Estimates of appropriations

Vote Defence - External Sector - Estimates 2017/18

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 2017/18 financial year covering the following:

  • a total of $2.384 million for evaluations, audits and assessments of the New Zealand Defence Force and Ministry of Defence
  • a total of $11.008 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 $7.170 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 $265.585 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#

2016/172017/18
Titles and Scopes of Appropriations by Appropriation TypeFinal
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.
2,3872,3872,384

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.
8,9318,90611,008

Total Departmental Output Expenses

11,31811,29313,392

Departmental Other Expenses

Earthquake/Storm Damages (M22)

This appropriation is limited to writing off, or making good damage to, departmental assets and re-establishing departmental operations following the 14 November 2016 Kaikoura earthquakes and aftershocks.
1,1671,167-

Total Departmental Other Expenses

1,1671,167-

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.
650650350

Total Departmental Capital Expenditure

650650350

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.
329,469329,469265,585

Total Non-Departmental Capital Expenditure

329,469329,469265,585

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.
6,9766,9667,170
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.
838837861
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.
4,1984,1904,316
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.
1,9401,9391,993

Total Multi-Category Expenses and Capital Expenditure

6,9766,9667,170

Total Annual and Permanent Appropriations

349,580349,545286,497

Capital Injection Authorisations#

2016/172017/18
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 InitiativeAppropriation2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Maritime Sustainment CapabilityDefence Equipment:
Non-departmental capital expenditure
127,99091,067168,42282,6686,200
Underwater Intelligence, Surveillance and Reconnaissance CapabilityDefence Equipment:Non-departmental capital expenditure16,99712,8445,831--
81mm Mortar Replacement ProjectDefence Equipment:
Non-departmental capital expenditure
10010,460---
Littoral Operations Support CapabilityDefence Equipment:
Non-departmental capital expenditure
470320---
Total Initiatives 145,557 114,691 174,253 82,668 6,200 

Summary of Financial Activity#

2012/132013/142014/152015/162016/172017/182018/192019/202020/21
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 Expenses7,8537,4045,8828,29311,31811,29313,392-13,39212,52312,52312,523
Benefits or Related Expenses------N/A-----
Borrowing Expenses------------
Other Expenses----1,1671,167------
Capital Expenditure132,834273,604387,413212,713330,119330,119350265,585265,935194,726136,950140,900
Intelligence and Security Department Expenses and Capital Expenditure-------N/A----
Multi-Category Expenses and Capital Expenditure (MCA)
Output Expenses5,4346,1745,9416,4806,9766,9667,170-7,1707,1707,1707,170
Other Expenses------------
Capital Expenditure------N/A-----

Total Appropriations

146,121287,182399,236227,486349,580349,54520,912265,585286,497214,419156,643160,593

Crown Revenue and Capital Receipts

Tax Revenue------N/A-----
Non-Tax Revenue273362495225218218N/A-----
Capital Receipts176,315273,572386,929212,412329,469329,469N/A265,585265,585194,376136,6004,765

Total Crown Revenue and Capital Receipts

176,588273,934387,424212,637329,687329,687N/A265,585265,585194,376136,6004,765

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.

Departmental Other Expenses Appropriations

The 2016/17 Other Expenses arises from the value of assets written-off or impaired due to the November 2016 earthquake.

Multi-Category Expense Appropriation

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, with an increase over 2013/14 to 2015/16 largely due to modernisation of the workplace environment. The higher departmental capital expenditure in 2016/17 is due to replacement of assets damaged or destroyed due to the November 2016 earthquake.

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

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation2,3872,3872,384
Revenue from the Crown2,3872,3872,384
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

2016/172017/18
Assessment of PerformanceFinal 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 metStandard metStandard met
Process Quality

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

100%N/A100%

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

100%N/A100%

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.

Reasons for Change in Appropriation

The decrease of $3,000 in this appropriation for 2017/18 is due to the reduction in the capital charge rate.

Conditions on Use of Appropriation

ReferenceConditions
AuthorityThe 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#

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation8,9318,90611,008
Revenue from the Crown7,7677,76710,908
Revenue from Others1,1641,164100

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#

2016/172017/18
Assessment of PerformanceFinal 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 (see Note 1).

100%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).

100%100%100%

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

85%85%85%

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 InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Enhancements to Defence Capability Development and Acquisition2015/164,8307,2007,2607,2607,260

Reasons for Change in Appropriation#

The appropriation increases in 2017/18 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

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Forests/Agricultural---
Land---
Property, Plant and Equipment650650350
Intangibles---
Other---

Total Appropriation

650650350

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

2016/172017/18
Assessment of PerformanceFinal Budgeted
Standard
Estimated
Actual
Budget
Standard

Capital expenditure is within Capital Plan.

Within Capital PlanWithin Capital PlanWithin 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 appropriation was increased in 2016/17 due to the need to purchase replacement assets for those damaged and/or destroyed in the November 2016 earthquake.

Capital Injections and Movements in Departmental Net Assets

Ministry of Defence

Details of Net Asset Schedule2016/17
Estimated Actual
$000
2017/18
Projected
$000
Explanation of Projected Movements in 2017/18
Opening Balance3,4162,284
Capital Injections--
Capital Withdrawals--
Surplus to be Retained (Deficit Incurred)(1,132)-Deficit from the write-off of destroyed and damaged assets due to November 2016 earthquake.
Other Movements--

Closing Balance

2,2842,284

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

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation329,469329,469265,585

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

2016/172017/18
Assessment of PerformanceFinal 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 (see Note 1).

100%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).

100%100%100%

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

85%85%85%

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 InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Maritime Helicopter Capability2013/1412,200----
Frigate Systems Upgrade2014/15115,00042,522---
Network Enabled Army Programme2014/1534,20025,000---
Maritime Sustainment Capability2015/16127,99091,067168,42282,6686,200
Underwater Intelligence, Surveillance and Reconnaissance Capability2015/1616,99712,8445,831--
Special Operations Vehicles Replacement2015/1612,000----
Individual Weapons Replacement2015/1642,7341,500---
81mm Mortar Replacement2016/1710010,460---
Littoral Operations Support Capability2016/17292110---

Reasons for Change in Appropriation

The appropriation decrease in 2017/18 is due to a reduced value of expected contractual payments from that paid in 2016/17.

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

2016/172017/18
Final Budgeted
$000
Estimated Actual
$000
Budget
$000

Total Appropriation

6,9766,9667,170

Departmental Output Expenses

Ministerial Services838837861
Policy Advice4,1984,1904,316
Policy Support1,9401,9391,993

Funding for Departmental Output Expenses

Revenue from the Crown

6,9766,9767,170
Ministerial Services838837861
Policy Advice4,1984,2004,316
Policy Support1,9401,9391,993

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

2016/172017/18
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

The performance of the MCA as a whole will be assessed by the average performance success of the below measures.

>0%Measured at end of period >0%

Note 1 - Measured by the average difference between actual results and the budget standard of all percentage based measures within the MCA categories.

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

2016/172017/18
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%Measured at end of period>= 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%Measured at end of period>=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.

$100Measured at end of period$100

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

Mean >= 70%Measured at end of periodMean >= 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 periodN/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%

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 InitiativeYear of
First
Impact
2016/17
Final Budgeted
$000
2017/18
Budget
$000
2018/19
Estimated
$000
2019/20
Estimated
$000
2020/21
Estimated
$000
Enhancements to Defence Capability Development and Acquisition2015/161,1501,3501,3501,3501,350

Reasons for Change in Appropriation

The appropriation increases for 2017/18 and onwards due to the Enhancements to Defence Capability Development and Acquisition initiative.