Vote Foreign Affairs and Trade - External Sector - Estimates 2017/18

Overview of the Vote#

The Minister of Foreign Affairs is responsible for appropriations in the Vote for the 2017/18 financial year covering the following:

• a total of $338.605 million on purchasing services in the sphere of foreign affairs and trade from the Ministry of Foreign Affairs and Trade
• a total of $74.539 million on capital expenditure
• a total of $57.081 million on subscriptions to international organisations
• a total of $20.853 million on purchasing support for Antarctic research from the New Zealand Antarctic Institute
• a total of $4 million to the Asia New Zealand Foundation for the promotion of Asian skills and relationships
• a total of $1.800 million on payments in accordance with the Diplomatic Privileges and Immunities Act 1968
• a total of $1.400 million to the Pacific Cooperation Foundation for the promotion of mutual understanding and constructive linkages between New Zealanders and other countries and people of the Pacific
• a total of $941,000 to the Pacific Cooperation Broadcasting Ltd for the provision of New Zealand-sourced television content and other media services and related technical support of countries in the Pacific, and

• a total of $1.200 million to the New Zealand Antarctic Institute for capital expenditure.

The Minister of Foreign Affairs is also responsible for a capital injection of $8.680 million to the Ministry of Foreign Affairs and Trade to establish two new embassies and one new high commission.

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

Details of Appropriations and Capital Injections#

Annual and Permanent Appropriations#

Capital Injection Authorisations#

Supporting Information#

Part 1 - Vote as a Whole#

1.1 - New Policy Initiatives

1.2 - Trends in the Vote#

Summary of Financial Activity#

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.

1.3 - Analysis of Significant Trends#

Total Vote: All Appropriations

Trends in comparative actual and estimated total expenses and capital expenditure are shown in Figure 1 below, including budgeted and estimated actuals for the preceding year.

Vote trends in actual expenses and capital expenditure by appropriation type

Source: Ministry of Foreign Affairs and Trade

Departmental Output Expenses

Departmental output expenses have increased by $49.078 million from an actual $289.527 million in 2012/13 to $338.605 million appropriated in 2017/18, with the key factors contributing to the movement being:

• funding increases of $9.819 million from the new initiatives package approved in Budget 2017, comprising the establishment of a New Zealand High Commision in Sri Lanka ($937,000), the establishment of a New Zealand Embassy in Ireland ($1.432 million), the Dubai Expo 2020 ($3.010 million), together with the making New Zealanders more prosperous through trade and more connected initiatives ($4.440 million)
• net fiscally neutral increases totalling $17.921 million primarily reflecting expense transfers and retention of underspends for existing and new initiatives ($28.280 million), a net increase resulting from movements in foreign exchange and overseas inflation over and above the rate of New Zealand inflation ($972,000), partially offset by a decrease from lower net capital charges resulting from a reduction in rates ($11.331 million)
• a net funding decrease across the two financial years of $19.825 million in respect of a 6% efficiency dividend returned to the Crown
• savings initiatives - over the past five years the Ministry has implemented a lower cost business model and completed an efficiency programme. This focus on costs has allowed the Ministry to manage cost pressures, increase outputs to support Government objectives and return, in addition to the 6% efficiency dividend, significant baseline savings to the Crown.

Non-Departmental Expenses

Non-departmental output and other expenses have increased by $24.377 million from an actual $61.698 million in 2012/13 to $86.075 million appropriated in 2017/18, with the key changes as follows:

• funding increases of $5.573 million for logistics support to the New Zealand Antarctic Institute, including the new initiatives package approved in Budget 2017 ($2.050 million) for preparing for the future redevelopment of Scott Base together with accommodation support for Antarctic programmes based in Christchurch
• an increase in funding of $17.285 million reflecting changes both in volumes of subscriptions to international organisations and the associated foreign exchange rates, in respect of the non-discretionary payments required as formal obligations arising from New Zealand's membership of international organisations, and as a signatory to international treaties and conventions
• funding transfers totalling $941,000 from Vote Arts, Culture and Heritage and Vote Official Development Assistance for Pacific Broadcasting Services
• an increase of $748,000 for refunding New Zealand local body rates for offices and residual premises of overseas diplomatic missions and consular posts.

Departmental Capital Expenditure

After a slow down period immediately after the Global Financial Crisis the Ministry's capital expenditure programme will ramp up as the Ministry implements its long term investment plan before reverting to a more business-as-usual tempo in the out-years.

Part 2 - Details of Departmental Appropriations#

2.1 - Departmental Output Expenses#

Administration of Diplomatic Privileges and Immunities (M34)

Scope of Appropriation

Expenses and Revenue

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the fulfilment of New Zealand's obligations under the Diplomatic Privileges and Immunities Act 1968, and the Consular Privileges and Immunities Act 1971.

How Performance will be Assessed and End of Year Reporting Requirements

Note 1 - Ministerial OIAs are requests of the Minister responsible for the Foreign Affairs and Trade portfolios. Ministry OIAs are requests of the Chief Executive of the Ministry of Foreign Affairs and Trade.

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Conditions on Use of Appropriation

Consular Services (M34)#

Scope of Appropriation#

Expenses and Revenue#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve the provision of assistance to New Zealanders in distress overseas, including in the event of a natural disaster or other large-scale emergency. We also seek to mitigate risks to New Zealanders by raising the awareness of New Zealanders travelling and living overseas.

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

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Current and Past Policy Initiatives#

Reasons for Change in Appropriation#

The appropriation increased by $1.291 million to $21.438 million appropriated for 2017/18 due to:

• an increase of $409,000 from the new initiatives package approved in Budget 2017 comprising the establishment of a New Zealand High Commission in Sri Lanka ($56,000) establishment of a New Zealand Embassy in Dublin, Ireland ($86,000), the Making New Zealanders more prosperous through trade initiative ($177,000) and the Making New Zealanders more connected initiative ($90,000)

•  expense transfer of $200,000 from 2016/17 for the establishment of a New Zealand Embassy in Bogota, Colombia, and

• an increase of $1.500 million due to a one-off fiscally neutral adjustment in 2016/17 to reflect the reprioritisation of resources across the Ministry's output expenses.

These increases are partially offset by:

• a decrease of $223,000 resulting from a reduction in the capital charge rate from 7% to 6%, and

• a decrease of $595,000 resulting from foreign exchange rate and overseas inflation movements.

Pacific Security Fund (M34)#

Scope of Appropriation#

Expenses and Revenue#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve the advancement or protection of New Zealand's security interests by reducing risks from threats arising in, or operating through, Pacific Island countries.

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

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Policy Advice and Representation - International Institutions (M34)#

Scope of Appropriation#

Expenses and Revenue#

Components of the Appropriation#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve New Zealand's participation in international institutions in order to strengthen international rules and to influence outcomes that are favourable for New Zealand.

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

Note 1 - Binding international treaties include multilateral, plurilateral and bilateral treaties. Concluded means signed or, if signature is not provided for in the treaty, acceded to, adopted, accepted or ratified.

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Current and Past Policy Initiatives#

Reasons for Change in Appropriation#

The appropriation increased by $535,000 to $61.730 million appropriated for 2017/18 due to:

• increases of $1.566 million from the new initiatives package approved in Budget 2017, comprising the establishment of a New Zealand High Commission in Sri Lanka ($216,000), the establishment of a New Zealand Embassy in Ireland ($329,000), the Making New Zealanders more prosperous through trade initiative ($677,000) and the Making New Zealanders more connected initiative ($344,000), and

• net expense transfers totalling $3.052 million from 2016/17 for a range of initiatives including the establishment of a new post in Bogota, Colombia, the Agriculture Cooperation Fund, the Korea-New Zealand Free Trade Agreement, the removal of asbestos from a number of our offshore buildings, and the World War One Centenary programme.

These increases are partially offset by:

• a decrease of $2.370 million resulting from foreign exchange rate and overseas inflation movements;

• a decrease of $1.500 million due to a one-off fiscally neutral adjustment in 2016/17 to reflect the reprioritisation of resources across the Ministry's output expenses, and

• a decrease of $213,000 resulting from a reduction in the capital charge rate from 7% to 6%.

Policy Advice and Representation - Other Countries (M34)#

Scope of Appropriation#

Expenses and Revenue#

Components of the Appropriation#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve the management of New Zealand's international connections in order to contribute to New Zealand's economic prosperity alongside political and security interests.

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

Note 1 - Concluded means signed or, if signature is not provided for in the arrangement, acceded to, adopted, accepted or ratified.

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Current and Past Policy Initiatives#

Reasons for Change in Appropriation#

The appropriation increased by $8.475 million to $244.200 million appropriated for 2017/18 due to:

• an increase of $7.845 million from the new initiatives package approved in Budget 2017, comprising the establishment of a New Zealand High Commission in Sri Lanka ($665,000), the establishment of a New Zealand Embassy in Ireland ($1.017 million), the Making New Zealanders more prosperous through trade initiative ($2.090 million), the Making New Zealanders more connected initiative ($1.063 million) and the Expo 2020 Dubai initiative ($3.010 million), and

• net expense transfers and retention of underspends totaling $9.622 million from 2016/17 for a range of initiatives including the establishment of a new post in Bogota, Colombia, planning for the Dubai Expo 2020, the Agriculture Cooperation Fund, the Korea-New Zealand Free Trade Agreement, the removal of asbestos from post buildings, the Ministry's programme of systems enhancements, the China Capable Public Service programme, and the World War One Centenary programme.

These increases are partially offset by:

• a decrease of $6.723 million resulting from foreign exchange rate and overseas inflation movements, and
• a decrease of $2.269 million resulting from a reduction in the capital charge rate from 7% to 6%.

Policy Advice and Representation - Other Countries PLA (M34)#

Scope of Appropriation#

Expenses and Revenue#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve the Ministry's obligation, as set out in section 11 of the Foreign Affairs Act 1988, of superannuation for local staff employed by overseas posts.

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

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Conditions on Use of Appropriation#

Promotional Activities - Other Countries (M34)#

Scope of Appropriation#

Expenses and Revenue#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve the promotion of New Zealand to other countries as an attractive market for investment and to support activities that foster outwards direct investment by New Zealand firms.

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

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Services for Other New Zealand Agencies Overseas (M34)#

Scope of Appropriation#

Expenses and Revenue#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve the coordinated effort of NZ Inc agencies offshore.

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

Note 1 - Based on surveys of NZ Inc secondees and head office contacts.

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Reasons for Change in Appropriation#

The appropriation decreased by $226,000 to $7.550 million appropriated for 2017/18 due to a decrease of $178,000 resulting from foreign exchange rate and overseas inflation movements and a decrease in demand for services provided at overseas posts ($48,000).

Conditions on Use of Appropriation#

2.3 - Departmental Capital Expenditure and Capital Injections#

Ministry of Foreign Affairs and Trade - Capital Expenditure PLA (M34)#

Scope of Appropriation

Capital Expenditure

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the provision of modern, secure and effective premises for accommodating NZ Inc's requirements offshore and modernising the Ministry's IT systems.

How Performance will be Assessed and End of Year Reporting Requirements

Note 1 - The Ministry uses a Fit for Purpose framework that rates every Chancery (office) and Official Residence property against five asset management criteria of location, building and infrastructure quality, brand, functionality, and flexibility. Weighted sub-criteria are used to reflect the criticality of each asset management criteria relative to specific locations. The current performance of each property asset in the above mentioned class is scored against pre-determined business defined target scores. The target scores reflect the relative importance of each of the five asset criteria as an enabler supporting the specific objectives and business model in each location.

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Foreign Affairs and Trade in its Annual Report to be tabled in the House.

Reasons for Change in Appropriation

The increase in the appropriation for 2017/18 reflects the scheduling of building construction and refurbishment work within the Ministry's capital programme.

Capital Injections and Movements in Departmental Net Assets

Ministry of Foreign Affairs and Trade

Part 3 - Details of Non-Departmental Appropriations#

3.1 - Non-Departmental Output Expenses#

Antarctic Research and Support (M34)

Scope of Appropriation

Expenses

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the delivery of safe and effective support for New Zealand's Antarctic related activities and interests.

How Performance will be Assessed and End of Year Reporting Requirements

End of Year Performance Reporting

Performance information for this appropriation will be reported by the New Zealand Antarctic Institute in its Annual Report to be tabled in the House.

Current and Past Policy Initiatives

Reasons for Change in Appropriation

The appropriation increased by $34,000 to $20.853 million appropriated for 2017/18 due to:

• an increase of $2.050 million from the new initiatives package approved in Budget 2017, comprising Antarctica New Zealand - preparation for the future redevelopment of Scott Base ($1.200 million) and Antarctica New Zealand - accommodation for National Antarctic programmes with operations based in Christchurch ($850,000), and
• an increase of $1.144 million from the new initiatives package approved in Budget 2016 for logistics support and related activity.

These increase are partially offset by:

• a decrease for a one-off funding transfer of $3 million for Antarctic logistics support in 2016/17, and

• a decrease of $160,000 resulting from a reduction in the capital charge rate from 7% to 6%.

Conditions on Use of Appropriation

Pacific Broadcasting Services (M34)#

Scope of Appropriation#

Expenses#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve diverse and relevant New Zealand television, radio and on-line content, meeting appropriate content standards, available to Pacific audiences.

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

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Pacific Cooperation Broadcasting Ltd in its Statement of Service Performance to be tabled in the House.

Service Providers#

Conditions on Use of Appropriation#

Pacific Cooperation Foundation (M34)#

Scope of Appropriation#

Expenses#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve outputs to promote outcomes in particular on a pan-regional basis in three strategic priority areas: promoting economic sustainability and business growth in the Pacific, connecting people and organisations in the Pacific and New Zealand, and enhancing New Zealand's identity as a Pacific nation.

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

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Pacific Cooperation Foundation in its Statement of Service Performance to be tabled in the House.

Service Providers#

Conditions on Use of Appropriation#

Promotion of Asian Skills and Relationships (M34)#

Scope of Appropriation#

Expenses#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve improving knowledge among New Zealanders about Asian countries and develop the necessary skills required by New Zealanders in their dealings with Asia.

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

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Asia New Zealand Foundation in its Statement of Service Performance to be tabled in the House.

Service Providers#

Conditions on Use of Appropriation#

3.4 - Non-Departmental Other Expenses#

Disbursements Made and Exemptions from Taxation PLA (M34)#

Scope of Appropriation

Expenses

What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the fulfilment of New Zealand's obligations pursuant to section 21 of the Diplomatic Privileges and Immunities Act 1968.

How Performance will be Assessed and End of Year Reporting Requirements

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Minister of Foreign Affairs and appended to the Annual Report of the Ministry of Foreign Affairs and Trade to be presented to the House.

Service Providers

Conditions on Use of Appropriation

Subscriptions to International Organisations (M34)#

Scope of Appropriation#

Expenses#

Components of the Appropriation#

What is Intended to be Achieved with this Appropriation#

This appropriation is intended to achieve the funding of the non-discretionary payments required as formal obligations arising from New Zealand's membership of international organisations, and as a signatory to international treaties and conventions.

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

End of Year Performance Reporting#

Performance information for this appropriation will be reported by the Minister of Foreign Affairs and Trade and appended to the Annual Report of the Ministry of Foreign Affairs and Trade to be presented to the House.

Reasons for Change in Appropriation#

The increase in funding to $57.081 million appropriated for 2017/18 reflects changes in foreign exchange rates and volumes in respect of the non-discretionary payments arising from New Zealand's membership of international organisations, and as a signatory to international treaties and conventions.