appropriation

This appropriation is limited to the purchase or development of assets by and for the use of the Ministry of Defence, as authorised by section 24(1) of the Public Finance Act 1989.

Capital Expenditure

  2015/16 2016/17
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Forests/Agricultural - - -
Land - - -
Property, Plant and Equipment 480 480 350
Intangibles - - -
Other - - -

Total Appropriation

480 480 350

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the purchase and development of assets by and for the use of the Ministry of Defence in its day-to-day operations.

How Performance will be Assessed and End of Year Reporting Requirements

  2015/16 2016/17
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Capital expenditure is within budget.

Within budget Within budget N/A

Capital expenditure is within Capital Plan.

New Measure N/A Within Capital Plan

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Defence in its Annual Report.

Reasons for Change in Appropriation

The decrease in this appropriation for 2016/17 is mainly due to the appropriation for 2015/16 including funding for the development of a secure communications facility for the Ministry.

Capital Injections and Movements in Departmental Net Assets

Ministry of Defence

Details of Net Asset Schedule 2015/16
Estimated Actual
$000
2016/17
Projected
$000
Explanation of Projected Movements in 2016/17
Opening Balance 3,416 3,416  
Capital Injections - -  
Capital Withdrawals - -  
Surplus to be Retained (Deficit Incurred) - -  
Other Movements - -  

Closing Balance

3,416 3,416  

Part 3 - Details of Non-Departmental Appropriations#

3.5 - Non-Departmental Capital Expenditure#

Defence Equipment (M22)

Scope of Appropriation

This appropriation is limited to the purchase, modification or refurbishment of major items of defence equipment for the New Zealand Defence Force.

Capital Expenditure

  2015/16 2016/17
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 219,837 219,837 260,529

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the procurement of major military equipment in a transparent and fair way, and in accordance with government procurement policies.

How Performance will be Assessed and End of Year Reporting Requirements

  2015/16 2016/17
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Cost: Each procurement or refurbishment project will be managed within its approved budget, inclusive of approved variations to the contract price and project budget. The measure is the % of all project-related expenditure incurred in the year.

- - Measure restated (refer below)

Quality of Deliverable: Each procurement or refurbishment project will achieve on delivery the agreed/contracted specifications that are critical to acceptance. The measure is the number of accepted projects that do not meet all specifications that are critical to acceptance.

- - Measure restated (refer below)

Schedule: Each procurement or refurbishment project will be managed to schedule, without avoidable schedule over-run. The measure is the % of all projects where, during the year, the project delivery schedule is extended by more than 10%.

- 17% Measure restated (refer below)

Cost: Each procurement or refurbishment project will be managed within its approved budget, inclusive of approved variations to the contract price and project budget (see Note 1).

Restated measure 100% 100%

Quality of Deliverable: Each procurement or refurbishment project will achieve on delivery the agreed/contracted specifications, inclusive of approved variations, that are critical to acceptance (see Note 2).

Restated measure 100% 100%

Schedule: Each procurement or refurbishment project will be managed to schedule, without avoidable schedule over-run (see Note 3).

Restated measure 83% 85%

Measures for this appropriation have been restated to an achievement basis. Previously measures were reported on a deficit (failure) basis.

Note 1 - Measured by the percentage of all projects that have total project-related expenditure incurred in the year within the approved project expenditure budget.

Note 2 - Measured by the percentage of accepted projects that meet all specifications that are critical to acceptance.

Note 3 - Measured by the percentage of all projects where, during the year, the project delivery schedule is not extended by more than 10%.

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Minister of Defence and appended to the Ministry of Defence Annual Report.

Current and Past Policy Initiatives

Policy Initiative Year of
First
Impact
2015/16
Final Budgeted
$000
2016/17
Budget
$000
2017/18
Estimated
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
Maritime Helicopter Capability 2013/14 40,000 12,200 - - -
Pilot Training Capability 2013/14 7,120 - - - -
Frigate Systems Upgrade 2014/15 105,000 115,000 42,522 - -
Network Enabled Army Programme 2014/15 45,600 34,200 25,000 - -
Maritime Sustainment Capability 2015/16 783 - - - -
Special Operations Vehicles Replacement Project 2015/16 16,000 12,000 - - -
Individual Weapons Replacement Project 2015/16 15,000 42,734 1,500 - -

Reasons for Change in Appropriation

The appropriation increase in 2016/17 is due to recently approved projects managed by the Ministry entering the main production phase of the project with consequent increases in milestone payments for contracted production.

Part 4 - Details of Multi-Category Expenses and Capital Expenditure#

Multi-Category Expenses and Capital Expenditure#

Policy Advice and Related Outputs (M22)

Overarching Purpose Statement

The overarching purpose of this appropriation is to provide policy advice, other support to Ministers in discharging their policy decision-making and other portfolio responsibilities.

Scope of Appropriation

Departmental Output Expenses
Ministerial Services
This category is limited to the provision of services to Ministers to enable them to discharge their portfolio (other than policy decision-making) responsibilities.
Policy Advice
This category is limited to the provision of advice (including second opinion advice and contributions to policy advice led by other agencies) to support decision-making by Ministers on government policy matters relating to defence and national security.
Policy Support
This category is limited to the provision of services (other than defence policy) that support the development and procurement of military capability, and the conduct of international defence relations.

Expenses, Revenue and Capital Expenditure

  2015/16 2016/17
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000

Total Appropriation

6,485 6,410 6,985

Departmental Output Expenses

     
Ministerial Services 779 770 839
Policy Advice 3,903 3,858 4,204
Policy Support 1,803 1,782 1,942

Funding for Departmental Output Expenses

     

Revenue from the Crown

6,485 6,410 6,985
Ministerial Services 779 770 839
Policy Advice 3,903 3,858 4,204
Policy Support 1,803 1,782 1,942

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the provision of civilian advice on defence policy matters and the development of international defence relations.

How Performance will be Assessed for this Appropriation

  2015/16 2016/17
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

The performance of the MCA as a whole will be assessed by the average of the difference between actual results and the budget standard of all percentage based measures within the MCA categories.

>0% Measured at end of period >0%

What is Intended to be Achieved with each Category and How Performance will be Assessed

  2015/16 2016/17
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Departmental Output Expenses

     

Ministerial Services

     

This category is intended to achieve the provision of quality and timely Ministerial support to the Minister.

     

Quality, as assessed by the percentage of first draft of all correspondence accepted by the Minister.

>= 90% 100% >= 90%

Timeliness, as assessed by the percentage of papers that were submitted by the timeframe set in legislation, or otherwise agreed with the Minister.

>=95% 100% >=95%

Policy Advice

     

This category is intended to achieve the provision of accurate, timely and responsive policy advice.

     

Total cost per output hour of Policy Advice.

$100 $93.22 $100

Technical quality of policy advice, as assessed by independent review of a sample of policy papers.

Mean >= 70% Measured at end of period Mean >= 70%

Minister's satisfaction with the quality of policy advice, as assessed by survey.

>= 70% Measured at end of period >= 70%

Technical quality robustness, as assessed by the Common Indicator Set tool.

>= 70% Measured at end of period >= 70%

Timeliness, as assessed by the percentage of papers that were submitted by the directed deadline.

>=95% Measured at end of period N/A

Policy Support

     

This category is intended to achieve the provision of quality and timely policy support to the Minister.

     

Minister's satisfaction with the quality of policy support, as assessed by survey.

>= 70% Measured at end of period >= 70%

Timeliness, as assessed by the percentage of papers that were submitted by the directed deadline.

>=95% Measured at end of period N/A

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Defence in its Annual Report.

Current and Past Policy Initiatives

Policy Initiative Year of
First
Impact
2015/16
Final Budgeted
$000
2016/17
Budget
$000
2017/18
Estimated
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
Enhancements to Defence Capability Development and Acquisition 2015/16 650 1,150 1,350 1,350 1,350

Reasons for Change in Appropriation

The appropriation increases for 2016/17 and onwards due to the Enhancements to Defence Capability Development and Acquisition initiative.