Economic Development and Infrastructure Sector - Information Supporting the Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2009

Introduction#

Purpose of Information Supporting the Estimates#

The Information Supporting the Estimates provides members of Parliament with additional performance information in order to:

• support their examination of the appropriations and other authorities requested by the Government in the first Appropriation Bill for the forthcoming financial year, and
• provide a base against which they can later assess the actual performance of the Crown and individual departments and Offices of Parliament over that financial year.

The Information Supporting the Estimates is organised into 10 volumes by sector, each of which covers one or more Votes. The scope of each sector and the allocation of Votes to a sector reflect a balancing of three desired characteristics - namely that each volume should, where possible:

• reflect natural sectors
• keep together Votes administered by the same department, and
• keep together Votes allocated to a particular select committee of the House of Representatives for examination.

The number of sectors and coverage of each sector is set in consultation with the House of Representatives. The 10 sectors are:

• Economic Development and Infrastructure Sector
• Education and Science Sector
• Environment Sector
• External Sector
• Finance and Government Administration Sector
• Health Sector
• Justice Sector
• National Identity Sector
• Primary Sector
• Social Development and Housing Sector.

Votes and departments included in each sector are listed in the following table.

Votes and Departments in Each Sector#

Purpose and Nature of Appropriations#

An appropriation is a statutory authority from Parliament allowing the Crown or an Office of Parliament to incur expenses or capital expenditure.

Neither the Crown nor an Office of Parliament can legally incur any expense or capital expenditure - as those terms are defined in the Public Finance Act 1989 (PFA) - unless it is expressly authorised by or under an Act of Parliament.

Limits Created by Appropriations#

Each appropriation is allocated to, and managed as, one of six types of appropriation.

Each appropriation also has a defined scope that limits the uses or activities for which the expenses or capital expenditure can be incurred. The scope should be sufficient on its own to establish the nature and extent of the authority to incur expenses or capital expenditure. The wording of the appropriation scope should achieve the balance between being sufficiently precise to act as an effective constraint against non-authorised activities and not so specific that it inadvertently limits activity intended to be authorised.

In most cases an appropriation also limits the amount of expenses or capital expenditure that can be incurred, and the time period within which those expenses or capital expenditure can be incurred.

Aside from the very limited exclusions provided for in the PFA, the amount of expense or capital expenditure authorised by an appropriation is measured in accordance with generally accepted accounting practice.

As generally accepted accounting practice does not normally treat GST as an expense, appropriation amounts usually exclude GST. Prior to 2005/06, however, appropriations included applicable GST. All prior-year appropriation data - such as in the Summary of Trends table in the Estimates and the Summary of Financial Activity table for each Vote in Information Supporting the Estimates - have been adjusted to exclude GST and allow appropriate comparison.

Responsibility for Appropriations#

Each appropriation is the responsibility of a designated Minister, who controls the right to use that appropriation within the limits authorised by Parliament. A department is also assigned to administer that appropriation in accordance with the Minister's wishes concerning its use.

A Vote is a group of appropriations (and can be a single appropriation) administered by a single department. Different appropriations within a Vote may be the responsibility of different Ministers.

Types of Appropriation#

The PFA provides for six types of appropriation. Four appropriation types authorise the incurring of expenses; one type authorises the incurring of capital expenditure; the remaining type authorises both.

These appropriation types can be further differentiated by whether the expenses or capital expenditure are departmental or non-departmental transactions.

Types of Output Expense Appropriations#

A number of variations are possible for output expense appropriations. In particular, the constraint on the amount of expense that can be incurred is not always a fixed sum; and an output expense appropriation can cover more than one class of outputs.

Appropriation Period#

The length of the appropriation period affects how appropriations are presented in the Estimates and Supplementary Estimates. Three kinds of appropriation can be distinguished on the basis of period - annual and multi-year (as referred to in the above table on output expense appropriations), and permanent:

• Annual Appropriations - Most appropriations listed in the Estimates and Supplementary Estimates allow expenses or capital expenditure to be incurred only during a particular financial year. The annual amounts for which parliamentary authority is sought are shown in bold type in Details of Annual and Permanent Appropriations in the Estimates and Supplementary Estimates for each Vote. The amounts for RDAs and annual DDAs are forecasts only, and so are not shown in bold type.
• Multi-Year Appropriations (MYAs) - The PFA also permits appropriations that allow expenses or capital expenditure to be incurred during a specified period that spans the whole or parts of more than one financial year, but no more than five financial years. The details of each MYA, including its commencement date and expiry date, are specified in Details of Multi-Year Appropriations in the Estimates and Supplementary Estimates for relevant Votes.
• Permanent Appropriations (sometimes referred to as permanent legislative authorities or PLAs) -Permanent appropriations are authorised by legislation other than an Appropriation Act and continue in effect until revoked by Parliament. Generally the authorising legislation will impose limits on the scope of the appropriation and not its amount. The usual legislative wording allows for expenses or capital expenditure to be incurred for the purpose specified in the legislation “without further appropriation than this section”. Details of permanent appropriations are included in Details of Annual and Permanent Appropriations in the Estimates and Supplementary Estimates for each Vote for completeness, though the amount specified is a forecast rather than a limit. The amounts of permanent appropriations are therefore not shown in bold type. The scope of a permanent appropriation will reference the relevant section of the authorising legislation.

Guide to Reading Information Supporting the Estimates#

The Information Supporting the Estimates for each of the 10 sectors comprises five components, each of which is briefly described, below.

Sector Overview#

The first component of the Information Supporting the Estimates may include a statement, agreed by all Ministers responsible for appropriations in Votes included in the sector, that presents an overview of the sector and a high-level summary of the Government's expectations and priorities. The Overview also includes Ministerial and Chief Executive Statements of Responsibility for the information provided on future operating intentions of departments in the sector.

Performance Information for Appropriations in Each Vote#

The second component of the Information Supporting the Estimates presents performance information relating to each appropriation, ordered by Vote and appropriation type.

The title page for each Vote specifies the Minister(s) responsible for existing and proposed appropriations in the Vote, the administering department for the Vote, and the Responsible Minister for that department. The performance information meets the requirements of sections 15 and 41(1)(e) of the PFA and contains up to six parts. If particular information is not applicable to a Vote or a specific appropriation or type, or is otherwise unavailable, the relevant heading is not included.

Part 1 - Summary of the Vote

The Summary of the Vote comprises:

• Part 1.1 - Overview of the Vote - A plain-language summary of the focus of the appropriations through a brief explanation of the Vote. The Overview also appears at the start of the Vote in the Estimates.
• Part 1.2 - High-Level Objectives of the Vote - The objectives for the Vote presented through links and relationships between the appropriations and high-level priorities and outcomes to which they contribute. Where applicable, priorities and outcomes are drawn from the Government's themes and sub-themes, and published strategy documents. Links may also be made to specific Government objectives.
• Part 1.3 - Trends in the Vote - A presentation of actual and estimated trends in the Vote, comprising:
  • Summary of Financial Activity - A table showing financial information over the preceding five years (actual, budgeted or estimated actual), the current (Budget) year and the following three years (estimated) for types of appropriations and Crown revenue and capital receipts.
  • Budget Policy Initiatives - A table showing how new initiatives (and associated expenses or capital expenditure) are allocated to appropriations in the Vote. References are included where appropriations in other Votes are affected by the same initiative.
  • Analysis of Significant Trends - High-level analysis of appropriations and of Crown revenue and capital receipts by type over the nine financial years covered by the Summary of Financial Activity table, with graphical presentations and explanations of significant changes.
• Part 1.4 - Reconciliation of Changes in Appropriation Structure - A table providing a reconciliation and explanation of changes in the structure or classification of appropriations made in the Budget year. These changes are restated for the previous financial year to facilitate comparison.

Part 2 - Details and Expected Performance for Output Expenses

This Part provides further detail about appropriations and expected performance for output expenses.

• Part 2.1 - Departmental Output Expenses - Intended impacts, outcomes or objectives are presented for departmental output expense appropriations in the Vote. This is followed by information on each appropriation, including its scope, a table showing expenses and revenue (distinguishing between revenue from the Crown and others), a statement of reasons for change in the appropriation (if material), and tables detailing performance measures and standards for significant aspects of expected output performance, any conditions on use of the appropriation, any memorandum accounts (which record accumulated surpluses and deficits incurred in the provision of outputs on a full cost-recovery basis), and any current and past policy initiatives affecting the appropriation.

Information on impacts and outcomes or objectives to which the outputs contribute is provided where the relationships are direct or involve a small number of output expenses. Where the relationships are more complex, this information will be included in high-level objectives of the Vote outlined in Part 1.2. Conditions of use include administrative criteria and processes contained in legislation, regulations and Government decisions, which may be referenced in scope statements or performance measures. The current and past policy initiatives table provides a five-year history of announced initiatives that impact on the Budget year, the preceding year and the following three years.

For MCOAs, an explanation is provided as to why the classes of outputs have been grouped under a single appropriation, and the scope statement, expenses and revenue, and performance information is presented for each output class. Data provided for MYAs enables the original appropriation to be reconciled to the adjusted level if changes have been approved or are proposed, and the balance remaining to be derived taking account of actual or estimated actual expenses incurred to date.

The appropriation scope, expenses and revenue, and output performance measures and standards match information required to be included in a department's Statement of Forecast Service Performance with respect to departmental output expense appropriations used by the department.

• Part 2.2 - Non-Departmental Output Expenses - This sub-part contains comparable information to that presented in Part 2.1 on departmental output expense appropriations. The main differences are that details of third parties' other revenue is not relevant and a summary of service providers is included.

The service providers table shows Crown entities and non-governmental organisations providing outputs funded through the Vote, and (where applicable) the mechanism for reporting actual performance to Parliament and the expiry of the Government's resource commitment. The reporting mechanisms are typically an entity's annual report or a report by the responsible Minister required by section 32A of the PFA. Where the provider is a Crown entity that is required to produce a Statement of Intent, its annual report may contain more detailed performance information at the output class or output level. ‘Section 32A’ reports include a statement of service performance in relation to the appropriation.

Part 3 - Details for Benefits and Other Unrequited Expenses

Part 3 provides performance information about appropriations for benefits and other unrequited expenses incurred by the Crown. No departmental transactions arise under this appropriation type.

• Part 3.2 - Non-Departmental Benefits and Other Unrequited Expenses - Information on each appropriation includes impacts and outcomes intended to be achieved, a scope statement, expense components, reasons for material changes, any conditions of use, and details of any current and past policy initiatives over the five years up to and including the Budget year.

Guide to Reading Information Supporting the Estimates (continued)#

Part 4 - Details for Borrowing Expenses

This Part provides detail about appropriations for borrowing expenses. No departmental borrowing expense appropriations exist at present.

• Part 4.2 - Non-Departmental Borrowing Expenses - The set of performance information for these appropriations is the same as that for non-departmental benefits and other unrequited expenses, except that conditions on use of an appropriation are not specified.

Part 5 - Details and Expected Results for Other Expenses

Part 5 provides detail about appropriations for:

• Part 5.1 - Departmental Other Expenses - It is uncommon for this category of appropriation to be used. In the few cases where it occurs, the performance information is the same as that for non-departmental other expense appropriations except for a summary of reporting mechanisms.
• Part 5.2 - Non-Departmental Other Expenses - Information on other expenses incurred by the Crown covers intended impacts and outcomes, appropriation scope, expenses analysed by component, reasons for material changes in the appropriation, expected results and standards, any conditions on use, any current and past policy initiatives, and a summary of mechanisms for reporting actual performance to Parliament.

Part 6 - Details and Expectations of Capital Expenditure

This Part provides details about appropriations for capital expenditure.

• Part 6.1 - Departmental Capital Expenditure - The purchase or development of assets by a department is made under a permanent appropriation authorised by section 24(1) of the PFA. Capital expenditure is defined in section 2 as the cost of assets acquired or developed, including tangible, intangible or financial assets, and any ownership interest in entities, but excluding inventories. The appropriation appears in the Vote that contains appropriations belonging to the department's Responsible Minister.

Information is provided on intended impacts and outcomes of the appropriation, its scope, expenditure analysed by standard asset categories, reasons for material changes in the appropriation, and expected results. The scope statement is in a standard form for all departments. The performance information relates to the department as a whole and is not limited to any specific capital injection.

• Part 6.2 - Non-Departmental Capital Expenditure - Performance information for capital expenditure incurred by the Crown is the same as that for departmental capital expenditure except for not detailing asset categories and the addition of any conditions on use of the appropriation, any current and past policy initiatives, and a summary of the mechanism for reporting to Parliament.

The scope statement indicates the form of interest or asset acquired by the Crown, such as a capital injection (equity), loan or shares.

Overview of Performance Information

The following table summarises the performance information sought for a ‘standard’ appropriation in each sub-part.

Information on reasons for change, conditions of use, current and past policy initiatives, and reporting mechanisms appears where applicable or material. Memorandum accounts are relevant only in Part 2. Some variations exist for non-standard appropriations, including MCOAs in Parts 2.1 and 2.2 and MYAs in Parts 2.2, 5.2 and 6.2. Furthermore, performance information may not be available for some appropriations.

Guide to Reading Information Supporting the Estimates (continued)#

Statement of Forecast Service Performance of Departments#

The third component of the Information Supporting the Estimates of Appropriations comprises the Statement of Forecast Service Performance of each department included in the sector, by reference to performance information set out in Part 2.1 of Votes containing appropriations proposed to be used by the department. This Statement is of particular importance for those departments proposing to use appropriations in more than one Vote.

Forecast Financial Statements of Departments#

The fourth component of the Information Supporting the Estimates begins with a Statement of Common Accounting Policies applicable to all departments. The forecast financial statements for the forthcoming financial year for each department covered by the sector includes a:

• Statement of Forecast Financial Performance
• Statement of Forecast Changes in Taxpayers' Funds
• Statement of Forecast Financial Position
• Statement of Forecast Cash Flows
• Statement of Significant Assumptions.

Each department will include a Statement of Entity-Specific Accounting Policies detailing policies for any matters not addressed by the Statement of Common Accounting Policies (such as a “going concern” statement) or where its policies are more specific than the common policies (such as capitalisation thresholds and estimated useful lives of individual classes of assets). Notes to the Financial Statements provide additional details to assist interpretation of the accounts and to meet disclosure requirements outlined in legislation and accounting standards.

Statements of Intent of Departments#

The final component of the Information Supporting the Estimates presents the Statements of Intent of departments included in each sector. These Statements contain information required by section 40 of the PFA. They focus on the medium term and generally cover:

• Nature and scope of the department's functions - A brief high-level description of the department's functions, addressing its role(s) and purpose and how it intends fulfilling them.
• Strategic direction - impacts and outcomes - A brief high-level overview of the department's strategic direction covering both the impacts and outcomes the department is seeking to achieve (or contribute to) and the strategic environment in which the department operates through, in particular, its responses to the Government's priorities.
• Operating intentions - Information that describes how the department intends to achieve (or contribute to) those desired impacts and outcomes through its operations. This section should also include the main measures and standards the department will use to assess and demonstrate what it has achieved, including measures of outcome achievement, impact and cost-effectiveness.
• Managing in a changeable operating environment - Information on the risks to achievement of the desired outcomes and priorities, and the department's mitigation strategies.
• Assessing organisational health and capability - The department's intentions for building and strengthening its internal capability, including its responses to the development goals for the State services and its strategic approach to managing its asset base and forecast capital expenditure in the medium term.
• Additional information and statutory reporting requirements - As required either by the responsible Minister or Minister of Finance, or by specific legislation.

Terms and Definitions#

The table below contains terms that are used in the Estimates and the Information Supporting the Estimates.

Useful Links#

The suite of Budget 2008 documents can be accessed in the Budgets section of the website: www.treasury.govt.nz/budget/2008. Documents providing guidance on the PFA and the public sector financial management system can be accessed in the Public Finance Overviews section of the Treasury's website: www.treasury.govt.nz/publications/guidance/publicfinance.

Sector Overview - Social Development and Housing Sector#

Ministerial Statements of Responsibility#

Each of us is satisfied that the information on future operating intentions provided by our respective departments and included in the Information Supporting the Estimates for the Social Development and Housing Sector is in accordance with sections 38, 40 and 41 of the Public Finance Act 1989 and is consistent with the policies and performance expectations of the government.

Chief Executive Statements of Responsibility#

Ministry of Social Development#

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the Social Development and Housing Sector relating to the Ministry of Social Development and for the Vote/Votes for which the Ministry of Social Development is the administering department. Specifically, this information is contained in the Ministry of Social Development's statement of forecast service performance, forecast financial statements and Statement of Intent.

This information has been prepared in accordance with the Public Finance Act 1989. It is also consistent with the proposed appropriations set out in the Appropriation (2008/09 Estimates) Bill, as presented to the House of Representatives in accordance with section 13 of the Public Finance Act 1989, and with existing appropriations and financial authorities.

Department of Building and Housing#

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the Social Development and Housing Sector relating to the Department of Building and Housing and for the Vote/Votes for which the Department of Building and Housing is the administering department. Specifically, this information is contained in the Department of Building and Housing's statement of forecast service performance, forecast financial statements and Statement of Intent.

This information has been prepared in accordance with the Public Finance Act 1989. It is also consistent with the proposed appropriations set out in the Appropriation (2008/09 Estimates) Bill, as presented to the House of Representatives in accordance with section 13 of the Public Finance Act 1989, and with existing appropriations and financial authorities.

Performance Information for Appropriations Vote Social Development#

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Associate Minister for Social Development and Employment (CYF) (M10), Minister for Social Development and Employment (M63)

ADMINISTERING DEPARTMENT: Ministry of Social Development

MINISTER RESPONSIBLE FOR MINISTRY OF SOCIAL DEVELOPMENT: Minister for Social Development and Employment

Part 1 - Summary of the Vote#

Part 1.1 - Overview of the Vote

The Minister for Social Development and Employment is responsible for the appropriations in the Vote for the 2008/09 financial year covering the following:

• a total of over $412 million on Child Youth and Family related services including responding to and preventing child abuse and neglect, managing adoptions and youth justice services
• a total of nearly $569 million on services to assist people into employment, and to assess and pay the appropriate entitlement of social assistance to beneficiaries, and to protect the integrity of the benefit system, including collection of debt
• a total of over $83 million on specialised services, including services for students, seniors and administration of community services and SuperGold cards
• a total of nearly $52 million on social policy advice and crown entity monitoring
• a total of over $39 million on leadership and coordination services to support and strengthen families, communities and whanau
• a total of over $273 million on services from other organisations
• a total of over $15 million purchasing services from the Children's Commissioner, the Retirement Commissioner, and the Families Commission
• a total of over $773 million on debt write-downs, and a series of assistance programmes
• a total of $7,739 million on payments of New Zealand Superannuation
• a total of $3,882 million on payments for the working age benefits - Domestic Purposes Benefit (DPB), Unemployment, Sickness, Invalid's and Widow's
• a total of $1,486 million on payments for assistance with expenses related to accommodation, disability, hardship and entering or remaining in the workforce
• a total of $494 million on payments to assist people to obtain a qualification or independent youth to continue education/training or obtain work
• a total of $320 million on other forms of financial assistance such as childcare, care of unsupported children, payments to Australia and special circumstances
• a total of $1,296 million on payments for student loans, and
• a total of $122 million on advances of benefits and other recoverable payments to assist with hardship.

Details of these appropriations are set out in Parts 2-6 below.

Part 1.2 - High-Level Objectives of the Vote#

Government Priorities and Outcomes - Links to Appropriations#

Objectives of the Vote#

Vote Social Development provides, on behalf of the Government, a significant contribution to the theme of Families - Young and Old.

Families - Young and Old focuses on providing all families with the support and choices they need to be secure and to be able to reach their full potential. Vote Social Development contributes to the Families - Young and Old theme in the following ways:

• It helps children to get the best start in life by developing and implementing early intervention services to support vulnerable children and families from before birth through to the transition to school.
• It supports strong families by coordinating action to minimise family violence.
• It supports older New Zealanders age positively by providing New Zealand Superannuation and it provides a safety net for people facing difficulties through the provision of income support.

The impacts that the appropriations in Vote Social Development are intended to have on different groups in society are reflected in the Ministry of Social Development's outcomes:

• Children and Young People.
• Working Age People.
• Older People.
• Families and Whanau.
• Communities, Hapu and Iwi.

The table above maps the Ministry of Social Development's outcomes and appropriations to the Government's theme of Families - Young and Old, and the Government's Outcomes and Objectives. Most of the Ministry's appropriations map to more than one Government Outcome.

Part 1.3 - Trends in the Vote#

Summary of Financial Activity#

Budget Policy Initiatives#

Analysis of Significant Trends#

Total Vote: All Appropriations

Significant changes in departmental and non-departmental appropriations in Vote Social Development, are discussed briefly below.

From 1 July 2008 Vote Child, Youth and Family Services merges with Vote Social Development. Data in Part 1.3 Trends in the Vote includes the trends in Vote Child, Youth and Family Services for the period 2003/04 to 2007/08 before the Votes were merged. This data is also reflected in the relevant graphs below, but the numbers quoted in the written trend analyses for 2003/04 to 2007/08 refer only to changes in Vote Social Development before the Votes were merged.

Figure 1 - Trends in total voted and actual expenses and capital expenditure

Trends in total voted and actual expenses and capital expenditure

Source: Ministry of Social Development

The movements in departmental and non-departmental appropriations in Vote Social Development, which are detailed in the Summary of Financial Activity table above, are largely driven by movements in Benefits and Other Unrequited Expenses and Capital Expenditure.

Departmental Output Expenses

Figure 2 - Trends in departmental output expenses

Departmental Output Expenses

Source: Ministry of Social Development

Departmental outputs increased between 2003/04 and 2004/05 largely as a result of new initiatives. The most significant was the implementation of the Working for Families reforms.

Departmental output expenses increased by $48.577 million between 2004/05 and 2005/06. The most significant increase was $13.098 million transferred from Vote Employment to administer Community Labour Market Development Assistance. The departmental costs of a number of new initiatives - for example Addressing Long Term Unemployed, New Service for Sickness and Invalid's Beneficiaries, and Early Intervention - also contributed to the increase.

Departmental output expenses decreased by $11.174 million between 2005/06 and 2006/07 mainly because after the merger between the Ministry of Social Development and the Department of Child, Youth and Family Services on 1 July 2006. There was no need to appropriate funding for Information Technology Services to the Department of Child, Youth and Family Services in Vote Social Development. Accordingly this departmental output expense is no longer reported.

Departmental output expenses increased by $22.369 million between 2006/07 and 2007/08 mainly because of additional funding for Working New Zealand.

Departmental output expenses increased by $448.701 million between 2007/08 and 2008/09 mainly because Vote Child, Youth and Family Services is being merged with Vote Social Development, with effect from 1 July 2008 (approximately $420 million).

Non-Departmental Output Expenses

Figure 3 - Trends in non-departmental output expenses

Non-Departmental Output Expenses

Source: Ministry of Social Development

Non-departmental outputs increased by $16.738 million between 2003/04 and 2004/05 as a result of the establishment of the Families Commission and additional funding for Vocational Services for People with Disabilities.

Non-departmental outputs increased by $39.638 million between 2004/05 and 2005/06. The main reasons for this increase were the transfer of funding from Vote Child, Youth and Family Services for services purchased from Non-Government Organisations (NGOs) that fitted better with the outcomes sought from Vote Social Development ($21.835 million) and an increase in the funding for Vocational Services for People with Disabilities of $13.163 million.

Non-departmental outputs increased by $31.255 million between 2005/06 and 2006/07. The main reasons for this increase were a further transfer of funding from Vote Child, Youth and Family Services for services purchased from NGOs that fitted better with the outcomes sought from Vote Social Development ($10.762 million) and a transfer of funding from Vote Health for services purchased from NGOs ($7.454 million).

Non-departmental outputs increased by $25.840 million between 2006/07 and 2007/08. The main reasons for this were the transfer of contract management for Children's Health Camps from Vote Health ($12.183 million) and new initiatives funding of $9.748 million for the Pathway to Partnership initiative.

Non-departmental output expenses increased by $109.616 million between 2007/08 and 2008/09 mainly because Vote Child, Youth and Family Services is being merged with Vote Social Development, with effect from 1 July 2008 (approximately $67 million). The other main reason is increased funding for the Pathway to Partnership initiative for 2008/09 and outyears. Funding increases from approximately $25 million in 2008/09 to approximately $175 million in 2011/12.

Non-Departmental Other Expenses

Figure 4- Trends in non-departmental other expenses

Non-Departmental Other Expenses

Source: Ministry of Social Development

Other Expenses increased by $340.066 million between 2004/05 and 2005/06 to $450.695 million. The main reasons are the early adoption of the New Zealand International Accounting Standard 39 for Debt Write-downs of Student Loans, and the Ministry of Social Development (MSD) accounting for Debt Write-downs from 2005/06 as a result of the change in the transfer treatment of Student Loans between MSD and the Department of Inland Revenue.

The increases in Other Expenses between 2006/07 and 2008/09 is mainly due to increase in Debt Write-downs to reflect the growth in Student Loans over recent years.

Non-Departmental Capital Expenditure

Figure 5 - Trends in non-departmental capital expenditure

Non-Departmental Capital Expenditure

Source: Ministry of Social Development

Capital Expenditure is dominated by student loans, with the next largest item, recoverable assistance, typically making up 8% to 10% of the total. The $26 million reduction between 2003/04 and 2004/05 reflects lower increases in fees under the fee stabilisation policy of the time, and fewer borrowers. The increase up to 2007/08 reflects greater borrowing since the introduction of no interest on loans policy since April 2006. Ongoing growth is expected in line with continuing cost increases and a rising number of eligible students due to population increases in the 18 to 25 age group.

Non-Departmental Benefits and Other Unrequited Expenses

Figure 6 - Trends in non-departmental benefits and other unrequited expenses

Benefits and Other Unrequited Expenses

Source: Ministry of Social Development

The magnitude and trend in total benefit expenditure is mostly driven by New Zealand Superannuation, which accounted for 49% of expenditure in 2003/04 and will rise to 58% by 2011/12. The total increase in expenditure from nearly $12,000 million in 2003/04 to an estimated $16,100 million in 2011/12 is primarily due to accumulated cost of living adjustments, explaining about 80% of the increase. Four of the principal benefits and other unrequited expenses are summarised below. These items collectively account for between 78% and 80% of total expenditure on benefits and other unrequited expenses in each year.

New Zealand Superannuation

Figure 7 - Trends in New Zealand Superannuation

NZ Superannuation

Source: Ministry of Social Development

About 65% of the $3,460 million increase over the 2003/04 to 2011/12 period is explained by accumulated cost of living adjustments. These include wage floor impacts where relevant, for example the 66% floor in April 2007. Over the same nine year period the number of recipients is expected to rise by 108,000 or 63% to reach 568,000. This growth is in line with the projected growth in the NZ population aged 65 years and over.

Invalid's Benefit

Figure 8 - Trends in Invalid's Benefit

Invalid's Benefit

Source: Ministry of Social Development

There is an estimated increase of 53% in annual expenditure between 2003/04 and 2011/12. Accumulated cost of living adjustments account for $330 million or 64% of the increase. The number of recipients has increased from an average of 70,500 in 2003/04 to an expected 90,400 in 2011/12. Projected increases in the number of Invalid's Benefit recipients is largely due to demographic trends.

Domestic Purpose Benefit

Figure 9 - Trends in Domestic Purpose Benefit

Domestic Purpose Benefit

Source: Ministry of Social Development

Annual expenditure is expected to rise by over $75 million between 2003/04 and 2011/12. This relatively small increase results from the offsetting impact of accumulated cost of living adjustments adding about $370 million over the nine year period and an expected 15,100 (14%) fewer recipients in 2011/12 compared to 2003/04.

Unemployment Benefit and Emergency Benefit

Figure 10 - Trends in Unemployment Benefit and Emergency Benefit

Unemployment Benefit and Emergency Benefit

Source: Ministry of Social Development

Annual expenditure is expected to reduce by $637 million or nearly 60% between 2003/04 and 2011/12, with nearly all of the reduction already having occurred. The number of recipients is projected to be stable from 2008/09 as employment creation slows in line with expected slower economic growth. The Emergency Benefit component of the total grew from 8,800 in 2003/04 to a peak of 9,400 in 2006/07 before falling sharply and is expected to continue to steadily fall.

Sickness Benefit

Figure 11 - Trends in Sickness Benefit

Sickness Benefits

Source: Ministry of Social Development

The number of Sickness Benefit recipients is estimated to fall by over 5% (2,600) between 2007/08 and 2008/09. These numbers have been impacted by changes to administration under Working New Zealand and the active case management of this client group.

Other Benefits

Figure 12 - Trends in Other Benefits

Other Benefits

Source: Ministry of Social Development

This section covers the other 16 benefits and other unrequited expense appropriations not already discussed. The largest item Accommodation Assistance has about 37% of annual expenditure which contributed significantly to growth in 2004/05 and 2005/06 following Working for Families initiatives that increased use of this assistance by non beneficiaries. Accommodation Assistance will contribute about one-quarter of growth over the 2007/08 to 2011/12 period. Student Allowances, at 18% of total annual amounts, fell slightly in earlier years but is expected to contribute about one-quarter of growth from 2007/08. Disability Assistance contributes about 16% to total annual expenditure and a further quarter of growth from 2007/08. Childcare Assistance made up 3% of the total in 2003/04 but has grown from 2004/05 and will reach over 8% of total by 2011/12. Childcare Assistance accounts for a steady 20% of each increment in annual amounts under Other Benefits.

Part 1.4 - Reconciliation of Changes in Appropriation Structure#

Explanations of the reasons for changing the appropriation structure are noted in the details of each appropriation in Parts 2-6.

Part 2 - Details and Expected Performance for Output Expenses#

Part 2.1 - Departmental Output Expenses#

Intended Impacts, Outcomes and Objectives

Adoption Services (M63)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Care and Protection Services (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Collection of Balances Owed by Former Clients and Non-beneficiaries (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

The increase in this appropriation is due to a fiscally neutral transfer in 2007/08 to Services to Protect the Integrity of the Benefit System, to meet the increased costs associated with the various data match processes.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Development and Funding of Community Services (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Family and Community Services (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

The increase in this appropriation is largely due to additional funding for the Pathway to Partnership initiative in Budget 2008; a transfer of funding from Vote Education for Parent Support and Development programmes; and migrant levy funding.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Income Support and Assistance to Seniors (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

The changes in this appropriation are due to the transfer of SuperGold Card costs to a new Multi Class Output Appropriation (MCOA) called Management of Service Cards - Management of SuperGold Card output class.

Output Performance Measures and Standards#

Current and Past Policy Initiatives#

Management of Service Cards MCOA (M63)#

Scope of Appropriation#

Explanation for Use of Multi-Class Output Expense Appropriation#

The two output classes grouped together under this MCOA are both related to Service Cards and as such involve similar services.

Expenses and Revenue#

Reasons for Change in Appropriation#

This MCOA is a new appropriation in 2008/09 and includes the departmental appropriation, Community Services Card and a new output class, Management of SuperGold Card.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Management of Student Support (M63)#

Scope of Appropriation#

Expenses and Revenue#

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Policy Advice and Support to Ministers MCOA (M63)#

Scope of Appropriation#

Explanation for Use of Multi-Class Output Expense Appropriation#

The two output classes under the MCOA both relate to the same broad service of providing advisory support to Ministers.

Expenses and Revenue#

Reasons for Change in Appropriation#

This is a new MCOA appropriation combining three departmental appropriations, Policy and Purchase Advice and Social Development Leadership in Vote Social Development and Policy Advice and Ministerial Servicing previously in Vote Child, Youth and Family Services.

The significant changes in this appropriation are due to: Historical Claims funding which is only for two years, $5.283 million in 2008/09 and $6.783 million in 2009/10; Longitudinal Study of New Zealand Children and Families funding is also only for two years, $4.750 million in 2009/10 and $3.100 million in 2010/11.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Prevention Services (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Services to Protect the Integrity of the Benefit System (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

The decrease in this appropriation is largely due to a one-off fiscally neutral transfer in 2007/08, to meet increased operational costs of data match programmes.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Tailored Sets of Services to Help People into Work or Achieve Independence (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

This is a new appropriation in 2008/09 combining Services to Provide Benefit Entitlements and Obligations to Working Age Beneficiaries and Services to Promote Self-Sufficiency and Services to Minimise the Duration of Unemployment and Move People into Work to reflect the services provided by Work and Income, a service line within the Ministry of Social Development.

The significant reduction in appropriations are due to decreasing one-off expense transfers from previous years to self fund the replacement of the Ministry's key IT systems; and a decrease in outyear funding of $707,000 for the Working New Zealand Work Focused Support.

Output Performance Measures and Standards#

Current and Past Policy Initiatives#

Vocational Skills Training (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

This is a new appropriation in 2008/09 with funding transferred from Services to Minimise the Duration of Unemployment and Move People into Work.

Output Performance Measures and Standards#

Current and Past Policy Initiatives#

Youth Justice Services (M63)#

Scope of Appropriation#

Expenses and Revenue#

Reasons for Change in Appropriation#

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Part 2.2 - Non-Departmental Output Expenses#

Intended Impacts, Outcomes and Objectives#

Assistance to Disadvantaged Persons (M63)#

Scope of Appropriation

Expenses

Output Performance Measures and Standards

Current and Past Policy Initiatives

Children's Commissioner (M63)#

Scope of Appropriation#

Expenses#

Reasons for Change in Appropriation#

The decrease in this appropriation is due to a one-off transfer of funds from the Families Commission in 2007/08.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Connected Communities (M63)#

Scope of Appropriation#

Expenses#

Output Performance Measures and Standards#

Current and Past Policy Initiatives#

Counselling and Rehabilitation Services (M63)#

Scope of Appropriation#

Expenses#

Reasons for Change in Appropriation#

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Education and Prevention Services (M63)#

Scope of Appropriation#

Expenses#

Reasons for Change in Appropriation#

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Families Commission (M63)#

Scope of Appropriation#

Expenses#

Reasons for Change in Appropriation#

The increase in this appropriation is due to a one off transfer of funding to the Children's Commissioner in 2007/08.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Family Wellbeing Services (M63)#

Scope of Appropriation#

Expenses#

Reasons for Change in Appropriation#

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Life Skills and Employment-Related Training Activities (M63)#

Scope of Appropriation#

Expenses#

Output Performance Measures and Standards#

Retirement Commissioner (M63)#

Scope of Appropriation#

Expenses#

Output Performance Measures and Standards#

Conditions on Use of Appropriation#

Current and Past Policy Initiatives#

Strengthening Providers and Communities (M63)#

Scope of Appropriation#

Expenses#

Reasons for Change in Appropriation#

This appropriation was previously in Vote Child, Youth and Family Services which is being merged with Vote Social Development on 1 July 2008.

Output Performance Measures and Standards#

Conditions on Use of Appropriation#