Estimates of appropriations

Vote Defence - External Sector - Estimates 2018/19

Publication type:
Estimates of appropriations
Status:
Current
Document (signed) date:
Issue date:
Part of:
Corporate author:
Government of New Zealand
Viewpoint:
Government
Publication category:
Budgets of the government
Copyright:
© Crown Copyright, Attribution 4.0 International (CC BY 4.0)
ISBN:
978-1-98-855615-4 (print) 978-1-98-855616-1 (online)
Fiscal year:
2018/19
Budget year:
2018
Budget vote:
Defence
Last updated:
Formats and related files

Vote Defence#

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 2018/19 financial year covering the following:

  • a total of $2.294 million for audits and assessments of the New Zealand Defence Force and Ministry of Defence
  • a total of $9.628 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 $8.171 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 $294.121 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#

  2017/18 2018/19
Titles and Scopes of Appropriations by Appropriation Type Final
Budgeted
$000		 Estimated
Actual
$000		 Budget
$000

Departmental Output Expenses

     

Audit & Assessment (M22)

This appropriation is limited to audits and assessments of the New Zealand Defence Force and the Ministry of Defence.		 1,947 1,947 2,294

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.		 11,018 11,018 9,628

Total Departmental Output Expenses

12,965 12,965 11,922

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.		 350 170 350

Total Departmental Capital Expenditure

350 170 350

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.		 240,000 230,415 294,121

Total Non-Departmental Capital Expenditure

240,000 230,415 294,121

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.		 8,118 8,118 8,171

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.		 975 975 981

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.		 4,887 4,887 4,919

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.		 2,256 2,256 2,271

Total Multi-Category Expenses and Capital Expenditure

8,118 8,118 8,171

Total Annual and Permanent Appropriations

261,433 251,668 314,564

Capital Injection Authorisations#

  2017/18 2018/19
  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 2017/18
Final Budgeted
$000		 2018/19
Budget
$000		 2019/20
Estimated
$000		 2020/21
Estimated
$000		 2021/22
Estimated
$000
Frigate Systems Upgrade Defence Equipment
Non-Departmental Capital Expenditure		 10,209 63,358 71,964 2,469 -
NH90 Simulator Management of Equipment Procurement
Departmental Output Expense		 366 - - - -
  Defence Equipment
Non-Departmental Capital Expenditure		 516 - - - -
Total Initiatives   11,091  63,358  71,964  2,469  - 

Summary of Financial Activity#

  2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
  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 7,404 5,882 8,293 10,675 12,965 12,965 11,922 - 11,922 11,522 11,522 11,522
Benefits or Related Expenses - - - - - - N/A - - - - -
Borrowing Expenses - - - - - - - - - - - -
Other Expenses - - - 1,063 - - - - - - - -
Capital Expenditure 273,604 387,413 212,713 281,031 240,350 230,585 350 294,121 294,471 308,174 18,396 81,813
Intelligence and Security Department Expenses and Capital Expenditure - - - - - - - N/A - - - -
Multi-Category Expenses and Capital Expenditure (MCA)                        
Output Expenses 6,174 5,941 6,480 6,837 8,118 8,118 8,171 - 8,171 8,171 8,171 8,171
Other Expenses - - - - - - - - - - - -
Capital Expenditure - - - - - - N/A - - - - -

Total Appropriations

287,182 399,236 227,486 299,606 261,433 251,668 20,443 294,121 314,564 327,867 38,089 101,506

Crown Revenue and Capital Receipts

                       
Tax Revenue - - - - - - N/A - - - - -
Non-Tax Revenue 362 495 225 843 747 747 N/A - - - - -
Capital Receipts 273,572 386,929 212,412 280,658 240,000 230,415 N/A 294,121 294,121 307,824 18,046 341

Total Crown Revenue and Capital Receipts

273,934 387,424 212,637 281,501 240,747 231,162 N/A 294,121 294,121 307,824 18,046 341

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 the 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 Kaikoura earthquake.

Multi-Category Expense Appropriation

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. 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.

1.4 - Reconciliation of Changes in Appropriation Structure#

    Old Structure New Structure
2017/18 Appropriations
in the 2017/18 Structure		 2017/18
(Current)
$000		 Appropriations to which
Expenses (or Capital
Expenditure) have been Moved from or to		 Amount
Moved
$000		 2017/18 Appropriations
in the 2018/19 Structure		 2017/18
(Restated)
$000		 2018/19
$000
Evaluation, audit and assessment of performance 1,947 Renamed - Audit and assessment 1,947 2,294

Explanations of the reasons for changing the appropriation structure are noted in the details of each appropriation in Parts 2-4.

Part 2 - Details of Departmental Appropriations#

2.1 - Departmental Output Expenses#

Audit & Assessment (M22)

Scope of Appropriation
This appropriation is limited to audits and assessments of the New Zealand Defence Force and the Ministry of Defence.
Expenses and Revenue
  2017/18 2018/19
  Final Budgeted
$000		 Estimated Actual
$000		 Budget
$000
Total Appropriation 1,947 1,947 2,294
Revenue from the Crown 1,947 1,947 2,294
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 audits and assessments as required by the Minister of Defence.

How Performance will be Assessed and End of Year Reporting Requirements
  2017/18 2018/19
Assessment of Performance Final Budgeted
Standard		 Estimated
Actual		 Budget
Standard

Ministerial Direction#

      

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

 Standard met Standard met Standard met

Process Quality#

      

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

 100% N/A 100%

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

 100% N/A 100%

Note 1 - Small simple reviews may be peer reviewed by qualified Ministry of Defence staff from outside the Audit and Assessment 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 increase of $347,000 in this appropriation for 2018/19 is due to reallocation of funding to other Ministry outputs in 2017/18 to align the resource requirements with demand and activities in that year.

Conditions on Use of Appropriation
Reference Conditions
Authority The 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#

  2017/18 2018/19
  Final Budgeted
$000		 Estimated Actual
$000		 Budget
$000
Total Appropriation 11,018 11,018 9,628
Revenue from the Crown 9,997 9,997 9,628
Revenue from Others 1,021 1,021 -

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#

  2017/18 2018/19
Assessment of Performance Final Budgeted
Standard		 Estimated
Actual		 Budget
Standard

Quality of Deliverable: Options to be presented to the Minister for each refurbishment or procurement project up to the preferred tenderer stage will meet the high level user requirements and will be affordable within the Defence Capital Plan.

 New measure 100% 100%

Schedule: Each refurbishment or procurement project up to identification of the preferred tenderer stage will be managed to the agreed schedule, except when there are circumstances beyond the control of the Ministry.

 New measure 100% 100%

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		 2017/18
Final Budgeted
$000		 2018/19
Budget
$000		 2019/20
Estimated
$000		 2020/21
Estimated
$000		 2021/22
Estimated
$000
Previous Government            
NH90 Simulator 2017/18 366 - - - -
Enhancements to Defence Capability Development and Acquisition 2015/16 7,200 7,260 7,260 7,260 7,260

Reasons for Change in Appropriation#

This appropriation decreased by $1.390 million to $9.628 million for 2018/19. The decrease relates to a:

  • $1.021 million reduction in expenditure on capability projects in the pre-acquisition phase (funded by Revenue from Others). The Ministry currently has no capability projects budgeted in the pre-acquisition stage in 2018/19.
  • $369,000 reduction in expenditure on capability projects in the definition phase (funded by Revenue from the Crown). This decrease reflects a return to normal baseline expenditure levels for capability projects in the definition phase (prior to the pre-acquisition phase), which were higher in 2017/18.

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

  2017/18 2018/19
  Final Budgeted
$000		 Estimated Actual
$000		 Budget
$000
Forests/Agricultural - - -
Land - - -
Property, Plant and Equipment 200 170 325
Intangibles 150 - 25
Other - - -

Total Appropriation

350 170 350

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

  2017/18 2018/19
Assessment of Performance Final Budgeted
Standard		 Estimated
Actual		 Budget
Standard

Capital expenditure is within Capital Plan.

 Within Capital Plan Within Capital Plan 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.

Capital Injections and Movements in Departmental Net Assets

Ministry of Defence

Details of Net Asset Schedule 2017/18
Estimated Actual
$000		 2018/19
Projected
$000		 Explanation of Projected Movements in 2018/19
Opening Balance 2,353 2,353  
Capital Injections - -  
Capital Withdrawals - -  
Surplus to be Retained (Deficit Incurred) - -  
Other Movements - -  

Closing Balance

2,353 2,353  

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
  2017/18 2018/19
  Final Budgeted
$000		 Estimated Actual
$000		 Budget
$000
Total Appropriation 240,000 230,415 294,121
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
  2017/18 2018/19
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 (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 Initiative Year of
First
Impact		 2017/18
Final Budgeted
$000		 2018/19
Budget
$000		 2019/20
Estimated
$000		 2020/21
Estimated
$000		 2021/22
Estimated
$000
Current Government            
Frigate Systems Upgrade 2017/18 10,209 63,358 71,964 2,469 -
Previous Government            
NH90 Simulator 2017/18 516 - - - -
81mm Mortar Replacement 2016/17 10,460 - - - -
Littoral Operations Support Capability 2016/17 110 - - - -
Individual Weapons Replacement 2015/16 1,500 - - - -
Maritime Sustainment Capability 2015/16 91,067 168,422 82,668 6,200 -
Underwater Intelligence, Surveillance and Reconnaissance Capability 2015/16 12,844 5,831 - - -
Frigate Systems Upgrade 2014/15 42,522 - - - -
Network Enabled Army Programme 2014/15 25,000 - - - -
Reasons for Change in Appropriation

The appropriation increase in 2018/19 is due to various Ministry projects, particularly Frigate Systems Upgrade and Maritime Sustainment Capability, entering the main production phase of the project.

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
  2017/18 2018/19
  Final Budgeted
$000		 Estimated Actual
$000		 Budget
$000

Total Appropriation

8,118 8,118 8,171

Departmental Output Expenses

     
Ministerial Services 975 975 981
Policy Advice 4,887 4,887 4,919
Policy Support 2,256 2,256 2,271

Funding for Departmental Output Expenses

     

Revenue from the Crown

8,118 8,118 8,171
Ministerial Services 975 975 981
Policy Advice 4,887 4,887 4,919
Policy Support 2,256 2,256 2,271
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
  2017/18 2018/19
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
  2017/18 2018/19
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.

 $100 Measured 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 period Mean >= 70%

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

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

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 Initiative Year of
First
Impact		 2017/18
Final Budgeted
$000		 2018/19
Budget
$000		 2019/20
Estimated
$000		 2020/21
Estimated
$000		 2021/22
Estimated
$000
 Previous Government            
Enhancements to Defence Capability Development and Acquisition 2015/16 1,350 1,350 1,350 1,350 1,350
Reasons for Change in Appropriation

The appropriation increases for 2018/19 and onwards due to the Enhancements to Defence Capability Development and Acquisition initiative.