Information supporting the estimates of appropriations

External Sector - Information Supporting the Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2010

Information Supporting the Estimates is organised on the basis of sectors, with each Vote and its administering department allocated to one sector (with a small number of exceptions). The Information Supporting the Estimates comprises of sector overview information, together with statements of responsibility; performance information for appropriations in Votes covered by the sector; and statements of forecast service performance and forecast financial statements of departments included in the sector. Statements of Intent of departments included in the sector form part of the supporting information.

Formats and related files

Information Supporting the Estimates is organised on the basis of sectors, with each Vote and its administering department allocated to one sector (with a small number of exceptions). The Information Supporting the Estimates comprises of sector overview information, together with statements of responsibility; performance information for appropriations in Votes covered by the sector; and statements of forecast service performance and forecast financial statements of departments included in the sector. Statements of Intent of departments included in the sector form part of the supporting information.

 

Chapters of the Economic Development and Infrastructure Sector volume of the Information Supporting the Estimates 2009/10 are available in Adobe PDF and HTML formats.

Using PDF Files

Cover, Contents#

Introduction#

  • Purpose of Information Supporting the Estimates
  • Votes and Departments in Each Sector
  • Purpose and Nature of Appropriations
  • Guide to Reading Information Supporting the Estimates
  • Terms and Definitions
  • Useful Links

Sector Overview#

  • Sector Overview Statement
  • Ministerial Statements of Responsibility
  • Chief Executive Statements of Responsibility

Performance Information for Appropriations in Each Vote#

  • Vote Customs
  • Vote Defence
  • Vote Defence Force
  • Vote Foreign Affairs and Trade
  • Vote Official Development Assistance
  • Vote Veterans' Affairs - Defence Force

Statement of Forecast Service Performance of Departments#

Forecast Financial Statements of Departments#

  • Statement of Common Accounting Policies
  • New Zealand Customs Service
  • Ministry of Defence
  • New Zealand Defence Force
  • Ministry of Foreign Affairs and Trade

Statements of Intent of Departments (separately produced but forming part of this volume)#

Strategic Evaluation and Advice (M34)#

Scope of Appropriation#

This appropriation is limited to the work and advice necessary to improve the overall effectiveness of development assistance, comprising international development research, evaluation of Official Development Assistance (ODA) programmes and activities, analysis and consultation leading to the development of ODA strategies and policies, the provision of advice on international development issues, and Ministerial services.

Expenses and Revenue#

Expenses and Revenue - Strategic Evaluation and Advice (M34) - Official Development Assistance
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 9,504 9,109 9,577
Revenue from Crown 9,427 9,427 9,554
Revenue from Other 77 77 23

Reasons for Change in Appropriation#

This appropriation is increasing in order to effectively manage and monitor the increasing size and number of development assistance programmes arising from increased ODA.

Output Performance Measures and Standards#

Output Performance Measures and Standards - Strategic Evaluation and Advice (M34) - Official Development Assistance
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard

Indicators of the Quantity of Output

     
Review or development of programme strategies. At least 4 At least 4 At least 4
Appraisal of all necessary proposals/design studies for programmes. At least 40 At least 40 At least 40
New (or substantially revised) sectoral or thematic policies or strategies. At least 2 At least 2 At least 2
Evaluations or activity reviews. At least 20 At least 20 At least 20

Indicators of the Quality of Output

     
Compliance with stated MFAT-wide quality and timeliness targets of policy advice. Expectations met Expectations met Expectations met
Reviews and evaluations comply with good practice guidelines. 100% 100% 100%
All demand for ministerial correspondence, parliamentary questions and ministerial and Cabinet submissions met. 100% (with numbers reported) 100% 100% (with numbers reported)
All media inquiries met. 100% (with numbers reported) 100% 100% (with numbers reported)
Ministerial servicing products meet standards. 100% 100% 100%
Programme strategies that are up to date as per the schedule of reviews and revisions. 100% (with numbers reported) 100% 100% (with numbers reported)
Programme strategy reviews completed this year were agreed with partners and meet guidelines and standards. 100% (with numbers reported) 100% 100% (with numbers reported)
Proposals and design studies meet guidelines and standards. 100% (with numbers reported) 100% 100% (with numbers reported)
Sectoral and thematic policies and strategies meet guidelines, and NZAID advice stands up to public scrutiny. 100% (with numbers reported; and criticisms documented and responded to) 100% 100% (with numbers reported; and criticisms documented and responded to)

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - Strategic Evaluation and Advice (M34) - Official Development Assistance
Reference Conditions
Quality, Quantity and Timeliness Standards for Analysis, Advice, Representation and Action  
Quality The purpose of advice will be clearly stated; its assumptions made explicit; its arguments logical; all material facts will be included and accurate; a range of options will be presented and assessed for benefits; consultation will be undertaken; implementation issues will be considered and professionally presented.
Representation, negotiation and implementation will effectively convey and advance the Government's policies and views.
Quality assurance measures will be implemented through managers directing the completion of work, maintaining approval processes, ensuring deadlines are met, and controlling quality either directly or through delegation procedures. This will be supported by an individual performance management system and senior management oversight of unit performance through internal operational planning and evaluation. Confirmation of Ministerial satisfaction will be obtained twice a year.
Responses to ministerial correspondence, parliamentary questions, and requests under the Official Information Act will be well presented.
Quantity Management of relationships with countries and international and regional organisations, and of issues arising, will be undertaken as agreed with the Minister. Priorities for each issue and relationship will be translated into actual work programmes for each unit in the Ministry incorporating goals, action steps and impact measures.
Briefings and reports on external events and issues will be provided for Ministers, Members of Parliament, Select Committees, and other organisations and groupings as appropriate.
Responses will be prepared for all ministerial correspondence, parliamentary questions and requests under the Official Information Act.
Timeliness Advice will be given, and action taken, in a prompt and appropriate manner. Substantive responses to Ministerial correspondence will be prepared within 14 days, unless otherwise agreed.
Responses to parliamentary questions and Cabinet papers will be prepared in time for the Minister to consider and review the response prior to the due date.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Strategic Evaluation and Advice (M34) - Official Development Assistance
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Changes to New Zealand's ODA funding, arising from savings identified from the baseline review and the move to basing funding on outcomes rather than a percentage of GNI. 2009/10 - (1,679) (1,674) (1,443) (1,130)
Funding to enable New Zealand to respond to the Indian Ocean Tsunami. 2004/05 44 - - - -
Increase to New Zealand's Official Development Programme. 2004/05 4,789 6,639 6,746 6,746 6,746

Part 5 - Details and Expected Results for Other Expenses#

Part 5.2 - Non-Departmental Other Expenses#

Intended Impacts, Outcomes and Objectives

Intended Impacts, Outcomes and Objectives - Part 5.2 NonDepartmental Other Expenses - Official Development Assistance
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Objective
Development partners have reduced poverty through sustainable development.
To be measured by:
  • Progress in economic indicators.
  • Progress towards the Millennium Development Goals.
More details on the indicators used are in the MFAT Statement of Intent.
Intermediate Outcomes
Development assistance programmes and activities that are relevant, effective, efficient, and deliver positive sustainable impacts.
End Outcome
A more secure, equitable and prosperous world.
Global Development Assistance
International Agency Funding
New Zealand Voluntary Agency Grants
Pacific Development Assistance

Global Development Assistance (M34)

Scope of Appropriation and Expenses

Multi-Year Appropriations - Official Development Assistance
Type, Title, Scope and Period of Appropriations Appropriation $000

Non-Departmental Other Expenses

   

Global Development Assistance (M34) (M34)

This appropriation is limited to provision of assistance for development activities for non Pacific Island countries including Asian, African, Latin American, Caribbean, and Middle Eastern countries. The assistance will be provided to development organisations, partner countries and through other delivery mechanisms and be used to implement activities that include humanitarian assistance; design, management, implementation and evaluation of those partner-led activities. The assistance is to be consistent with Ministers' requirement for NZAID to work with development partners to ensure aid expenditure is targeted as close as possible to need.

Commences: 1 July 2009

Expires: 30 June 2012

Original Appropriation 312,000
Adjustments for 2007/08 -
Adjustments to 2008/09 -
Adjusted Appropriation 312,000
Actual to 2007/08 Year End -
Estimated Actual for 2008/09 -
Estimated Actual for 2009/10 102,000
Estimated Appropriation Remaining 210,000

Reasons for Change in Appropriation

This is a new multi-year appropriation taking the place of a multi-year appropriation that expired on 30 June 2009.

Expected Results

Expected Results - Global Development Assistance (M34) - Official Development Assistance
  2008/09 2009/10
  Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Progress towards outcomes identified in NZAID Programme Strategies. N/A See Strategic Outcome IV in the MFAT Statement of Intent Further progress
Summary evaluative results for completing Crown-funded activities. N/A See Strategic Outcome IV in the MFAT Statement of Intent Improved information and demonstrated results
Example impacts of Crown-funded activities. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated impacts
Example impacts from third parties funded by NZAID. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated impacts
Effective implementation of management priorities and Government policy as set out in the Statement of Intent. N/A See Strategic Outcome IV in the MFAT Statement of Intent Implementation of priorities and policies
Compliance with the internationally-agreed principles of aid effectiveness and good humanitarian donorship. N/A See Strategic Outcome IV in the MFAT Statement of Intent Improved performance against all indicators
Review and evaluation findings relating to programme and activity cost-effectiveness. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated cost-effectiveness

Conditions on Use of Appropriation

Conditions on Use of Appropriation - Global Development Assistance (M34) - Official Development Assistance
Reference Conditions
Provision of assistance Evaluations show that programmes are realistic, effective and appropriately prioritised; development is aligned to partner country priorities and is delivered in ways that grow partner country capability and ownership; NZAID has well-aligned policies, strategies, culture, processes and resources to support its programmes.
New central focus on sustainable economic development.
Acknowledgement and pursuance of the Millennium Development Goals (MDGs).

Current and Past Policy Initiatives

Current and Past Policy Initiatives - Global Development Assistance (M34) - Official Development Assistance
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Changes to New Zealand's ODA funding, arising from savings identified from the baseline review and the move to basing funding on outcomes rather than a percentage of GNI. 2009/10 - 1,596 (4,465) (2,465) (465)
Increase to New Zealand's Official Development Programme. 2006/07 - 30,208 38,269 38,269 38,269

International Agency Funding (M34)#

Scope of Appropriation#

Contributions to international agencies for multilateral humanitarian and development policy and programme activity.

Expenses#

Expenses - International Agency Funding (M34) - Official Development Assistance
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 92,568 92,568 94,500

Reasons for Change in Appropriation#

This appropriation is decreasing as a result of decisions arising from the baseline review.

Expected Results#

Expected Results - International Agency Funding (M34) - Official Development Assistance
  2008/09 2009/10
  Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Progress towards outcomes identified in NZAID Programme Strategies. N/A See Strategic Outcome IV in the MFAT Statement of Intent Further progress
Summary evaluative results for completing Crown-funded activities. N/A See Strategic Outcome IV in the MFAT Statement of Intent Improved information and demonstrated results
Example impacts of Crown-funded activities. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated impacts
Example impacts from third parties funded by NZAID. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated impacts
Effective implementation of management priorities and Government policy as set out in the Statement of Intent. N/A See Strategic Outcome IV in the MFAT Statement of Intent Implementation of priorities and policies
Compliance with the internationally-agreed principles of aid effectiveness and good humanitarian donorship. N/A See Strategic Outcome IV in the MFAT Statement of Intent Improved performance against all indicators
Review and evaluation findings relating to programme and activity cost-effectiveness. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated cost-effectiveness

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - International Agency Funding (M34) - Official Development Assistance
Reference Conditions
Contributions and subscriptions to international organisations including the UN and its associated institutions, the World Bank, the Asian Development Bank, the International Committee of the Red Cross and Pacific regional agencies. Cabinet approval

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - International Agency Funding (M34) - Official Development Assistance
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Changes to New Zealand's ODA funding, arising from savings identified from the baseline review and the move to basing funding on outcomes rather than a percentage of GNI. 2009/10 - (4,918) (16,418) (14,418) (14,418)
Increase to New Zealand's Official Development Programme. 2004/05 30,600 47,600 61,600 61,600 61,600

New Zealand Voluntary Agency Grants (M34)#

Scope of Appropriation#

Contributions to non-government organisations providing humanitarian and development assistance overseas, conducting development education within New Zealand and providing capacity building and co-ordination support to New Zealand NGOs.

Expenses#

Expenses - New Zealand Voluntary Agency Grants (M34) - Official Development Assistance
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 32,826 32,826 32,826

Expected Results#

Expected Results - New Zealand Voluntary Agency Grants (M34) - Official Development Assistance
  2008/09 2009/10
  Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Progress towards outcomes identified in NZAID Programme Strategies. N/A See Strategic Outcome IV in the MFAT Statement of Intent Further progress
Summary evaluative results for completing Crown-funded activities. N/A See Strategic Outcome IV in the MFAT Statement of Intent Improved information and demonstrated results
Example impacts of Crown-funded activities. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated impacts
Example impacts from third parties funded by NZAID. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated impacts
Effective implementation of management priorities and Government policy as set out in the Statement of Intent. N/A See Strategic Outcome IV in the MFAT Statement of Intent Implementation of priorities and policies
Compliance with the internationally-agreed principles of aid effectiveness and good humanitarian donorship. N/A See Strategic Outcome IV in the MFAT Statement of Intent Improved performance against all indicators
Review and evaluation findings relating to programme and activity cost-effectiveness. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated cost-effectiveness

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - New Zealand Voluntary Agency Grants (M34) - Official Development Assistance
Reference Conditions
Contributions to NGOs Analysis indicates that contributions are effectively utilised for the purpose for which they are provided.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - New Zealand Voluntary Agency Grants (M34) - Official Development Assistance
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Changes to New Zealand's ODA funding, arising from savings identified from the baseline review and the move to basing funding on outcomes rather than a percentage of GNI. 2009/10 - (4,000) (7,000) (7,000) (7,000)
Transfer of funding for Himalayan Trust. 2006/07 290 290 290 290 290
Increase to New Zealand's Official Development Programme. 2005/06 13,113 17,113 20,113 20,113 20,113

Pacific Development Assistance (M34)#

Scope of Appropriation and Expenses#

Multi-Year Appropriations - Official Development Assistance
Type, Title, Scope and Period of Appropriations Appropriation $000

Non-Departmental Other Expenses

   

Pacific Development Assistance (M34) (M34)

This appropriation is limited to provision of assistance for development activities for Pacific Island countries. The assistance will be provided to development organisations, partner countries and through other delivery mechanisms; and be used to implement activities that include humanitarian assistance; design, management, implementation and evaluation of those partner-led activities. The assistance is to be consistent with Ministers' requirement for NZAID to work with development partners to ensure aid expenditure is targeted as close as possible to need.

Commences: 1 July 2009

Expires: 30 June 2012

Original Appropriation 755,801
Adjustments for 2007/08 -
Adjustments to 2008/09 -
Adjusted Appropriation 755,801
Actual to 2007/08 Year End -
Estimated Actual for 2008/09 -
Estimated Actual for 2009/10 231,978
Estimated Appropriation Remaining 523,823

Reasons for Change in Appropriation#

This is a new multi-year appropriation taking the place of a multi-year appropriation that expired on 30 June 2009.

Expected Results#

Expected Results - Pacific Development Assistance (M34) - Official Development Assistance
  2008/09 2009/10
  Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Progress towards outcomes identified in NZAID Programme Strategies. N/A See Strategic Outcome IV in the MFAT Statement of Intent Further progress
Summary evaluative results for completing Crown-funded activities. N/A See Strategic Outcome IV in the MFAT Statement of Intent Improved information and demonstrated results
Example impacts of Crown-funded activities. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated impacts
Example impacts from third parties funded by NZAID. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated impacts
Effective implementation of management priorities and Government policy as set out in the Statement of Intent. N/A See Strategic Outcome IV in the MFAT Statement of Intent Implementation of priorities and policies
Compliance with the internationally-agreed principles of aid effectiveness and good humanitarian donorship. N/A See Strategic Outcome IV in the MFAT Statement of Intent Improved performance against all indicators
Review and evaluation findings relating to programme and activity cost-effectiveness. N/A See Strategic Outcome IV in the MFAT Statement of Intent Demonstrated cost-effectiveness

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - Pacific Development Assistance (M34) - Official Development Assistance
Reference Conditions
Provision of assistance Evaluations show that programmes are realistic, effective and appropriately prioritised; development is aligned to partner country priorities and is delivered in ways that grow partner country capability and ownership; NZAID has well-aligned policies, strategies, culture, processes and resources to support its programmes.
New central focus on sustainable economic development.
Acknowledgement and pursuance of the Millennium Development Goals (MDGs).

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Pacific Development Assistance (M34) - Official Development Assistance
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Changes to New Zealand's ODA funding, arising from savings identified from the baseline review and the move to basing funding on outcomes rather than a percentage of GNI. 2009/10 - 10,726 (53,363) (33,138) 13,612
Increase to New Zealand's Official Development Programme. 2006/07 - 106,845 150,325 150,325 150,325

Reporting Mechanisms#

Reporting Mechanisms - Reporting Mechanisms - Official Development Assistance
Appropriation Reporting Mechanism
Global Development Assistance Not required
International Agency Funding Not required
New Zealand Voluntary Agency Grants Not required
Pacific Development Assistance Not required

The above table indicates the mechanisms to be used for reporting actual performance for each non-departmental other expenses appropriation.

Performance Information for Appropriations Vote Veterans' Affairs - Defence Force#

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister of Veterans' Affairs (M75)

ADMINISTERING DEPARTMENT: New Zealand Defence Force

MINISTER RESPONSIBLE FOR NEW ZEALAND DEFENCE FORCE: Minister of Defence

Part 1 - Summary of the Vote#

Part 1.1 - Overview of the Vote

The Minister of Veterans Affairs is responsible for the appropriations in the Vote for the 2009/10 financial year covering the following:

  • A total of over $2 million for the provision of policy advice, the provision of administrative services to relevant boards and committees, the coordination of commemorations and the administration of contracts for work carried out in Services Cemeteries.
  • A total of over $5 million for the assessment and review of entitlements and benefits (War Disablement Pension, Surviving Spouse Pension and burial in Services Cemeteries), the provision and installation of ex-service memorials for eligible veterans and the provision of case management for veterans and their families.
  • A total of under $1 million for the development and maintenance of Services Cemeteries.
  • A total of under $4 million for the provision of services to veterans and their families.
  • A total of over $171 million for benefits and medical treatment to veterans and their families.

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

Part 1.2 - High-Level Objectives of the Vote#

Contribution of Appropriations to Government Priorities and Outcomes - Part 1.2 HighLevel Objectives of the Vote - Veterans' Affairs - Defence Force
Appropriations Government Priorities Government Outcomes
Departmental Output Appropriations:
Policy and Administration
Services and Payments to Veterans
Non-Departmental Output Appropriations:
Development and Maintenance of Services Cemeteries
Support for Veterans and Their Families
Benefits and Other Unrequited Expenses:
Medical Treatment
War Disablement Pensions
Non-Departmental Other Appropriations:
Ex-Gratia Payments
Debt Write-Down for Benefits and Other Unrequited Expenses
The Government's underpinning policy related to veterans is 'Respecting Veterans, Honouring Service'. This is substantiated by the broader principles of:
  • respecting Veterans
  • strengthening Communities
  • dignity for Older New Zealanders.
  • Veterans are acknowledged and recognised for their service and sacrifice and the community is aware of the role veterans have played and continue to play in developing New Zealand as a nation.
  • Working in partnership with NZDF, the impacts of service on eligible veterans and their dependants are monitored and they have information about and access to services and supports that promote wellbeing.
  • The veteran's perspective is considered as part of government decision-making on issues that impact on their lives.

Summary of Financial Activity#

Summary of Financial Activity - Veterans' Affairs - Defence Force
  2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
  Actual
$000
Actual
$000
Actual
$000
Actual
$000
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 4,474 4,227 6,604 7,290 10,105 10,105 8,377 2,623 11,000 10,150 10,150 9,900
Benefits and Other Unrequited Expenses - - - - 166,581 164,921 N/A 171,139 171,139 177,799 184,866 189,735
Borrowing Expenses - - - - - - - - - - - -
Other Expenses - - 8,135 1,187 1,050 1,050 - 2,250 2,250 1,950 1,650 1,550
Capital Expenditure 225 2,500 920 - - - - - - - - -
Intelligence and Security Department Expenses and Capital Expenditure - - - - - - - N/A - - - -

Total Appropriations

4,699 6,727 15,659 8,477 177,736 176,076 8,377 176,012 184,389 189,899 196,666 201,185

Crown Revenue and Capital Receipts

                       
Tax Revenue - - - - - - N/A - - - - -
Non-Tax Revenue - - - - - - N/A - - - - -
Capital Receipts - - - - - - N/A - - - - -

Total Crown Revenue and Capital Receipts

- - - - - - N/A - - - - -

New Policy Initiatives#

Budget Policy Intiatives - Veterans' Affairs - Defence Force
Policy Initiative Appropriation 2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Additional Funding for the three Veterans' Homes: Montecillo, Rannerdale and Ranfurly. Support for Veterans and their Families.
(Non-Departmental Output Expense).
- 600 - - -
Funding for yearly medical checks for Vietnam Veterans. Ex-Gratia Payments and Comprehensive Medical Assessments for Vietnam Veterans.
(Non-Departmental Output Expense).
- 1000 1000 1000 1000
  Policy and Administration.
(Departmental Output Expense).
- 200 200 200 200
Ex-gratia payments to Vietnam Veterans. Support for Veterans and their Families.
Ex-Gratia Payments and Comprehensive Medical Assessments for Vietnam Veterans.
(Non-Departmental Other Expense).
- 1,000 700 400 300

Total Vote: All Appropriations

Total Vote: All Appropriations
Vote trends in actual expenses and capital expenditure by appropriation type
Source: New Zealand Defence Force

The appropriations in Vote Veterans' Affairs - Defence Force show the changes discussed briefly below.

The following changes are noted:

  • The total increase in funding of over $2 million between 2005/06 and 2006/07 was primarily to cover the 2006 Year of the Veteran activities.
  • The total increase in funding of over $3 million in 2006/07 and 2007/08 to implement the Memorandum of Understanding (MOU) signed by the Crown and the Ex-Vietnam Services Association and the Royal New Zealand Returned and Services' Association (RNZRSA) regarding the concerns of Vietnam Veterans. This was primarily made up from one-off costs: $1.680 million for provision of ex-gratia payments to Vietnam Veterans and/or members of their family with accepted conditions and one-off medical assessments; a grant of $120,000 to the Vietnam Veterans and their Families Endowment Trust to cover administration costs and payments to some veterans and their family members until the time the trust starts to generate its own income, and an additional grant of $180,000 to the Vietnam Veterans and their Families Endowment Trust to cover payments to some veterans and their family members until the time that the trust starts to generate its own income; costs associated with the 2006 Year of the Veteran activities; one-off funding to cover participation in commemorations and arrangements covered by the Memorandum of Understanding (MOU) signed by the Crown and the Ex-Vietnam Services Association and the Royal New Zealand Returned and Services' Association (RNZRSA) regarding the concerns of Vietnam Veterans.

Comparison with 2008/09 and 2009/10

Departmental Output Expenses

Funding has increased in the 2009/10 year as compared to 2008/09. This is primarily due to the reorganisation of Veterans' Affairs New Zealand, with increased funding reflecting the increased size and scope of Veterans' Affairs as a result of this change. The funding increases include:

  • An increase of $3 million in 2008/09 for the for the assessment and review of entitlements and benefits. This is primarily due to the reorganisation of Veterans' Affairs New Zealand, with the New Zealand Defence Force assuming responsibility for the payment of veterans' entitlements.

Non-Departmental Output Expenses

Funding has increased in the 2009/10 year as compared to 2008/09. This is primarily due to the increased need and demand for services from the veteran community. The funding increase includes:

  • An increase of $300,000 for the provision of support for Veterans and their Families.

Benefits and Other Unrequited Expenses

This increase to appropriations is primarily due to the reorganisation of Veterans' Affairs New Zealand, with the New Zealand Defence Force assuming responsibility for the payment of veterans' entitlements in 2008/09. These appropriations will increase by $4.558 million in 2009/10 to a total of over $171 million for benefits and medical treatment to veterans and their families.

Non-Departmental Other Expenses

Funding has increased in the 2009/10 year as compared to 2008/09. This is primarily due to the Government policy decision to provide Vietnam veterans with an annual comprehensive medical assessment. The total funding increase is for $1.200 million.

Outyears: 2010/11 - 2012/13

There are no significant forecast changes for the outyears 2010/11 - 2012/13.

Part 2 - Details and Expected Performance for Output Expenses#

Part 2.1 - Departmental Output Expenses#

Intended Impacts, Outcomes and Objectives

Intended Impacts, Outcomes and Objectives - Part 2.1 Departmental Output Expenses - Veterans' Affairs - Defence Force
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Veterans are acknowledged and recognised for their service and sacrifice and the community is aware of the role veterans have played and continue to play in developing New Zealand as a nation. Policy and Administration
  Services and Payments to Veterans
Working in partnership with the NZDF, the impacts of service on eligible veterans and their dependants are monitored and they have information about and access to services and supports that promote wellbeing. Policy and Administration
  Services and Payments to Veterans
The veterans' perspective is considered as part of government decision-making on issues that impact on their lives. Policy and Administration

Policy and Administration (M75)

Scope of Appropriation

The purchase of the provision of policy advice on, and administration of, a wide range of issues relating to veterans' entitlements, care, and recognition. This includes the provision of administrative services to relevant boards and committees, the coordination of commemorations, the administration of contracts for service for, and undertaking quality audits of, maintenance and development work carried out in Services Cemeteries.

Expenses and Revenue

Expenses and Revenue - Policy and Administration (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 2,269 2,269 2,400
Revenue from Crown 2,269 2,269 2,400
Revenue from Other - - -

Reasons for Change in Appropriation

This appropriation will increase by $131,000 for 2009/10. The increase mainly relates to the implementation of the Government's policy to provide Vietnam Veterans with an annual comprehensive medical assessment.

Output Performance Measures and Standards

Output Performance Measures and Standards - Policy and Administration (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard

Provide policy advice to the Minister of Veterans' Affairs on veterans' entitlements, care and recognition

     
Replies to requests within 20 days of receipt of requests, if not otherwise specified. 95% 95% 95%
The drafts of policy papers presented to the Minister will be accepted on their first presentation. 95% 95% 95%
Policy papers will meet defined characteristics of quality advice (purpose, logic, accuracy, options, consultation, practicality and presentation). meet meet meet
Responses to submissions, other than policy papers, accepted without amendment. 90% 90% 90%

Provide Ministerial Servicing and Support

     
Replies to requests within 20 days of receipt of requests, if not otherwise specified. 95% 95% 95%
Responses accepted without amendment. 95% 95% 95%

Provide Administration for War Pensions Appeal Board and War Pensions Advisory Board

     
Arrangements and actions meet Boards requirements. meet meet meet
Actions defined by Boards will be completed within 20 working days after decisions made, unless otherwise specified. 95% 95% 95%

Management of Rehabilitation Loan Scheme

     
Provide information to MSD in timely manner to enable them to make payments. 100% 100% 100%

Administration of maintenance agreements and contracts for service relating to the maintenance and development of Services Cemeteries

     
Contracts to be current, legally correct and clearly specify maintenance and development requirements. meet meet meet
No breaches of contract by Veterans' Affairs New Zealand. 100% 100% 100%
Breaches of contracts by contractors will be managed as per the conditions in the contract. meet meet meet
Services Cemeteries will have maintenance agreement specifying the maintenance standards in place. 100% 100% 100%

Quality Audits of Services Cemeteries

     
Specifications outlined in contracts for service have been met. 100% 100% 100%

Coordinate New Zealand's participation in the commemoration of significant military anniversaries

     
Participation to be delivered in accordance with agreed parameters and budget. meet meet meet

Conditions on Use of Appropriation

Conditions on Use of Appropriation - Policy and Administration (M75) - Veterans' Affairs - Defence Force
Reference Conditions
Quality Characteristics Description
Purpose The aims of the papers are clearly stated and answer the questions the Minister has raised.
Logic The assumptions behind the advice are explicit, the argument is logical and supported by facts.
Accuracy The facts in the papers are accurate and all material facts have been included.
Options An adequate range of options has been presented and each is assessed for benefits, costs and consequences to the Government and the community.
Consultation Evidence of adequate consultation with interested parties and possible objections to proposals have been identified.
Practicality The problems of implementation, technical feasibility, timing and consistency with other policies have been considered.
Presentation The format meets Cabinet Office requirement, the material is effectively and concisely summarised, has short sentences in plain English, and is free from spelling and grammatical errors.

Current and Past Policy Initiatives

Current and Past Policy Initiatives - Policy and Administration (M75) - Veterans' Affairs - Defence Force
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Commemoration of Anzac Day at Gallipoli 2005/06 746 820 897 897 897
NZ Government attendance at the commemoration of the 90th anniversary of Passchendaele 2006/07 196 - - - -
Funding for yearly checks for Vietnam Veterans 2009/10 - 200 200 200 200

Services and Payments to Veterans (M75)#

Scope of Appropriation#

This appropriation is limited to the assessment, review and payment of entitlements and benefits (War Disablement Pensions and related concessions and allowances, Surviving Spouse Pensions), the assessment and review of entitlement for burial in Service Cemeteries, the installation of ex-service memorials for eligible veterans, and the provision of case management for veterans and their families.

Expenses and Revenue#

Expenses and Revenue - Services and Payments to Veterans (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 5,513 5,513 5,977
Revenue from Crown 5,036 5,036 5,500
Revenue from Other 477 477 477

Reasons for Change in Appropriation#

This appropriation will increase by $464,000 for 2009/10. This increase is due to the relocation of the administration of the War Disablement Pension from the Ministry of Social Development to the New Zealand Defence Force.

Output Performance Measures and Standards#

Output Performance Measures and Standards - Services and Payments to Veterans (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Assess and Review Entitlements to War Disablement Pension      
Assessments and Reviews will be conducted against extant policy. meet meet meet
War Disablement Pension Claims will be resolved within 2 months of receipt where all the required documentation has been provided with the application. - - 85%
Reviews and re-openings will be completed within 3 months of receipt by the National Review Officer. 95% 95% 95%
Reviews will be completed within 3 months of receipt by the Secretary for War Pensions. 95% 95% 95%
Appeals will be heard within 3 months of receipt by the War Pensions Appeal Board. 95% 95% 95%
Provide Ex-Service Memorial Plaques and Headstones for Eligible Veterans      
Ex-service memorials will be factually correct, meet technical specifications as contracted and be correctly installed. 99.5% 99.5% 99.5%
Decisions on eligibility for an ex-service memorials will be made within legislative parameters. meet meet meet
Where correct documentation has been supplied with the application an ex-Service memorials will be manufactured and installed within 4 months of receipt of the order. 75% 75% 75%
Provide Case Management      
New referrals to case management will be assigned a case manager within 5 working days. 95% 95% 95%
Active cases will be contacted every 4 months (in the range 1 to 4 months) to monitor progress and effectiveness of the interventions put in place. 100% 100% 100%
The intervention packages that are put in place by case management will meet the identified need of the veteran. - - 85%
Deal with Enquiries - -  
Calls will be resolved on first contact. - - 80%
Calls will be resolved within 5 working days. - - 100%
The resolution provided by the enquiry line will meet the identified need of the caller. - - 95%

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - Services and Payments to Veterans (M75) - Veterans' Affairs - Defence Force
Reference Conditions
Extant Policy Policy complies with the War Pensions Act 1954.
Technical specifications for ex-service memorials Ex-service memorials must meet specified size, material composition and finish as per the relevant contract specifications.
Eligibility for ex-service memorials Decision on eligibility for ex-service memorials will be made on the basis of Section 15 of the Burial and Cremation Act 1964.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Services and Payments to Veterans (M75) - Veterans' Affairs - Defence Force
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
MOU signed by the Crown with the Ex-Vietnam Services Association and the RNZRSA regarding the concerns of Vietnam Veterans. 2006/07 610 202 202 202 202

Part 2.2 - Non-Departmental Output Expenses#

Intended Impacts, Outcomes and Objectives#

Intended Impacts, Outcomes and Objectives - Part 2.2 NonDepartmental Output Expenses - Veterans' Affairs - Defence Force
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Veterans are acknowledged and recognised for their service and sacrifice and the community is aware of the role veterans have played and continue to play in developing New Zealand as a nation. Development and Maintenance of Services Cemeteries
  Support for Veterans and their Families
Working in partnership with the NZDF, the impacts of service on eligible veterans and their dependants are monitored and they have information about and access to services and supports that promote wellbeing. Support for Veterans and their Families

Development and Maintenance of Services Cemeteries (M75)#

Scope of Appropriation

The purchase of the development and maintenance of Services Cemeteries.

Expenses

Expenses - Development and Maintenance of Services Cemeteries (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 746 746 746

Output Performance Measures and Standards

Output Performance Measures and Standards - Development and Maintenance of Services Cemeteries (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard

Develop and Maintain Services Cemeteries

     
Works carried out under contract will comply with agreed contract standards. 90% 90% 90%
Services Cemeteries will be maintained to specified standards. 100% 100% 100%
Works in Services Cemeteries will be managed in accordance with an agreed annual programme. meet meet meet
Service Cemeteries will be maintained to the satisfaction of Local Authorities, the RSA and veterans' representative organisations. meet meet meet

Conditions on Use of Appropriation

Conditions on Use of Appropriation - Development and Maintenance of Services Cemeteries (M75) - Veterans' Affairs - Defence Force
Reference Conditions
Standards for Services Cemeteries These define the maintenance standards for service cemeteries that Local Authorities need to meet in order to receive maintenance grants.
Works in Services Cemeteries All work funded under this appropriation is contracted with specifications around the work to be undertaken.

Current and Past Policy Initiatives

Current and Past Policy Initiatives - Development and Maintenance of Services Cemeteries (M75) - Veterans' Affairs - Defence Force
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Additional annual maintenance grant paid for the routine upkeep of Services Cemeteries 2003/04 512 512 512 512 512

Support for Veterans and Their Families (M75)#

Scope of Appropriation#

This appropriation is limited to providing for the support of veterans and their families. This includes the provision of counselling for veterans' families, the reimbursement of out of pocket expenses for veterans' children with specified conditions; additional support for veterans to facilitate them remaining in their own homes for as long as possible; additional support to facilitate veterans' rehabilitation; support for the surviving partner after the death of the veteran and for the provision of grants to Non-Government Organisations for the support of veterans and their families.

Expenses#

Expenses - Support for Veterans and Their Families (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 1,577 1,577 1,877

Reasons for Change in Appropriation#

This appropriation will increase by $300,000 for 2009/10. This increase mainly reflects the additional support that will be provided to the Veterans' Homes in 2009/10.

Output Performance Measures and Standards#

Output Performance Measures and Standards - Support for Veterans and Their Families (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard

Support for Veterans and Their Families

     
The services provided will be to the satisfaction of the veteran and/or the veteran's family. meet meet meet
Works carried out under contract will comply with agreed contract standards. 95% 95% 95%

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - Support for Veterans and Their Families (M75) - Veterans' Affairs - Defence Force
Reference Conditions
Services All interventions are contracted with specifications around the work to be undertaken.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Support for Veterans and Their Families (M75) - Veterans' Affairs - Defence Force
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Additional services to veterans and their families. 2005/06 475 475 475 475 475
A grant to the RNZRSA to support the RNZRSA in furthering its mission. 2008/09 250 250 250 250 -
Additional Funding for the three Veterans' Homes. 2009/10 - 600 - - -

Part 3 - Details for Benefits and Other Unrequited Expenses#

Part 3.2 - Non-Departmental Benefits and Other Unrequited Expenses#

Intended Impacts, Outcomes and Objectives

Intended Impacts, Outcomes and Objectives - Part 3.2 NonDepartmental Benefits and Other Unrequited Expenses - Veterans' Affairs - Defence Force
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Working in partnership with NZDF, the impacts of service on eligible veterans and their dependants are monitored and they have information about and access to services and supports that promote wellbeing. Medical Treatment
Support for Veterans and their Families
War Disablement Pensions

Interest Concessions Land and Buildings (M75)

Scope of Appropriation

This appropriation is limited to provision for grandparented loans of the differential between the 3% or 5% Rehabilitation Loan rate and the current market rate as set out in the Rehabilitation Act 1941.

Expenses

Expenses - Interest Concessions Land and Buildings (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 46 36 10

Reasons for Change in Appropriation

This appropriation will decrease by $36,000 due to the lower current market rates forecast for 2009/10, and due to a decrease in the value of the outstanding loans.

Medical Treatment (M75)#

Scope of Appropriation#

This appropriation is limited to the payment of assessment costs as set out in the War Pensions Regulations 1956 for War Disablement Pension applications and reviews, medical treatment costs for accepted service-related disabilities, and the costs of appliances and aids required as a result of an accepted disability.

Expenses#

Expenses - Medical Treatment (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 22,476 21,578 21,309

Reasons for Change in Appropriation#

The 2008/09 budget includes an increase of $898,000 to reduce the likelihood of an overspend. This increase is not included in 2009/10, accounting for the decrease in expenditure between 2008/09 and 2009/10.

War Disablement Pensions (M75)#

Scope of Appropriation#

This appropriation is limited to the payment of War Disablement Pensions to ex-service people who have a disability attributable to, or aggravated by, service in a declared war or emergency at any time, or in routine service prior to 1 April 1974 as set out in the War Pensions Act 1954, the payment of Surviving Spouse Pensions as set out in the War Pensions Act 1954 and the payment of allowances as set out in the War Pensions Act 1954 and the War Pensions Regulations 1956.

Expenses#

Expenses - War Disablement Pensions (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 144,059 143,307 149,820

Conditions on Use of Appropriation#

This increase is owing to indexation of payment rates and the increase in average disability levels more than offsetting the fall in the number of recipients.

Part 5 - Details and Expected Results for Other Expenses#

Part 5.2 - Non-Departmental Other Expenses#

Debt Write-down for Benefits and Other Unrequited Expenses (BOUE) (M75)

Scope of Appropriation

This appropriation is limited to the write-down of Crown debtors administered by the New Zealand Defence Force due to the requirement to comply with Crown accounting policies and generally accepted accounting principles (GAAP).

Expenses

Expenses - Debt Writedown for Benefits and Other Unrequited Expenses (BOUE) (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 250 250 250

Ex-Gratia Payments and Comprehensive Medical Assessments for Vietnam Veterans (M75)#

Scope of Appropriation#

This appropriation is limited to the ex-gratia payments to Vietnam veterans and/or members of their family with accepted conditions and for the annual comprehensive medical assessments for Vietnam Veterans.

Expenses#

Expenses - ExGratia Payments and Comprehensive Medical Assessments for Vietnam Veterans (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 800 800 2,000

Reasons for Change in Appropriation#

This appropriation will increase by $1.200 million for 2009/10. The increase mainly relates to the Government policy decision to provide Vietnam Veterans with an annual comprehensive medical assessment.

Expected Results#

Expected Results - ExGratia Payments and Comprehensive Medical Assessments for Vietnam Veterans (M75) - Veterans' Affairs - Defence Force
  2008/09 2009/10
  Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Performance Measures      
Provision of annual medical checks for Vietnam Veterans. - - Up to 2000
Number of ex-gratia payments likely to be made to Vietnam Veterans and/or members of their family with accepted conditions. 39 78 Up to 13

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - ExGratia Payments and Comprehensive Medical Assessments for Vietnam Veterans (M75) - Veterans' Affairs - Defence Force
Reference Conditions
Accepted Conditions A condition on the Institute of Medicine of the United States National Academy of Sciences 'Sufficient Evidence of Association' list, or one of five conditions accepted as being related to parental dioxin exposure.
Comprehensive Medical Assessments An assessment of the impact of service and exposure to a toxic environment on Vietnam Veterans.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - ExGratia Payments and Comprehensive Medical Assessments for Vietnam Veterans (M75) - Veterans' Affairs - Defence Force
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
MOU signed by the Crown with the Ex-Vietnam Services Association and the RNZRSA regarding the concerns of Vietnam Veterans. 2006/07 800 1,000 700 400 300
Annual comprehensive medical assessments for Vietnam Veterans. 2009/10 - 1,000 1,000 1,000 1,000

Statements of Forecast Service Performance#

The Statements of Forecast Service Performance of departments included in the External Sector comprise the service performance information for all departmental output expense appropriations that are proposed to be used by those departments. In this context, service performance information comprises the scope, expenses and revenue, and output performance measures and standards for each class of outputs within those departmental appropriations, as set out in Part 2.1 of the Performance Information for appropriations in each Vote.

The following table identifies the classes of outputs incorporated in the Statement of Forecast Service Performance for each department in the External Sector.

Classes of outputs incorporated in the Statement of Forecast Service Performance for each department
Department Composition of Statement of Forecast Service Performance
New Zealand Customs Service The service performance information in Part 2.1 for the classes of outputs within all the departmental output expense appropriations in Vote Customs.
Ministry of Defence The service performance information in Part 2.1 for the classes of outputs within all the departmental output expense appropriations in Vote Defence.
New Zealand Defence Force

The service performance information in Part 2.1 for the classes of outputs within all the departmental output expense appropriations in:

  • Vote Defence Force
  • Vote Veterans' Affairs - Defence Force.
Ministry of Foreign Affairs and Trade

The service performance information in Part 2.1 for the classes of outputs within all the departmental output expense appropriations in:

  • Vote Foreign Affairs and Trade
  • Vote Official Development Assistance.

Forecast Financial Statements of Departments#

Statement of Common Accounting Policies#

These accounting policies have been applied in the forecast financial statements of all departments and Offices of Parliament except as outlined in the statement of entity-specific accounting policies for individual departments or Offices of Parliament.

These forecast financial statements are prepared in accordance with section 41(1)(a)-(f) of the Public Finance Act 1989. The purpose of the forecast financial statements is to facilitate Parliament's consideration of appropriations for, and planned performance of departments and offices of Parliament. Use of this information for other purposes may not be appropriate. It is not intended that these forecast financial statements be updated subsequent to publication.

Statement of Compliance

These forecast financial statements for the year ended 30 June 2009 comply with FRS-42 Prospective Financial Statements.

Specific Accounting Policies#

The accounting policies set out below have been applied consistently to all periods presented in these statements. These statements have been prepared on a going-concern basis. The measurement base applied is historical cost modified by the revaluation of certain assets and liabilities as identified in this statement of accounting policies.

The accrual basis of accounting has been used unless otherwise stated. These financial statements are presented in New Zealand dollars, which is the entity's functional currency. All financial information presented has been rounded to the nearest thousand.

Judgements and Estimations#

The preparation of forecast financial statements in conformity with FRS-42 requires judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and these variations may be material.

Revenue#

Revenue is derived through the provision of outputs to the Crown and from services to third parties. Revenue is recognised in the forecast statement of financial performance when earned.

Leases#

Operating Leases

Where substantially all of the risks and rewards of ownership are retained by the lessor, leases are classified as operating leases.

Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

Finance Leases

Leases which effectively transfer to the department substantially all the risks and rewards incidental to ownership of the leased items are classified as finance leases. These are capitalised at the lower of the fair value of the asset or the present value of the minimum lease payments. The leased assets and the corresponding lease liabilities are recognised in the statement of financial position. The leased assets are depreciated over the period the department is expected to benefit from their use. The interest expense component of finance lease payments is recognised in the statement of financial performance.

Borrowing Costs#

Borrowing costs are recognised as an expense when incurred.

Property, Plant and Equipment#

Property, plant and equipment, other than land and buildings, is stated at cost less accumulated depreciation and impairment losses. Land and buildings are stated at fair value as determined by an independent registered valuer. Fair value is determined using market-based evidence. Land and buildings are revalued with sufficient regularity to ensure that carrying value is not materially different from fair value at the end of the reporting period. Additions between revaluations are recorded at cost. Any capitalisation thresholds applied are set out in the statement of entity-specific accounting policies.

Depreciation#

Depreciation is provided on a straight-line basis so as to allocate the cost [or valuation] of an item of property, plant and equipment, less any estimated residual value, over its estimated useful life.

The estimated useful lives are set out in the statement of entity-specific accounting policies.

Leasehold improvements are capitalised and the cost is amortised over the unexpired period of the lease or the estimated useful life of the improvements, whichever is shorter.

Items under construction are not depreciated. The total cost of a capital project is transferred to the appropriate asset class on its completion and then depreciated.

Intangible Assets#

Intangible assets with finite useful lives (such as computer software) are recorded at cost less accumulated amortisation and impairment losses.

Any capitalisation thresholds applied are set out in the statement of entity-specific accounting policies.

Amortisation is charged to the statement of financial performance on a straight-line basis over the estimated useful life of the asset.

The estimated useful lives are set out in the statement of entity-specific accounting policies.

Intangible assets with indefinite useful lives are not amortised, but are tested at least annually for impairment.

Where there is an active market for an intangible asset, the asset is recorded at a revalued amount, being fair value less any subsequent accumulated amortisation and accumulated impairment losses.

Cash and Cash Equivalents#

Cash includes cash on hand and funds on deposit with banks with a maturity of 3 months or less from date of acquisition.

Debtors and Other Receivables#

Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate, less impairment charges. Allowances for estimated irrecoverable amounts are recognised when there is objective evidence that the asset is impaired.

Inventories#

Inventories held for sale or use in the production of goods and services on a commercial basis are recorded at the lower of cost and net realisable value. The cost of purchased inventory is determined using the weighted average cost method.

Inventories held for distribution for public benefit purposes are recorded at cost (calculated using the weighted average cost method) adjusted when applicable for any loss of service potential. Where inventories are acquired at no cost, or for nominal consideration, the cost is the current replacement cost at the date of acquisition.

Employee Entitlements#

Pension Liabilities

Obligations for contributions to defined contribution retirement plans are recognised in the statement of financial performance as they fall due.

Other Employee Entitlements

Employee entitlements to salaries and wages, annual leave, sick leave, long service leave, retiring leave and other similar benefits are recognised in the statement of financial performance when they accrue to employees. Employee entitlements to be settled within 12 months are reported at the amount expected to be paid. Long-term employee entitlements are reported at the present value of the estimated future cash outflows.

Termination Benefits

Termination benefits are recognised in the statement of financial performance only when there is a demonstrable commitment to either terminate employment prior to normal retirement date or to provide such benefits as a result of an offer to encourage voluntary redundancy. Termination benefits to be settled within 12 months are reported at the amount expected to be paid. Other termination benefits are reported at the present value of the estimated future cash outflows.

Onerous Contracts#

Where the benefits to be derived from a contract are lower than the unavoidable costs of meeting the obligation under the contract, a provision is recognised. The provision is stated at the present value of the future net cash outflows expected to be incurred in respect of the contract.

Foreign Currency#

Foreign currency transactions are reported at the New Zealand dollar exchange rate at the date of the transaction.

Statement of Cash Flows#

The following are definitions of the terms used in the statement of cash flows:

  • cash and cash equivalents include cash on hand, cash in transit, bank accounts and deposits with a maturity of no more than three months from date of acquisition
  • investing activities are those activities relating to the acquisition and disposal of non-current assets
  • financing activities comprise capital injections by, or repayment of capital to, the Crown, and
  • operating activities include all transactions and other events that are not investing or financing activities.

Taxation#

Departments and Offices of Parliament are exempt from income tax as public authorities. Accordingly no charge for income tax has been provided for.

Goods and Services Tax#

These forecast financial statements are GST exclusive, except for receivables and payables in the statement of financial position, which are stated on a GST inclusive basis. Where GST is not recoverable as input tax, then it is recognised as part of the related asset or expense.

The net amount of GST owing to or from the Inland Revenue Department at balance date is included as part of receivables or payables (as appropriate) in the statement of financial position.

Commitments#

Future expenses and liabilities to be incurred on contracts that have been entered into at balance date are disclosed as commitments to the extent that there are equally unperformed obligations.

Contingent Liabilities and Contingent Assets#

Contingent liabilities are disclosed if the possibility that they will crystallise is not remote. Contingent assets are disclosed if it is probable that the benefits will be realised.

 

Changes in Accounting Policies#

Any changes in accounting policies since the date of the last audited financial statements prepared under New Zealand generally accepted accounting practice are described in the statement of entity-specific accounting policies. The last audited financial statements (30 June 2008) were prepared in accordance with NZ IFRS (New Zealand Equivalents to International Financial Reporting Standards) as appropriate for public benefit entities.

Forecast Financial Statements New Zealand Customs Service#

Statement of Forecast Comprehensive Income for the year ending 30 June 2010#

Statement of Forecast Comprehensive Income for the year ending 30 June 2010 - Customs
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Income

         
Crown   84,216 82,349 82,474 82,300
Department(s)   2,666 2,168 2,977 2,574
Other revenue 1 31,434 39,315 36,475 39,415
Gains   - - - -
Interest   - - - -
Total Income   118,316 123,832 121,926 124,289

Expenses

         
Personnel   75,240 82,869 80,522 82,873
Operating 2 33,083 30,093 33,934 30,932
Depreciation and amortisation   7,064 7,900 6,000 7,456
Capital charge   2,895 2,970 2,970 3,028
Finance costs   - - - -
Other   24 - - -
Total Expenses   118,306 123,832 123,426 124,289
Net Surplus / (Deficit)   - - (1,500) -
Other comprehensive income   - - - -
Total Comprehensive Income   10 - (1,500) -

Statement of Forecast Changes in Taxpayers' Funds for the year ending 30 June 2010#

Statement of Forecast Changes in Taxpayers' Funds for the year ending 30 June 2010 - Customs
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Balance at 1 July

         
General funds   38,402 39,602 39,602 38,102
Revaluation reserve   - - - -
Other reserves   - - - -
Taxpayers' Funds Opening Balance   38,402 39,602 39,602 38,102

Changes in Taxpayers' Funds

         
Comprehensive income for the period   10 - (1,500) -
Repayment of surplus   (10) - - -
Capital contribution   1,200 - - 12,211
Capital withdrawal   - - - (108)
Other   - - - -
Total Changes in Taxpayers' Funds   1,200 - (1,500) 12,103

Balance at 30 June

         
General funds   39,602 39,602 38,102 50,205
Revaluation reserve   - - - -
Other reserves   - - - -
Taxpayers' Funds Closing Balance   39,602 39,602 38,102 50,205

Forecast Statement of Financial Position as at 30 June 2010#

Forecast Statement of Financial Position as at 30 June 2010 - Customs
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Assets

         

Current Assets

         
Cash and cash equivalents   23,521 19,938 21,361 19,919
Debtors and other receivables 3 3,670 4,326 4,347 4,347
Prepayments   427 1,088 500 500
Inventories   - - - -
Other current assets   - - - -
Total Current Assets   27,618 25,352 26,208 24,766

Non-current Assets

         
Property, plant and equipment 4 24,404 26,303 24,205 35,642
Intangible assets 5 3,936 4,627 4,335 6,443
Other non-current assets   - - - -
Total Non- current Assets   28,340 30,930 28,540 42,085
Total Assets   55,958 56,282 54,748 66,851

Liabilities

         

Current Liabilities

         
Creditors and other payables   5,554 6,948 5,354 5,354
Repayment of surplus   10 - - -
Employee entitlements 7 6,908 6,404 6,808 6,808
Other current liabilities   32 128 32 32
Total Current Liabilities   12,504 13,480 12,194 12,194

Non-current Liabilities

         
Provisions 6 200 200 200 200
Employee entitlements   3,652 3,000 4,252 4,252
Other non-current liabilities   - - - -
Total Non-current Liabilities   3,852 3,200 4,452 4,452
Total Liabilities   16,356 16,680 16,646 16,646

Taxpayers' Funds

         
General funds   39,602 39,602 38,102 50,205
Revaluation reserve   - - - -
Other reserves   - - - -
Total Taxpayers' Funds   39,602 39,602 38,102 50,205
Total Liabilities and Taxpayers' Funds   55,958 56,282 54,748 66,851

Statement of Forecast Cash Flows for the year ending 30 June 2010#

Forestry Statement of Forecast Cash Flows for the year ending 30 June 2010 - Customs
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000

Estimated
Actual
$000
Budgeted
$000

Cash Flows from Operating Activities

         

Receipts from:

         
Crown   84,226 82,349 82,464 82,300
Department(s)   2,967 2,168 2,977 2,574
Other   31,116 38,715 35,808 39,415
Interest   - - - -

Payments to:

         
Suppliers   (31,178) (30,476) (34,090) (31,315)
Employees   (74,795) (82,186) (80,139) (82,490)
Capital charge   (2,895) (2,970) (2,970) (3,028)
Goods and services tax (net)   (37) - - -
Other operating activities   (29) - - -
Net Cash from Operating Activities 8 9,375 7,600 4,050 7,456

Cash Flow from Investing Activities

         

Receipts from:

         
Sale of property, plant and equipment   73 300 300 300
Sale of intangible assets   - - - -
Sale of other non-current assets   - - - -

Purchase of:

         
Property, plant and equipment   (5,153) (9,905) (5,100) (17,413)
Intangible assets   - - (1,400) (3,888)
Other non-current assets   (17) - - -
Net Cash from Investing Activities   (5,097) (9,605) (6,200) (21,001)

Cash Flow from Financing Activities

         
Capital contribution   1,200 - - 12,211
Other financing cash inflows   - - - -
Repayment of surplus   - - (10) -
Capital withdrawal   - - - (108)
Other financing cash outflows   - - - -
Net Cash from Financing Activities   1,200 - (10) 12,103
Net Increase / (Decrease) in Cash   5,478 (2,005) (2,160) (1,442)
Cash at the beginning of the year   18,043 21,943 23,521 21,361
Cash at the end of the year   23,521 19,938 21,361 19,919

Statement of Significant Assumptions#

These forecast financial statements have been compiled on the basis of existing government policies and Ministerial expectations at the time the statements were finalised.

The main assumptions are as follows:

  • The department's activities will remain substantially the same as for the previous year.
  • Personnel costs are based on up to 1260 full-time equivalents.
  • Operating costs are based on historical experience. The general historical pattern is expected to continue.
  • Estimated year end information for 2008/09 is used as the opening position for the 2009/10 forecasts.

These assumptions are adopted as at 20th April 2009.

Statement of Entity-Specific Accounting Policies#

The New Zealand Customs Service (Customs) has applied the accounting policies set out in Statement of Common Accounting Policies in this document, except as stated below.

Reporting Entity

Customs is a government department as defined by section 2 of the Public Finance Act 1989. For the purposes of financial reporting, Customs is a public benefit entity.

Customs mitigates risks to the New Zealand economy and society posed by international movement of people, goods and craft, facilitation of legitimate trade and travel, and collection of revenue to support government's social economy and fiscal objectives. In addition, Customs reports on Crown activities and trust monies which it administers.

Authorisation Statement

These forecast financial statements were authorised for issue by Customs on 20th April 2009. Customs is responsible for the forecast financial statements presented, including the appropriateness of the assumptions underlying the forecast financial statements and all other required disclosure.

Specific Accounting Policies

Capitalisation

The capitalisation thresholds are set out below:

  • Intangible assets (computer software) $1,000.
  • All other property plant and equipment $500.

Depreciation

The estimated useful lives of property, plant and equipment are set out below:

  • Launch and watercraft - 10 years.
  • Computer equipment/hardware - 4 years.
  • Motor vehicles - 5 years.
  • Furniture and office equipment - 5 years.
  • Plant and equipment - 5-10 years.
  • Intangible assets (computer software) - 5-10 years.

The cost of leasehold improvements is capitalised and amortised over the unexpired period of the lease or over the estimated remaining useful lives of the improvements, whichever is shorter.

Cost allocation

Customs has determined the costs of outputs using a cost allocation system, which is outlined below.

Cost Allocation Policy 

Direct costs are charged directly to significant activities. Indirect costs are charged to significant activities based on cost drivers and related activity/usage information.

Criteria for Direct and Indirect Costs 

"Direct Costs" are those costs directly attributed to an output. "Indirect Costs" are those costs that cannot be identified in an economically feasible manner with a specific output.

Direct Costs Assigned to Outputs 

Direct costs are charged directly to outputs, where appropriate. This includes depreciation and occupancy costs.

Basis for Assigning Indirect and Corporate Costs to Outputs

Indirect costs are assigned to outputs based on a proportion of direct staff costs usage for each output.

Notes to the Financial Statements#

Note 1 - Other Revenue
Note 1 - Other Revenue - Customs
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Sale of Publications 185 181 181 181
Compliance Activity - Officers' Time 492 462 462 462
Compliance Activities - Other 284 305 305 305
Overseas Aid Projects 762 398 1178 736
Information Processing 377 169 558 37
Cost Recoveries - Other 974 1,120 1,120 1,120
Import Entry Transaction Fees 23,253 23,595 20,595 23,595
Goods Cost Recovery 6,559 13,996 13,496 13,996
State Sector Retirement Savings Scheme Recoveries 1,214 1,257 1,557 1,557
Less: Departmental revenue 2,666 2,168 2,977 2,574

Total other revenue

31,434 39,315 36,475 39,415

Note 2 - Operating Expenses#

Note 2 - Operating Expenses - Customs
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Operating expenses include:        
Net loss on sale of fixed assets 1 - - -
Bad debts written-off 22 - - -
Increase (decrease) in provision for doubtful debts -18 - - -
Audit fees to auditors for audit of financial statements 210 230 230 230
Audit fees to auditors for NZ IFRS transition 16 - - -
Fees to auditors for other services provided 9 - - -
Operating lease rentals 5,565 5,885 6,035 6,135
Occupancy costs (excluding rentals) 1,604 1,282 1,682 1,782
Computer equipment costs 2,073 1,456 1,844 1,844
Communication costs 1,842 2,049 1,942 1,990
Net Foreign exchange losses 11 215 11 11
Consultants' fees 2,445 790 2,990 890
Overseas travel 1,163 863 900 600
Domestic travel 2,646 2,551 2,951 2,200
Other operating costs 15,494 14,772 15,349 15,250

Total

33,083 30,093 33,934 30,932

Note 3 - Debtors and Other Receivables#

Note 3 - Debtors and Other Receivables - Customs
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Trade debtors 273 421 421 421
Less: Provision for doubtful debts -18 -5 -5 -5
Net trade debtors 255 416 416 416
Receivables 700 1,354 1,375 1,375
Debtor - Import Entry Transaction Fee 1,591 1,491 1,491 1,491
Debtor - Crown 125 115 115 115
Debtor - Goods Cost Recovery 999 950 950 950

Total debtors and receivables

3,670 4,326 4,347 4,347

Note 4 - Property, Plant and Equipment#

Note 4 - Property, Plant and Equipment - Customs
  Land
$000
Buildings
$000
Leasehold improvements
$000
Furniture/office equipment
$000
Other
$000
Total
$000

Cost or revaluation

           
Balance as at 1 July 2009 - - 5,211 2,710 46,160 54,081
Additions by purchase - - 8,000 1,050 8,363 17,413
Additions internally developed - - - - - -
Revaluation increase - - - - - -
Transfers between classes - - - - - -
Disposals - - - - 800 800

Balance as at 30 June 2010

- - 13,211 3,760 53,723 70,694

Accumulated depreciation and impairment losses

           
Balance as at 1 July 2009 - - 2,788 2,075 25,013 29,876
Depreciation expense - - 1,233 311 4,132 5,676
Eliminate on disposal - - - - 500 500
Eliminate on revaluation - - - - - -
Transfers between classes - - - - - -
Impairment losses - - - - - -

Balance as at 30 June 2010

- - 4,021 2,386 28,645 35,052

Carrying amount as at 30 June 2010

- - 9,190 1,374 25,078 35,642

Note 5 - Intangible assets#

Note 5 - Intangible assets - Customs
  Acquired software
$000
Internally
generated software
$000
Other
$000
Total
$000

Cost

       
Balance as at 1 July 2009 3,110 18,567 - 21,677
Additions by purchase 300 3,588 - 3,888
Additions internally developed - - - -
Disposals - - - -

Balance as at 30 June 2010

3,410 22,155 - 25,565

Accumulated amortisation and impairment losses

       
Balance as at 1 July 2009 785 16,557 - 17,342
Amortisation expense 95 1,685 - 1,780
Disposals - - - -
Impairment losses - - - -

Balance as at 30 June 2010

880 18,242 - 19,122

Carrying amount as at 30 June 2010

2,530 3,913 - 6,443

Note 6 - Provision#

Note 6 - Provision - Customs
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Make good provision 200 200 200 200

Total

200 200 200 200

Note 7 - Employee Entitlements#

Note 7 - Employee Entitlements - Customs
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Current Liabilities        
Personnel accruals 2,319 1,819 2,119 2,219
Annual leave 3,579 3,579 3,479 3,379
Retirement and long service leave 1,010 1,010 1,210 1,210
Total current portion 6,908 6,404 6,808 6,808
Non-current Liabilities        
Retirement and long service leave 3,652 3,000 4,252 4,252
Total non-current portion 3,652 3,000 4,252 4,252

Total employee entitlements

10,560 9,404 11,060 11,060

Note 8 - Reconciliation of Net Surplus to Net Cash Flows from Operating Activities for the year ending 30 June 2010#

Note 8 - Reconciliation of Net Surplus to Net Cash Flows from Operating Activities for the year ending 30 June 2010 - Customs
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Net surplus/(deficit) 10 - -1,500 -
Add/(less) non-cash items        
Depreciation and amortisation expense 7,064 7,900 6,000 7,456
Other non-cash items - - - -
Total non-cash items 7,064 7,900 6,000 7,456
Add/(less) items classified as investing or financing activities        
(Gains)/losses on disposal property, plant and equipment 1 - - -
Total items classified as investing or financing activities 1 - - -
Add/(less) movements in working capital items        
(Inc)/Dec in debtors and other receivables 70 -656 -677 -
(Inc)/Dec in prepayments 665 -661 -73 -
Inc/(Dec) in creditors and other payables 201 2,775 -200 -
Inc/(Dec) in employee entitlements 1,453 -1,844 500 -
Inc/(Dec) in other short term liabilities -89 86 - -
Net movements in working capital items  2,300 -300 -450 -
Net cash from operating activities 9,375 7,600 4,050 7,456

Forecast Financial Statements Ministry of Defence#

Statement of Forecast Comprehensive Income for the year ending 30 June 2010#

Statement of Forecast Comprehensive Income for the year ending 30 June 2010 - Defence
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Income

         
Crown   9,398 9,398 9,688 10,308
Department(s) 1 233 203 1,654 203
Other revenue   - - - -
Gains   - - - -
Interest   - - - -
Total Income   9,631 9,601 11,342 10,511

Expenses

         
Personnel   6,204 6,622 6,612 7,193
Operating 2 2,754 2,352 4,202 2,762
Depreciation and amortisation   262 371 272 300
Capital charge   256 256 256 256
Finance costs   - - - -
Other   - - - -
Total Expenses 8 9,476 9,601 11,342 10,511
Net Surplus / (Deficit) 9 - - - -
Other comprehensive income   - - - -
Total Comprehensive Income   155 - - -

Statement of Forecast Changes in Taxpayers' Funds for the year ending 30 June 2010#

Statement of Forecast Changes in Taxpayers' Funds for the year ending 30 June 2010 - Defence
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Balance at 1 July

         
General funds   3,416 3,416 3,416 3,416
Revaluation reserve   - - - -
Other reserves   - - - -
Taxpayers' Funds Opening Balance   3,416 3,416 3,416 3,416

Changes in Taxpayers' Funds

         
Comprehensive income for the period   155 - - -
Repayment of surplus   (155) - - -
Capital contribution   - - - -
Capital withdrawal   - - - -
Other   - - - -
Total Changes in Taxpayers' Funds   - - - -

Balance at 30 June

         
General funds   3,416 3,416 3,416 3,416
Revaluation reserve   - - - -
Other reserves   - - - -
Taxpayers' Funds Closing Balance   3,416 3,416 3,416 3,416

Forecast Statement of Financial Position as at 30 June 2010#

Forecast Statement of Financial Position as at 30 June 2010 - Defence
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Assets

         

Current Assets

         
Cash and cash equivalents   1,917 1,318 1,642 1,322
Debtors and other receivables 3 195 250 245 431
Prepayments   14 13 15 25
Inventories   - - - -
Other current assets   - - - -
Total Current Assets   2,126 1,581 1,902 1,778

Non-current Assets

         
Property, plant and equipment 4 2,510 2,662 2,563 2,433
Intangible assets 5 148 143 198 348
Other non-current assets   - - - -
Total Non- current Assets   2,658 2,805 2,761 2,781
Total Assets   4,784 4,386 4,663 4,559

Liabilities

         

Current Liabilities

         
Creditors and other payables 6 628 317 617 445
Repayment of surplus   155 - - -
Employee entitlements 7 375 425 400 450
Other current liabilities   - - - -
Total Current Liabilities   1,158 742 1,017 895

Non-current Liabilities

         
Provisions   - - - -
Employee entitlements 7 210 228 230 248
Other non-current liabilities   - - - -
Total Non-current Liabilities   210 228 230 248
Total Liabilities   1,368 970 1,247 1,143

Taxpayers' Funds

         
General funds   3,416 3,416 3,416 3,416
Revaluation reserve   - - - -
Other reserves   - - - -
Total Taxpayers' Funds   3,416 3,416 3,416 3,416
Total Liabilities and Taxpayers' Funds   4,784 4,386 4,663 4,559

Statement of Forecast Cash Flows for the year ending 30 June 2010#

Forestry Statement of Forecast Cash Flows for the year ending 30 June 2010 - Defence
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000

Estimated
Actual
$000
Budgeted
$000

Cash Flows from Operating Activities

         

Receipts from:

         
Crown   9,398 9,398 9,688 9,398
Department(s)   250 203 1,654 203
Other   - - - -
Interest   - - - -

Payments to:

         
Suppliers   (2,735) (2,759) (4,847) (2,716)
Employees   (6,095) (6,278) (6,359) (6,749)
Capital charge   (256) (256) (256) (256)
Goods and services tax (net)   - - 120 120
Other operating activities   - - - -
Net Cash from Operating Activities   562 308 - -

Cash Flow from Investing Activities

         

Receipts from:

         
Sale of property, plant and equipment   - - - -
Sale of intangible assets   - - - -
Sale of other non-current assets   - - - -

Purchase of:

         
Property, plant and equipment   (323) (350) (275) (320)
Intangible assets   (26) - - -
Other non-current assets   - - - -
Net Cash from Investing Activities   (349) (350) (275) (320)

Cash Flow from Financing Activities

         
Capital contribution   - - - -
Other financing cash inflows   - - - -
Repayment of surplus   (740) (244) - -
Capital withdrawal   - - - -
Other financing cash outflows   - - - -
Net Cash from Financing Activities   (740) (244) - -
Net Increase / (Decrease) in Cash   (527) (286) (275) (320)
Cash at the beginning of the year   2,444 1,604 1,917 1,642
Cash at the end of the year   1,917 1,318 1,642 1,322

Statement of Significant Assumptions#

These forecast financial statements have been compiled on the basis of existing government policies and Ministerial expectations at the time the statements were finalised.

The main assumptions are as follows:

  • The department's activities will remain substantially the same as for the previous year.
  • Personnel costs are based on 70 staff positions.
  • Operating costs are based on historical experience. The general historical pattern is expected to continue.
  • Estimated year end information for 2008/09 is used as the opening position for the 2009/10 forecasts.

These assumptions are adopted as at 3 April 2009.

Factors that could lead to material differences between the forecast financial statements and the 2009/10 actual financial statements include:

  • Changes to the baseline budget through new initiatives, or technical adjustments.

Statement of Entity-Specific Accounting Policies#

The Ministry of Defence has applied the accounting policies set out in Statement of Accounting Policies Standard included in this document, except as stated below.

Reporting Entity

These are the prospective financial statements of Ministry of Defence, prepared in accordance with section 38 of the Public Finance Act 1989.

Ministry of Defence is a Government Department as defined by section 2 of the Public Finance Act 1989. For the purposes of financial reporting Ministry of Defence is a public benefit entity.

Authorisation Statement

These forecast financial statements were authorised for issue by the Secretary of Defence on 3 April 2009. The Ministry of Defence is responsible for the forecast financial statements presented, including the appropriateness of the assumptions underlying the forecast financial statements presented and all other required disclosures.

Specific Accounting Policies

Property, Plant and Equipment

The capitalisation threshold for property, plant and equipment is $5,000.

Depreciation

The estimated useful lives of property, plant and equipment are set out below:

  • Leasehold improvements - 18 years.
  • IT equipment / hardware - 3-5 years.
  • Furniture and office equipment - 7 years.

Intangible Assets

The capitalisation threshold for intangible assets is $5,000.

The estimated useful life of intangible assets is 3 years.

Cost Allocation

The Ministry derives the cost of outputs using a cost allocation system that is outlined below:

Criteria for direct and indirect costs

"Direct costs" are those costs directly attributable to an output. "Indirect costs:" are those costs that cannot be identified in an economically feasible manner with a specific output.

Direct costs assigned to outputs

Direct costs are assigned to outputs by charging payments to specific job numbers. Selection of "general cost" job numbers within an output class will treat the expense as a direct cost to the output even though a specific job within the output class has not been identified.

Basis for assigning indirect and corporate costs to outputs

Indirect costs are assigned to outputs by charging payments to a corporate job number. The accounting system is programmed to allocate job costs to three output classes on a predetermined percentage for each expense item. The percentage number is an assessment of services to be provided to each output class in the ensuing year.

Notes to the Financial Statements#

Note 1 - Other Revenue - Department
Note 1 - Other Revenue - Department - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Employer superannuation subsidy recovery 163 203 203 203
New Zealand Defence Force pre-acquisition costs 52 - 1,451 -
Pay and Employment Equity Review Recovery 18 - - -

Total Other Revenue

233 203 1,654 203

Note 2 - Operating Expenses#

Note 2 - Operating Expenses - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Consultants' fees 250 140 1,298 879
Domestic travel 76 87 91 91
Overseas travel 295 248 234 234
Other 2,133 1,877 2,579 1,558

Total Operating Expenses

2,754 2,352 4,202 2,762

Note 3 - Debtors and Other Receivables#

Note 3 - Debtors and Other Receivables - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Debtor Crown 99 250 245 431
Debtor Other 96 - - -

Total Debtors and Other Receivables

195 250 245 431

Note 4 - Plant, Property and Equipment#

Note 4 - Plant, Property and Equipment - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Cost or Revaluation

       
Opening balance as at 1 July 3,663 3,913 3,751 4,026
Additions by purchase 103 375 275 320
Disposals (15) (150) - (200)
Closing balance as at 30 June 3,751 4,138 4,026 4,146

Accumulated depreciation

       
Opening balance as at 1 July 1,030 1,306 1,241 1,463
Depreciation expense 211 320 222 250
Disposals - (150) - -
Closing balance as at 30 June 1,241  1,476 1,463 1,713

Net Plant Property and Equipment at 30 June

2,510 2,662 2,563 2,433

Note 5 - Intangible Assets#

Note 5 - Intangible Assets - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Cost 527 572 588 688
Additions by purchase or reclassification 61 83 100 200
Closing balance as at 30 June 588 655 688 888

Accumulated amortisation and impairment losses

       
Opening balance as at 1 July 389 461 440 490
Amortisation expense 51 51 50 50
Closing balance as at 30 June 440 512 490 540

Carrying amount as at 30 June

148 143 198 348

Note 6 - Current Liabilities#

Note 6 - Current Liabilities - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Creditors and Other Payables 169 130 372 200
Accrued Expenses 316 67 125 125
GST payable 121 120 120 120
Accrued expenses for property, plant and equipment 22 - - -

Total

628 317 617 445

Note 7 - Employee Entitlements#

Note 7 - Employee Entitlements - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Salaries payable - 78 - -
Annual Leave 360 332 383 433
Sick leave 15 15 17 17
Total current employee entitlements 375 425 400 450
Long service, retirement and resigning leave 210 228 230 248
Total non current employee entitlements 210 228 230 248

Total Employee Entitlements

585 653 630 698

Note 8 - Reconciliation of Departmental Expenses and Appropriations#

Note 8 - Reconciliation of Departmental Expenses and Appropriations - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Appropriations for output expenses        
Total for Vote Defence 9,476 9,601 11,342 10,511

Total

9,476 9,601 11,342 10,511

Note 9 - Reconciliation of Net Surplus to Net Cash Flows from Operating Activities for the year ending 30 June 2009#

Note 9 - Reconciliation of Net Surplus to Net Cash Flows from Operating Activities for the year ending 30 June 2009 - Defence
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Net Surplus/(deficit) 155 - - -
Add/(less) non-cash items        
Depreciation and amortisation expense 262 371 272 300
Net gains on derivative financial instruments 22 - - -
Total non-cash items 284 371 272 300

Add/(less) items classified as savings or financing activities

       
Total items classified as investing or financing activities - - - -

Add/(less) movements in working capital items

       
(Inc)/Dec in debtors and other receivables 11 - (50) 5
(Inc/Dec) in prepayments (1) - (1) (2)
(Inc/Dec) in creditors and other payables 108 (108) (176) (308)
(Inc/Dec) in employee entitlements 5 25 (25) (20)
Net movements in working capital items 123 (83) (252) (325)

Add/(Less) movements in non-current liabilities

-      
(Inc)/Dec in employee entitlements - 20 (20) 25
Net movement in non-current liabilities - 20 (20) 25

Net cash from operating activities

562 308 - -

Forecast Financial Statements New Zealand Defence Force#

Statement of Forecast Comprehensive Income for the year ending 30 June 2010#

Statement of Forecast Comprehensive Income for the year ending 30 June 2010 - Defence Force
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Income

         
Crown   1,874,992 2,045,532 2,083,494 2,133,981
Department(s)   10,062 10,942 12,942 15,442
Other revenue   6,954 8,643 10,643 8,777
Gains 1 12,859 - 27,693 -
Interest   78 100 100 100
Total Income   1,904,945 2,065,217 2,134,872 2,158,300

Expenses

         
Personnel   691,925 762,146 813,708 818,493
Operating 2 553,210 591,846 553,100 609,880
Depreciation and amortisation   279,755 349,671 319,844 332,733
Capital charge   356,601 361,454 400,427 397,094
Finance costs   - - - -
Other   3,526 - 340 -
Total Expenses 3 1,885,017 2,065,117 2,087,419 2,158,200
Net Surplus / (Deficit)   100 100 47,453 100
Other comprehensive income 7 514,633 - - -
Total Comprehensive Income   534,561 100 47,453 100

Statement of Forecast Changes in Taxpayers' Funds for the year ending 30 June 2010#

Statement of Forecast Changes in Taxpayers' Funds for the year ending 30 June 2010 - Defence Force
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Balance at 1 July

         
General funds   3,570,383 3,653,523 3,655,619 3,658,016
Revaluation reserve   1,132,138 1,134,132 1,647,789 1,647,675
Other reserves   - - - -
Taxpayers' Funds Opening Balance   4,702,521 4,787,655 5,303,408 5,305,691

Changes in Taxpayers' Funds

         
Comprehensive income for the period   534,561 100 47,453 100
Repayment of surplus   (7,069) (100) (20,100) (100)
Capital contribution 4 73,395 54,190 54,930 80,000
Capital withdrawal 4 - - (80,000) (171)
Other   - - - -
Total Changes in Taxpayers' Funds   600,887 54,190 2,283 79,829

Balance at 30 June

         
General funds   3,655,619 3,707,713 3,658,016 3,737,845
Revaluation reserve   1,647,789 1,134,132 1,647,675 1,647,675
Other reserves   - - - -
Taxpayers' Funds Closing Balance   5,303,408 4,841,845 5,305,691 5,385,520

Forecast Statement of Financial Position as at 30 June 2010#

Forecast Statement of Financial Position as at 30 June 2010 - Defence Force
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Assets

         

Current Assets

         
Cash and cash equivalents   80,530 30,050 41,464 10,000
Debtors and other receivables 5 215,429 150,656 205,545 7,438
Prepayments   33,306 30,059 35,000 35,000
Inventories 6 82,820 104,745 97,827 105,063
Other current assets   - - - -
Total Current Assets   412,085 315,510 379,836 157,501

Non-current Assets

         
Property, plant and equipment 7 4,957,082 4,514,468 4,979,277 5,232,195
Intangible assets 8 16,756 21,227 16,518 16,517
Other non-current assets 6 171,355 194,526 181,679 195,117
Total Non- current Assets   5,145,193 4,730,221 5,177,474 5,443,829
Total Assets   5,557,278 5,045,731 5,557,310 5,601,330

Liabilities

         

Current Liabilities

         
Creditors and other payables   168,519 140,941 151,369 142,577
Repayment of surplus   7,069 100 20,100 100
Employee entitlements   27,756 21,500 29,150 29,150
Other current liabilities   - - - -
Total Current Liabilities   203,344 162,541 200,619 171,827

Non-current Liabilities

         
Provisions   - - - -
Employee entitlements   50,526 41,345 51,000 43,983
Other non-current liabilities   - - - -
Total Non-current Liabilities   50,526 41,345 51,000 43,983
Total Liabilities   253,870 203,886 251,619 215,810

Taxpayers' Funds

         
General funds   3,655,619 3,707,713 3,658,016 3,737,845
Revaluation reserve   1,647,789 1,134,132 1,647,675 1,647,675
Other reserves   - - - -
Total Taxpayers' Funds   5,303,408 4,841,845 5,305,691 5,385,520
Total Liabilities and Taxpayers' Funds   5,557,278 5,045,731 5,557,310 5,601,330

Statement of Forecast Cash Flows for the year ending 30 June 2010#

Forestry Statement of Forecast Cash Flows for the year ending 30 June 2010 - Defence Force
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000

Estimated
Actual
$000
Budgeted
$000

Cash Flows from Operating Activities

         

Receipts from:

         
Crown   1,815,042 2,102,079 2,079,987 2,332,088
Department(s)   11,281 10,942 16,443 15,442
Other   3,592 8,643 20,533 8,777
Interest   78 100 100 100

Payments to:

         
Suppliers   (539,766) (603,046) (531,846) (617,130)
Employees   (681,502) (764,861) (806,189) (819,859)
Capital charge   (356,601) (361,454) (400,427) (397,094)
Goods and services tax (net)   2,367 (5,294) (2,570) (8,793)
Other operating activities 1, 9 (13,649) - (30,693) -
Net Cash from Operating Activities 10 240,842 387,109 345,338 513,531

Cash Flow from Investing Activities

         

Receipts from:

         
Sale of property, plant and equipment   1,910 - 7,207 -
Sale of intangible assets   - - - -
Sale of other non-current assets   - - - -

Purchase of:

         
Property, plant and equipment   (352,792) (429,067) (352,677) (598,725)
Intangible assets   (5,704) (8,000) (6,795) (5,999)
Other non-current assets   - - - -
Net Cash from Investing Activities   (356,586) (437,067) (352,265) (604,724)

Cash Flow from Financing Activities

         
Capital contribution 4 73,395 54,190 54,930 80,000
Other financing cash inflows   - - - -
Repayment of surplus   (6,182) (100) (7,069) (20,100)
Capital withdrawal 4 - - (80,000) (171)
Other financing cash outflows   - - - -
Net Cash from Financing Activities   67,213 54,090 (32,139) 59,729
Net Increase / (Decrease) in Cash   (48,531) 4,132 (39,066) (31,464)
Cash at the beginning of the year   129,061 25,918 80,530 41,464
Cash at the end of the year   80,530 30,050 41,464 10,000

Statement of Significant Assumptions#

These statements have been compiled on the basis of government policies and the New Zealand Defence Force (NZDF) Output Plan agreements with the Minister for Defence at the time the statements were finalised.

The 2008/09 budgeted figures are based on management's judgments, estimates and assumptions of the final 2008/09 outcome and are used as the opening position for 2009/10 forecasts.

Key assumptions underlying this forecast are:

  • There will be no significant change in government policies or the New Zealand Defence Force's Output Plan agreement with the Minister of Defence.
  • Ministry of Defence payments reflect the forecast payments for acquisition projects which have been approved by Cabinet. Should additional projects be approved during the year, there may be some payments for these projects during the year.
  • There will be no major changes in exchange rates.
  • The capital charge rate for the year ending 30 June 2010 is assumed to be 7.5% per annum.

Statement of Entity-Specific Accounting Policies#

The New Zealand Defence Force has applied the accounting policies set out in Statement of Accounting Policies Standard included in this document, except as stated below.

Reporting Entity

These are the prospective financial statements of New Zealand Defence Force, prepared in accordance with section 38 of the Public Finance Act 1989.

New Zealand Defence Force is a Government Department as defined by section 2 of the Public Finance Act 1989. For the purposes of financial reporting New Zealand Defence Force is a public benefit entity. In addition the financial statements include information on the activities that NZDF administers on behalf of Vote Veterans' Affairs Defence Force.

In these financial statements the New Zealand Defence Force is also referred to as the NZDF, and Veterans' Affairs New Zealand is also referred to as VANZ.

Authorisation Statement

These forecast financial statements were authorised for issue by the Chief of Defence Force on 22 April 2009. The Chief of Defence Force as the Chief Executive of the New Zealand Defence Force is responsible for the forecast financial statements presented, including the appropriateness of the assumptions underlying the forecast financial statements and all other required disclosure.

Specific Accounting Policies

Property, Plant and Equipment

Capitalisation thresholds applied are set out below.

  • IT Equipment / Hardware $5,000
  • All other property, plant and equipment $5,000
Depreciation

The estimated useful lives of property, plant and equipment are set out below.

  • Buildings 5 - 100 years
  • Leasehold improvements 2 - 20 years
  • IT Equipment / Hardware 2 - 5 years
  • Motor vehicles 10 - 15 years
  • Furniture and office equipment 5 - 20 years
  • Specialist Military Equipment 5 - 55 years
  • Other Plant and Equipment 5 - 50 years
Revaluation

Land, Buildings and Specialist Military Equipment asset classes are subject to revaluation. Valuations use a market-based approach where possible. Where reliable market evidence is unavailable optimised depreciated replacement cost (ODRC) is used to calculate fair value. Valuations are determined or reviewed by an independent registered valuer.

Specialist Military Equipment with a net carrying value of $2 million or more, or groups of like assets with a total carrying value of $4 million or more are subject to revaluation. All other specialist military equipment is recorded at historical cost.

Intangible Assets

Capitalisation thresholds applied are:

  • Purchased software $5,000
  • Internally developed software $5,000

The estimated useful lives of intangible assets are set out below:

  • Purchased software 3 - 20 years
  • Internally developed software 3 - 20 years

Inventories

Inventories are held for distribution or consumption in the provision of services and are comprised of munitions, technical spares and consumable items.

Inventory intended to be kept for more than one year has been classified as non-current inventory.

Inventories are recorded at weighted average cost and the cost of inventory reflects any obsolescence or other impairment.

Cost Allocation

The NZDF has determined the cost of outputs using a cost allocation system outlined below.

  • Direct costs of a force element (for example, a squadron, a frigate, a battalion) are attributed directly to an appropriate output.
  • Support unit costs are charged to outputs using drivers that reflect the use of that activity to produce outputs.
  • Overhead costs are charged to outputs using the percentage of that outputs gross operating budget (exclusive of capital charge) to the total gross budget (exclusive of capital charge) for all outputs.

The allocation rules are reviewed if there is significant organisational change to alter the continued appropriateness of the rules.

Notes to the Financial Statements#

Note 1 - Foreign Exchange Gains
Note 1 - Foreign Exchange Gains - Defence Force
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Unrealised Foreign Exchange Gain 14,799 - 30,693 -
Clearing accumulated disposal costs (1,940) - (3,000) -

Total

12,859 - 27,693 -

The Forecast Financial Statements include Unrealised Foreign Exchange Gains of $30.693 million as at 28 February 2009 (28 February 2008 $14.451 million). It is Government policy not to budget for remeasurements in asset values.

Note 2 - Operating Expenses#

Note 2 - Operating Expenses - Defence Force
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Materials 185,645 185,470 208,146 208,044
Repairs and maintenance 85,749 110,013 77,178 88,709
Premises cost 77,342 88,687 73,189 73,514
Operating lease rentals 40,729 41,700 44,640 39,501
Domestic travel 14,730 13,139 15,912 14,193
Overseas travel 18,708 17,051 20,122 17,818
Consultants' fees 1,936 1,973 3,496 2,513
Other operating expenses 128,371 133,813 110,417 165,588

Total

553,210 591,846 553,100 609,880

Note 3 - Reconciliation of Departmental Expenses and Appropriations#

This note reconciles the expenses reported in the forecast Statement of Comprehensive Income with the corresponding departmental appropriations appearing in the Estimates of Appropriations.

This note reconciles the expenses reported in the forecast Statement of Comprehensive Income with the corresponding departmental appropriations appearing in the Estimates of Appropriations. - Defence Force
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Appropriations for output expenses

       
Total for Vote: Defence Force - Annual Expenses 1,814,954 2,086,176 2,099,297 2,149,823
Total for Vote: Defence Force - Multi Year Appropriation (MYA) 71,292 - - -
Total for Vote: Veterans' Affairs - Defence Force 7,531 3,941 7,782 8,377

Total Appropriations for output expenses

1,893,777

2,090,117

2,107,079

2,158,200

Appropriations for other expenses

       
Asset Write-Offs 2,700 - 3,000 -
Gifting of Putiki Rifle Range - - 340 -

Total Appropriations for other expenses

2,700

-

3,340

-

Adjustments

       
Appropriation amounts unused (8,760) - (20,000) -
Proposed transfer to 2009/10   (25,000) - -
Other expense appropriation not treated as departmental expense (2,700) - (3,000) -

Total departmental expenses [as per Statement of Comprehensive Income]

1,885,017

2,065,117

2,087,419

2,158,200

Note 4 - Capital Transfer#

Note 4 - Capital Transfer - Defence Force
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Capital contribution 2007/08 127,585 - - -
Capital contribution transfer from 2007/08 to 2008/09 (54,190) 54,190 - -
Capital contribution for 2008/09 - - 54,930 -
Capital contribution transfer from 2008/09 to 2009/10 - - (80,000) 80,000
Capital withdrawal in 2009/10 - - - (171)

Total

73,395 54,190 (25,070) 79,829

Note 5 - Debtors and Other Receivables#

Note 5 - Debtors and Other Receivables - Defence Force
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Debtor Crown 197,738 141,191 201,245 3,138
Debtors and other receivables 17,691 9,465 4,300 4,300

Total

215,429 150,656 205,545 7,438

Note 6 - Inventory#

Note 6 - Inventory - Defence Force
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Inventory: Current 82,820 104,745 97,827 105,063
Inventory: Non - Current 171,355 194,526 181,679 195,117

Total

254,175 299,271 279,506 300,180

Note 7 - Property, Plant and Equipment (PPE)#

Property, Plant and Equipment - Defence Force
  Land
$000
Buildings
$000
Specialist
Military
Equipment
$000
Plant & Equipment
$000
Office &
Computer
Equipment
$000
Total
$000
Cost or Revaluation            
Balance as at
1 July 2009
578,680 1,097,707 3,850,488 262,395 75,838 5,865,108
Additions by purchase - 72,000 466,651 33,000 8,000 579,651
Balance at 30 June 2010 578,680 1,169,707 4,317,139 295,395  83,838   6,444,759
Accumulated depreciation            
Balance as at
1 July 2009
- 38,337 658,665 152,083 36,746 885,831
Depreciation expense - 34,000 272,733 15,000 5,000 326,733
Balance at 30 June 2010 - 72,337 931,398 167,083 41,746   1,212,564
Net PPE at 30 June 2010 578,680 1,097,370  3,385,741 128,312 42,092   5,232,195

The Forecast Financial Statements include the revaluation increase of $514.633 million as at 30 June 2008 for the Land, Buildings and Specialist Military Equipment asset classes that are subject to revaluation. This revaluation increase is included in opening asset class values as at 1 July 2008. It is Government policy not to budget for revaluations in asset values.

Note 8 - Intangible Assets#

Note 8 - Intangible Assets - Defence Force
  Acquired software
$000
Internally
generated software
$000
Other
$000
Total
$000

Cost

       
Balance as at 1 July 2009 37,959 - - 37,959
Additions by purchase 5,999 - - 5,999
Additions internally developed - - - -
Disposals - - - -

Balance as at 30 June 2010

43,958 - - 43,958

Accumulated amortisation and impairment losses

       
Balance as at 1 July 2009 21,441 - - 21,441
Amortisation expense 6,000 - - 6,000
Disposals - - - -
Impairment losses - - - -

Balance as at 30 June 2010

27,441 - - 27,441

Carrying amount as at 30 June 2010

16,517 - - 16,517

Note 9 - Other Operating Activities#

The Statement of Forecast Cash Flows include Unrealised Foreign Exchange Gains of $30.693 million as at 28 February 2009 (28 February 2008 $14.451 million).

Note 10 - Reconciliation of Net Surplus to Net Cash Flows from Operating Activities for the year ending#

Note 10 - Reconciliation of Net Surplus to Net Cash Flows from Operating Activities for the year ending - Defence Force
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Net surplus / (deficit)

19,928

100

47,453

100

Add / (less) non cash items

       
Depreciation and amortisation expense 279,755 349,671 319,844 332,733
Increase / (decrease) in the provision for stock obsolescence 14,506 - - -
Increase / (decrease) in the provision for doubtful debts 333 - - -
Increase / (decrease) in non-current employee entitlements 1,082 - 474 (7,017)
Asset Write-Offs 1,940 - 3,000 -
Realised foreign exchange gain / (loss) (1,150) - - -
Other non cash item - - 2,999 -
Total non-cash items
296,466
349,671
326,317
325,716

Add / (less) items classified as investing or financing activities

       
(Gains) / losses on disposal of Property, Plant and Equipment 2,376 - 340 -
Total items classified as investing or financing activities
2,376
-
340 -

Add / (less) movements in working capital items

       
(Increase) / decrease in debtors and receivables (62,573) 56,547 9,884 198,107
(Increase) / decrease in interest - - - -
(Increase) / decrease in inventories (21,948) (37,074) (25,331) (1,600)
(Increase) / decrease prepayments (3,226) 29,074 (1,694) -
Increase / (decrease) in creditors and other payables 1,594 (5,294) (15,595) (8,792)
Increase / (decrease) in GST payable 2,367 - 2,570 -
Increase / (decrease) in provisions (167) - - -
Increase / (decrease) in current employee entitlements 6,025 (5,915) 1,394 -
Net movements in working capital items
(77,928)
37,338
(28,772)
187,715

Net cash from operating activities

240,842

387,109

345,338

513,531

Forecast Financial Statements Ministry of Foreign Affairs and Trade#

Statement of Forecast Comprehensive Income for the year ending 30 June 2010#

Statement of Forecast Comprehensive Income for the year ending 30 June 2010 - Foreign Affairs and Trade
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Income

         
Crown   292,748 331,091 325,698 386,807
Department(s)   12,019 11,731 12,212 12,819
Other revenue   3,190 2,260 2,260 2,080
Gains 1 6,017 - 10,000 -
Interest   104 100 100 100
Total Income   314,078 345,182 350,270 401,806

Expenses

         
Personnel   143,556 171,183 162,231 182,948
Operating 2 105,882 127,634 131,608 158,458
Depreciation and amortisation   15,773 19,643 17,798 20,900
Capital charge   25,135 26,622 26,508 39,400
Finance costs   - - - -
Other   3,056 - - -
Total Expenses 9 293,402 345,082 338,145 401,706
Net Surplus / (Deficit)   100 100 12,125 100
Other comprehensive income 3 - - 176,917 -
Total Comprehensive Income   20,676 100 189,042 100

Statement of Forecast Changes in Taxpayers' Funds for the year ending 30 June 2010#

Statement of Forecast Changes in Taxpayers' Funds for the year ending 30 June 2010 - Foreign Affairs and Trade
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Balance at 1 July

         
General funds   330,987 348,156 348,421 358,447
Revaluation reserve   - - - 176,917
Other reserves   - - - -
Taxpayers' Funds Opening Balance   330,987 348,156 348,421 535,364

Changes in Taxpayers' Funds

         
Comprehensive income for the period   20,676 100 189,042 100
Repayment of surplus   (22,711) (100) (2,099) (100)
Capital contribution   19,469 10,000 - 40,000
Capital withdrawal   - - - (171)
Other   - - - -
Total Changes in Taxpayers' Funds   17,434 10,000 186,943 39,829

Balance at 30 June

         
General funds   348,421 358,156 358,447 398,276
Revaluation reserve   - - 176,917 176,917
Other reserves   - - - -
Taxpayers' Funds Closing Balance   348,421 358,156 535,364 575,193

Forecast Statement of Financial Position as at 30 June 2010#

Forecast Statement of Financial Position as at 30 June 2010 - Foreign Affairs and Trade
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000

Assets

         

Current Assets

         
Cash and cash equivalents   66,802 29,253 25,051 61,314
Debtors and other receivables 4 36,726 2,004 49,654 1,883
Prepayments   3,654 3,906 3,654 3,654
Inventories   - - - -
Other current assets   2,622 18 12,622 12,622
Total Current Assets   109,804 35,181 90,981 79,473

Non-current Assets

         
Property, plant and equipment 5 290,525 351,774 479,210 506,860
Intangible assets 6 11,222 14,195 15,801 27,463
Other non-current assets   2,839 2,278 2,839 2,839
Total Non- current Assets   304,586 368,247 497,850 537,162
Total Assets   414,390 403,428 588,831 616,635

Liabilities

         

Current Liabilities

         
Creditors and other payables   17,238 14,565 17,238 17,238
Repayment of surplus   22,711 100 12,125 100
Employee entitlements   13,755 12,673 13,755 13,755
Other current liabilities 7 877 9,017 (1,039) (1,039)
Total Current Liabilities   54,581 36,355 42,079 30,054

Non-current Liabilities

         
Provisions   - - - -
Employee entitlements   11,388 8,917 11,388 11,388
Other non-current liabilities   - - - -
Total Non-current Liabilities   11,388 8,917 11,388 11,388
Total Liabilities   65,969 45,272 53,467 41,442

Taxpayers' Funds

         
General funds   348,421 358,156 358,447 398,276
Revaluation reserve   - - 176,917 176,917
Other reserves   - - - -
Total Taxpayers' Funds   348,421 358,156 535,364 575,193
Total Liabilities and Taxpayers' Funds   414,390 403,428 588,831 616,635

Statement of Forecast Cash Flows for the year ending 30 June 2010#

Forestry Statement of Forecast Cash Flows for the year ending 30 June 2010 - Foreign Affairs and Trade
    2007/08 2008/09 2009/10
  Note Actual
$000
In 2008
Budget
$000

Estimated
Actual
$000
Budgeted
$000

Cash Flows from Operating Activities

         

Receipts from:

         
Crown   257,905 365,934 312,770 434,578
Department(s)   12,019 11,731 12,212 12,819
Other   3,294 2,360 2,360 2,180
Interest   - - - -

Payments to:

         
Suppliers   (106,379) (128,180) (132,110) (158,960)
Employees   (143,059) (170,637) (161,729) (182,446)
Capital charge   (25,135) (26,622) (26,508) (39,400)
Goods and services tax (net)   119 - - -
Other operating activities   (1,859) - (1,916) -
Net Cash from Operating Activities   (3,095) 54,586 5,079 68,771

Cash Flow from Investing Activities

         

Receipts from:

         
Sale of property, plant and equipment   6,803 300 300 300
Sale of intangible assets   - - - -
Sale of other non-current assets   - - - -

Purchase of:

         
Property, plant and equipment   (19,802) (60,180) (27,961) (46,246)
Intangible assets   (4,361) (8,453) (6,484) (14,266)
Other non-current assets   - - - -
Net Cash from Investing Activities   (17,360) (68,333) (34,145) (60,212)

Cash Flow from Financing Activities

         
Capital contribution   19,469 10,000 - 40,000
Other financing cash inflows   - - - -
Repayment of surplus   (3,328) (6,000) (12,685) (12,125)
Capital withdrawal   - - - (171)
Other financing cash outflows   - - - -
Net Cash from Financing Activities   16,141 4,000 (12,685) 27,704
Net Increase / (Decrease) in Cash   (4,314) (9,747) (41,751) 36,263
Cash at the beginning of the year   71,116 39,000 66,802 25,051
Cash at the end of the year   66,802 29,253 25,051 61,314

Statement of Significant Assumptions#

Statement of Significant Assumptions

These forecast financial statements have been compiled on the basis of existing government policies and Ministerial expectations at the time the statements were finalised.

The main assumptions are as follows:

  • The department's activities will remain substantially the same as for the previous year.
  • Personnel costs are based on 935 full time equivalents and 420 full-time equivalents for local staff at overseas posts.
  • Operating costs are based on historical experience. The general historical pattern is expected to continue.
  • Estimated year end information for 2008/09 is used as the opening position for the 2009/10 forecasts.

These assumptions are adopted as at 22 April 2009.

Factors that could lead to material differences between the forecast financial statements and the 2009/10 actual financial statements include:

  • changes to the baseline budget through new initiatives, or technical adjustments.

Statement of Entity-Specific Accounting Policies#

The Ministry of Foreign Affairs and Trade has applied the accounting policies set out in Statement of Accounting Policies Standard included in this document, except as stated below.

Reporting Entity

These are the prospective financial statements of Ministry of Foreign Affairs and Trade, prepared in accordance with section 38 of the Public Finance Act 1989.

Ministry of Foreign Affairs and Trade is a Government Department as defined by section 2 of the Public Finance Act 1989. For the purposes of financial reporting Ministry of Foreign Affairs and Trade is a public benefit entity.

Authorisation Statement

These forecast financial statements were authorised for issue by Simon Murdoch and Paul Helm on 22 April 2009. The Ministry of Foreign Affairs and Trade is responsible for the forecast financial statements presented, including the appropriateness of the assumptions underlying the forecast financial statements and all other required disclosure.

Specific Accounting Policies

Going Concern

The accounting policies set out below have been applied consistently to all period presented in these statements. These statements have been prepared on a going concern basis.

Property, Plant and Equipment

Revaluations

Land and Buildings

Land and buildings are revalued at least every three years, or whenever the carrying amount differs materially to fair value. A revaluation was last completed on 31 October 2008.

Other PPE - at cost

Other property, plant and equipment, which include leasehold improvements, furniture and fittings, computer equipment, motor vehicles and office equipment, are recorded at cost less accumulated depreciation and accumulated impairment losses.

Capitalisation thresholds applied are set out below.

  • Laptops and Works of Art - $2,000.
  • All other property, plant and equipment - $3,000.

Depreciation

The estimated useful lives of property, plant and equipment are set out below.

  • Buildings - structure 35 to 60 years.
  • Buildings - fit outs - 3 to 20 years.
  • Buildings - services - 3 to 20 years.
  • Leasehold improvements - Period of the Ministry's expected occupancy with a maximum of 15 years.
  • IT Equipment/Hardware - 3 to 8 years.
  • Motor vehicles - 8 years.
  • Furniture and fittings - 6 years and 8 months.
  • Equipment - 4 to 20 years.
  • Plant and Machinery - 10 years.

Intangible Assets

Capitalisation thresholds applied are:

  • Purchased software - $5,000.
  • Internally developed software - $10,000.

The estimated useful lives of intangible assets are set out below:

  • Purchased software - 3 to 8 years.
  • Internally developed software - 3 to 8 years.

Cost Allocation

The Ministry has determined the cost of outputs using the cost allocation system outlined below.

Definition of Terms

"Operational Cost Centre" is a unit that produces outputs. All overseas posts and regional and functional divisions in Wellington are Operational Cost Centres.

"Support Service Cost Centre" is a unit that provides Support Services to Operational Cost Centres.

"Output Allocation Factor" is a ratio calculated from an estimate of time each officer spends on producing specified outputs.

"Direct Costs" are those costs directly attributed to outputs.

"Indirect Costs" are those costs directly attributed to Operational Cost Centres.

"Corporate Costs" are those costs of Support Service Cost Centres attributed to Operational Cost Centres as overhead.

Basis for assigning Corporate Costs to Operational Cost Centres

This is a two-stage process:

(i) Reciprocal costing methodology is used to recognise the services provided between Support Services Cost Centres.

(ii) Corporate Costs are then allocated to the other Operational Cost Centres based on head count.

Corporate Costs account for approximately 15 percent (2007:15 percent) of the Ministry's costs.

Basis for allocating Indirect Costs to Outputs

Output Allocation Factors are used to allocate Indirect Costs to outputs.

Indirect Costs account for approximately 75 percent (2007:74 percent) of the Ministry's costs.

Direct Costs assigned to Outputs

Direct Costing is used mainly for Management of ODA, Trade Access Support Programmes, Overseas Visitor Programmes, Pacific Security Fund and some local staff pension schemes.

Direct Costing makes up approximately 10 percent (2007:11 percent) of the Ministry's costs.

Foreign Currency

Foreign exchange gains and losses resulting from settlement of such transactions (the difference between the rate at which the transaction was recorded and the rate and which the foreign currency for that transaction was purchased or sold) and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currency are recognised in the Statement of Financial Performance.

Transactions in foreign currencies are initially translated at the foreign exchange rate at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Financial Performance.

Non-monetary assets and liabilities measured at historical cost in a foreign currency are translated into New Zealand dollars at a foreign exchange rate which materially represents the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies and measured at fair value are translated into New Zealand dollars at the exchange rate applicable at the fair value date.

The associated foreign exchange gains or losses follow the fair value gains to the Statement of Financial Performance.

Derivatives

Derivative financial instruments are recognised both initially and subsequently at fair value. They are reported as either assets or liabilities depending on whether the derivative is in a net gain or net loss position respectively. Movements in the value of derivatives are recognised in the Statement of Financial Performance.

Revenue

Revenue is derived through the provision of outputs to the Crown and from services to third parties. Revenue from the Crown is recognised in the forecast statement of financial performance when it is drawn down from Treasury. This is applied evenly throughout the year. All other revenue is recognised in the forecast statement of financial performance when earned.

Notes to the Financial Statements#

Note 1 - Gains
Note 1 - Gains - Foreign Affairs and Trade
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Unrealised Gain on the Remeasurement of Foreign Exchange Contracts. 6,017 - 10,000 -

Total

6,017 - 10,000 -

Note 2 - Operating Expenses#

Note 2 - Operating Expenses - Foreign Affairs and Trade
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Operating expenses include:        
Audit fees 405 276 307 305
Consultants' fees 3,879 4,824 6,877 5,845
Overseas travel 6,802 7,786 7,426 9,461
Domestic travel 2,088 2,497 2,634 2,993
Other 92,708 112,251 114,364 139,854

Total Operating Expenses

105,882 127,634 131,608 158,458

Note 3 - Other Comprehensive Income#

Note 3 - Other Comprehensive Income - Foreign Affairs and Trade
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Land and buildings were revalued at fair value as at
31 October 2008.
- - 176,917 -

Total

- - 176,917 -

Note 4 - Debtors and other receivables#

Note 4 - Debtors and other receivables - Foreign Affairs and Trade
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Debtor Crown 34,843 - 47,771 -
Debtors other 1,883 2,004 1,883 1,883

Total debtors and other receivables

36,726 2,004 49,654 1,883

Note 5 - Property, Plant and Equipment#

Note 5 - Property, Plant and Equipment - Foreign Affairs and Trade
  Land
$000
Buildings
$000
Leasehold improvements
$000
Furniture/office equipment
$000
Other
$000
Total
$000

Cost or revaluation

           
Balance as at 1 July 2009 302,590 138,700 39,349 39,887 30,153 550,679
Additions by purchase - 31,746 8,000 3,050 3,450 46,246
Disposals - - - (430) (1,070) (1,500)

Balance as at 30 June 2010

302,590 170,446 47,349 42,507 32,533 595,425

Accumulated depreciation and impairment losses

           
Balance as at 1 July 2009 - 4,679 20,607 29,580 16,603 71,469
Depreciation expense - 7,136 3,634 4,125 3,401 18,296
Reverse accumulated depreciation - disposal - - - (400) (800) (1,200)

Balance as at 30 June 2010

- 11,815 24,241 33,305 19,204 88,565

Carrying amount as at 30 June 2010

302,590 158,631 23,108 9,202 13,329 506,860

Note 6 - Intangible Assets#

Note 6 - Intangible Assets - Foreign Affairs and Trade
  Acquired software
$000
Internally
generated software
$000
Other
$000
Total
$000

Cost

       
Balance as at 1 July 2009 15,565 6,851 - 22,416
Additions by purchase 8,266 6,000 - 14,266
Disposals - (300) - (300)

Balance as at 30 June 2010

23,831 12,551 - 36,382

Accumulated amortisation and impairment losses

       
Balance as at 1 July 2009 4,275 2,340 - 6,615
Amortisation expense 1,404 1,200 - 2,604
Disposals - (300) - (300)

Balance as at 30 June 2010

5,679 3,240 - 8,919

Carrying amount as at 30 June 2010

18,152 9,311 - 27,463

Note 7 - Other current liabilities#

Note 7 - Other current liabilities - Foreign Affairs and Trade
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Derivatives in loss - departmental 782 8,148 (1,134) (1,134)
Derivatives in loss - third parties 95 151 95 95
Other - 718 - -

Total

877 9,017 (1,039) (1,039)

Note 8 - Reconciliation of Net Surplus to New Cash flows from Operating Activities for the year ending 30 June 2010#

Note 8 - Reconciliation of Net Surplus to New Cash flows from Operating Activities for the year ending 30 June 2010 - Foreign Affairs and Trade
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
Net surplus/(deficit) 20,676 100 12,125 100
Add/(less) non-cash items        
Depreciation and amortisation expense 15,773 19,643 17,798 20,900
Net loss (gain) on derivative financial instruments (11,940) - 22,927 -
Remeasurement 2,978 - - -
Total non-cash items 6,811 19,643 40,725 20,900
Add/(less) movements in working capital items        
(Inc)/Dec in debtors and other receivables (35,786) 34,843 (47,771) 47,771
(Inc)/Dec in prepayments (440) - - -
Inc/(Dec) in creditors and other payables 252 - - -
Inc/(Dec) in current provisions 2,559 - - -
Inc/(Dec) in employee entitlements 2,084 - - -
Net movements in working capital items (31,331) 34,843 (47,771) 47,771
Add/(less) movements in non-current liabilities        
Inc/(Dec) in employee entitlements 749 - - -
Net cash from operating activities (3,095) 54,586 5,079 68,771

Note 9 - Reconciliation of Departmental Expenses and Appropriations#

Note 9 - Reconciliation of Departmental Expenses and Appropriations - Foreign Affairs and Trade
  2007/08 2008/09 2009/10
  Actual
$000
In 2008
Budget
$000
Estimated
Actual
$000
Budgeted
$000
 Appropriations for output expenses        
Total for Vote: MFAT 259,801 307,499 301,280 363,010
Total for Vote: ODA 30,626 37,583 36,865 38,696
Total appropriations for output expenses 290,427 345,082 338,145 401,706
Adjustments        
Remeasurements 2,978 - - -
Other (3) - - -

Total departmental expenses (as per statement of financial performance)

293,402 345,082 338,145 401,706

Purpose of Information Supporting the Estimates#

The Information Supporting the Estimates provides members of Parliament with information on expected performance 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 each individual department and Office 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 Finance and Expenditure Committee. 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
  • Māori, Other Populations and Cultural Sector
  • Primary Sector
  • Social Development and Housing Sector.

 

Votes and Departments in Each Sector#

Votes and Departments in Each Sector
Votes by Sector Departments by Sector
Economic Development and Infrastructure Sector - B.5A Vol.1  
Vote Economic Development
Vote Commerce
Vote Communications
Vote Consumer Affairs
Vote Energy
Vote Tourism
Ministry of Economic Development
Vote Transport Ministry of Transport
Vote Labour
Vote ACC
Vote Employment
Vote Immigration
Department of Labour
Education and Science Sector - B.5A Vol.2  
Vote Education Ministry of Education
Vote Crown Research Institutes (this Vote is administered by the Treasury, which is in the Finance and Government Administration Sector.)  
Vote Education Review Office Education Review Office
Vote Research, Science and Technology Ministry of Research, Science and Technology
Environment Sector - B.5A Vol.3  
Vote Environment
Vote Climate Change
Ministry for the Environment
Vote Conservation Department of Conservation
Vote Local Government (this Vote is administered by the Department of Internal Affairs, which is in the National Identity Sector)  
Vote Parliamentary Commissioner for the Environment Parliamentary Commissioner for the Environment
External Sector - B.5A Vol.4  
Vote Foreign Affairs and Trade
Vote Official Development Assistance
Ministry of Foreign Affairs and Trade
Vote Defence Ministry of Defence
Vote Defence Force
Vote Veterans' Affairs - Defence Force
New Zealand Defence Force
Vote Customs New Zealand Customs Service
Finance and Government Administration Sector - B.5A Vol.5  
Vote Prime Minister and Cabinet Department of the Prime Minister and Cabinet
Vote Communications Security and Intelligence Government Communications Security Bureau
Vote Security Intelligence New Zealand Security Intelligence Service
Vote State Services State Services Commission
Vote Finance
Vote State-Owned Enterprises
The Treasury
Vote Revenue Inland Revenue Department
Vote Ministerial Services (this Vote is administered by the Department of Internal Affairs, which is in the National Identity Sector)  
Vote Office of the Clerk Office of the Clerk of the House of Representatives
Vote Ombudsmen Office of the Ombudsmen
Vote Parliamentary Service Parliamentary Service
Vote Audit Office of the Auditor-General
Health Sector - B.5A Vol.6  
Vote Health Ministry of Health
Justice Sector - B.5A Vol.7  
Vote Justice
Vote Courts
Ministry of Justice
Vote Corrections Department of Corrections
Vote Police New Zealand Police
Vote Serious Fraud Serious Fraud Office
Vote Attorney-General Crown Law Office
Vote Parliamentary Counsel Parliamentary Counsel Office
Māori, Other Populations and Cultural Sector - B.5A Vol.8  
Vote Arts, Culture and Heritage
Vote Sport and Recreation
Ministry for Culture and Heritage
Vote Statistics Statistics New Zealand
Vote National Archives Archives New Zealand
Vote National Library National Library of New Zealand
Vote Māori Affairs Te Puni Kōkiri
Vote Treaty Negotiations (this Vote is administered by the Ministry of Justice, which is in the Justice Sector)  
Vote Pacific Island Affairs Ministry of Pacific Island Affairs
Vote Women's Affairs Ministry of Women's Affairs
Vote Internal Affairs
Vote Community and Voluntary Sector
Vote Emergency Management
Vote Racing
Department of Internal Affairs
Primary Sector - B.5A Vol.9  
Vote Agriculture and Forestry
Vote Biosecurity
Ministry of Agriculture and Forestry
Vote Fisheries Ministry of Fisheries
Vote Food Safety New Zealand Food Safety Authority
Vote Lands Land Information New Zealand
Social Development and Housing Sector - B.5A Vol.10  
Vote Social Development
Vote Senior Citizens
Vote Veterans' Affairs - Social Development
Vote Youth Development
Ministry of Social Development
Vote Housing Department of Building and Housing

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 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 also generally 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 to 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; and 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 Appropriation
Appropriation Type Transaction Status Description
Output Expenses Departmental Authorises expenses to be incurred by a department or an Office of Parliament in supplying a specified category of outputs (goods and services).
Non-Departmental Authorises expenses to be incurred by the Crown (excluding departments) in purchasing a specified category of outputs (goods and services) from Crown entities or other third parties.
Benefits and Other Unrequited Expenses Non-Departmental

Authorises expenses to be incurred by the Crown (excluding departments) in transferring resources (generally to individuals for their personal benefit) for which the Crown receives nothing directly in return.

Examples include the Unemployment Benefit, student allowances and various scholarships and awards.

Borrowing Expenses Departmental

Authorises the incurring of interest or other financing expenses for loans made to a department or an Office of Parliament, or public securities (undertakings that represent part of the public debt) issued by a department or an Office of Parliament.

In practice, limitations on the rights of departments to borrow or issue securities mean that these are likely to be incurred only by Offices of Parliament.

Non-Departmental

Authorises the incurring of interest or other financing expenses for loans made to the Crown (excluding departments), or public securities (undertakings that represent part of the public debt) issued by the Crown.

Crown debt management is centralised, which means that most debt-servicing expenses appear in Vote Finance.

Other Expenses Departmental

Authorises expenses to be incurred by a department or an Office of Parliament that are not either output expenses or borrowing expenses.

Other expenses should be used only for events that cannot be related back to output production, such as redundancy costs arising from a government decision to cease purchasing certain types of outputs, or a loss on sale of assets made surplus by departmental restructuring.

Non-Departmental

Authorises expenses to be incurred by the Crown (excluding departments) that are not structured or managed as output expenses, benefits and unrequited expenses, or borrowing expenses.

Other expenses is the residual appropriation type, which should not be used where an appropriation could be better classified or managed as one of the other appropriation types (eg, as output expenses).

Examples include disposal of an asset for less than market value, grants to community organisations, subscriptions for membership of international bodies and remuneration of independent statutory officers.

Capital expenditure Departmental Authorises capital expenditure to be incurred by a department or an Office of Parliament to acquire or develop assets for the use of the department.
Non-Departmental Authorises capital expenditure to be incurred by the Crown (excluding departments) to acquire or develop Crown assets, including the purchase of equity, or making a loan to a person or organisation that is not a department.
Expenses or Capital expenditure incurred by an intelligence and security department Departmental Authorises both expenses and capital expenditure to be incurred by the New Zealand Security Intelligence Service or the Government Communications Security Bureau.

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 amount; and an output expense appropriation can cover more than one class of outputs.

Types of Output Expense Appropriations
Output Expense Appropriation Type and Authority Description, Constraints on Form and Typical Application

Standard Output Expense Appropriations

(section 7(1), Public Finance Act 1989)

Departmental or non-departmental:  Authorise a department or an Office of Parliament to incur expenses in supplying a specified class of outputs (goods and services), or the Crown (excluding departments) to incur expenses to purchase a specified class of outputs.

Annual or multi-year:  The authority lapses at the end of the financial year or multi-year period specified.

Single output class only:  The scope is limited to a single class of outputs (defined as a grouping of similar outputs).

Amount limited by Appropriation Act: The amount of a standard output expense appropriation is limited to a set amount of NZ dollars specified in an Appropriation Act.

Typical application:  The normal or default form for an output expense appropriation, used for a wide range of outputs for which the flexibility offered by the other types of output expense appropriation is not required.

Multi-Class Output Expense Appropriations (MCOA)

(section 7(3)(b), Public Finance Act 1989)

Departmental or non-departmental:  Authorise a department or an Office of Parliament to incur expenses in supplying more than one specified class of outputs (goods and services), or the Crown (excluding departments) to incur expenses to purchase more than one specified class of outputs.

A proposed MCOA must be approved by the Minister of Finance before it is presented in the Estimates.  The information supporting the Estimates must explain why the Minister has allowed those classes of outputs to be grouped in one appropriation.

Annual or multi-year:  The authority lapses at the end of the financial year or multi-year period specified.

Multiple output classes:  The scope of an MCOA is determined by the combined scope of each of the output classes included in that appropriation.

Amount limited by Appropriation Act:  The amount of an MCOA is limited to a set amount of NZ dollars specified in an Appropriation Act.  The amount of expense that can be incurred in relation to each component output class is flexible within the total amount of the MCOA, although expenses must be separately forecast and reported for each individual class in the Estimates, Information Supporting the Estimates, Supplementary Estimates and the department's annual report.

Typical application:  An MCOA is used where it is appropriate to give the responsible Minister or department ongoing discretion over the output mix across two or more classes of outputs.  Such discretion will most commonly be sought where the output classes contribute to a common outcome, or use a common or closely related set of inputs or processes, and the circumstances that determine the appropriate output choice or mix are likely to vary during the appropriation period.

Revenue-Dependent Appropriations (RDA)

(section 21(1), Public Finance Act 1989)

Departmental only:  Authorise a department or an Office of Parliament to incur expenses in supplying a specified a class of outputs (goods and services) that are not paid for directly by the Crown.

A proposed RDA must be approved by the Minister of Finance, before it is presented in the Estimates.  Each class of outputs for which an RDA is approved is listed in an Appropriation Act for the relevant financial year.

Annual only:  The authority lapses at the end of the financial year specified.

Single output class only:  The scope of an RDA is limited to a single class of outputs (defined as a grouping of similar outputs).

Amount limited by amount of revenue earned:  The amount of an RDA is limited tothe amount of revenue earned by a department or an Office of Parliament from other departments or from parties other than the Crown during a financial year.  The Minister of Finance can further direct a department to incur expenses to a level lower than the amount of revenue earned, though such directions have been rare.

Typical application:  An RDA provides flexibility to respond to unanticipated changes in the level of external demand for a class of outputs, where the full cost of the outputs is met by external parties and not the Crown.

Department-to-Department Appropriation (DDA)

(section 20(2), Public Finance Act 1989)

Departmental only:  Authorise a department or an Office of Parliament to incur expenses in supplying specified outputs (goods and services) paid for by another department.

Creation of a DDA requires an agreement between two departments.  Implicitly it also requires the approval of the Minister who will become responsible for the appropriation - namely, the Minister responsible for the supplying department - as the agreement has implications for the scope and risk of that department's operations.

Annual or multi-year:  The period of a DDA will depend on the negotiated terms of the agreement.

Single or multiple output class(es):  The scope of a DDA (and hence whether it covers one or more classes of outputs) will depend on the way in which the agreement defines what is to be delivered.  In most cases, an agreement that provides for a range of different outputs is better treated as creating several single-class DDAs.

Amount limited by departmental agreement:  The amount of a DDA is limited to either the amount of revenue earned from the commissioning department, or the cost incurred by the supplying department in providing those outputs (if that cost is less than the amount of revenue earned under the agreement).

Typical application:  DDAs are intended to make collaboration between departments easier by reducing the time and effort required to obtain / adjust the relevant appropriations while also allowing a commissioning department to retain full control over the resources it provides.

The use of a DDA is not confined to bilateral agreements.  A set of related DDAs could be used to enable one department to co-ordinate and manage the work of several departments that must work together to contribute to providing an integrated service to third parties, or to pool contributions from several departments to enable another department to provide a specific service to or on behalf of those departments.

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 types of 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 normally 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. For those appropriations that with limits set in cash terms, section 11(2) of the Public Finance Act 1989 requires that they be reported on an accrual basis. 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.

1 Sector Overview Information#

The first component of the Information Supporting the Estimates may include a statement, agreed by all Ministers responsible for appropriations in each Vote 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 in the Information Supporting the Estimates.

2 Performance Information Relating to Appropriations in Each Vote#

The second component of the Information Supporting the Estimates presents performance information relating to each appropriation.

The title pages for each Vote specify the Minister(s) responsible for existing and proposed appropriations in the Vote, and the Responsible Minister for the 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 the 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 and high-level priorities and outcomes to which they contribute. Where applicable, priorities and outcomes are drawn from the priorities and desired outcomes and published strategy documents. Links are also made to specific government strategies. Links may also be made to specific Government objectives.
  • Part 1.3 Trends in the Vote - A presentation of the 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 year (Budget) and the following three years (estimated) for the type of appropriations and Crown revenue and capital receipts.
    • New Policy Initiatives - A table showing how new initiatives (and the 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 Crown revenue and capital receipts by type over the nine financial years covered by the Summary of Financial Activity table, explanations of significant changes and may also contain graphical presentations.
  • Part 1.4 Reconciliation of Changes in Appropriation Structure - a table providing a reconciliation and explanation of any 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 and 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 the revenue sources between 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 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. Further information on the relationships between outputs, impacts, and outcomes or objectives is outlined in Part 1.2 and the Statement of Intent. Conditions on use include administrative criteria and processes contained in legislation, regulation and Government decisions, which may be reference in scope statement or performance measures. The current and past policy initiatives tables provides a five-year history of announced initiatives that impact on the Budget year, the preceding year and the following three years.
    • For MCOA, 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.
    • Information 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 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 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.

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 is the same as that for non-departmental benefits and other expenses, except that conditions on use are no 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 utilised. 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 further 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.

The following table summarises the performance information that is required for a ‘standard' appropriation in each sub-part.

Summary of performance information that is required for a ‘standard' appropriation
Standard Appropriations Part 2.1 Part 2.2 Part 3.1 Part 3.2 Part 4.1 Part 4.2 Part 5.1 Part 5.2 Part 6.1 Part 6.2
For each sub-part:                    
Intended impacts, outcomes or objectives
For each appropriation:                    
Scope of appropriation
Expenses and revenue N/A N/A N/A N/A N/A N/A N/A N/A N/A
Expenses N/A N/A N/A
Capital expenditure N/A N/A N/A N/A N/A N/A N/A N/A
Reasons for change in appropriation
Output performance measures and standards N/A N/A N/A N/A N/A N/A N/A N/A
Expected results N/A N/A N/A N/A N/A N/A
Conditions on use of appropriation N/A N/A N/A
Memorandum account N/A N/A N/A N/A N/A N/A N/A N/A N/A
Current and past policy initiatives N/A
Summary of service providers N/A N/A N/A N/A N/A N/A N/A N/A N/A
Reporting mechanism N/A N/A N/A N/A N/A N/A N/A

Information on reasons for change, conditions on 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.

3 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 for each department included in the sector, by reference to material already set out in Part 2.1 of Votes containing appropriations proposed to be used by the department.

4 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 Comprehensive Income
  • Statement of Forecast Changes in Taxpayers' Funds
  • Forecast Statement of 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.

5 Statements of Intent of Departments#

The final component of the Information Supporting the Estimates presents the Statements of Intent of the departments covered by each sector. These statements contain the 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. If capital expenditure is significant, it is in a separate section.
  • Additionalinformationand 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 Supplementary Estimates and the Information Supporting the Supplementary Estimates.

Terms and Definitions
Appropriation An appropriation is a parliamentary authorisation for the Crown or an Office of Parliament to incur expenses or capital expenditure.
Appropriation scope One of the defining terms of an appropriation that establishes limits on the activities for which the Crown or an Office of Parliament is authorised to incur expenses or capital expenditure under that appropriation.
Capital expenditure The cost of assets acquired or developed including any ownership interest in entities, but excluding inventory.
Crown revenue and capital receipts Flows accounted for as revenue and capital receipts on behalf of the Crown rather than as departmental revenue.
DDA Department-to-department appropriation - as authorised by section 20(2) of the PFA.
Department Generally references to Departments also include an Office of Parliament as provided in section 26E(4) of the PFA.
Expenses Amounts consumed or losses of service potential or future economic benefits, other than those relating to capital withdrawals, in a financial year.  Expenses are an accrual concept measured in accordance with generally accepted accounting practice.
GST Goods and services tax.  Appropriations are stated GST- exclusive.
MCOA Multi-class output expense appropriation.
MYA Multi-year appropriation.
N/A Not applicable.
Outcomes States or conditions of society, the economy or the environment, including changes in those states or conditions.
Outputs Goods or services supplied by departments and other entities to external parties.  Outputs are a variety of types, including policy advice, administration of contracts and grants, and the provision of specific services.
PFA Public Finance Act 1989
PLA Permanent legislative authority - a traditional term for a permanent appropriation, ie, one that is authorised for an indefinite period by legislation other than an Appropriation Act.
Minister The Minister responsible for specific appropriations being sought within a Vote.  As several Ministers may now hold appropriations within a single Vote, each appropriation will have a tag (M1, M2, etc) identifying the Minister responsible for that line item.
RDA Revenue-dependent appropriation - as authorised by section 21(1) of the PFA 1989.
Responsible Minister The Minister responsible for the financial performance of a department or Crown entity.  In relation to an Office of Parliament, the Office of the Clerk of the House of Representatives, and the Parliamentary Service, the Speaker is the Responsible Minister.
Revenue from the Crown Revenue earned by a department from the Crown for the provision of outputs to or on behalf of the Crown.  These flows are accounted for as departmental revenue.  Revenue from the Crown is eliminated for purposes of reporting the Crown's overall financial performance and position.
Revenue from Others Revenue earned by a department from other departments and from third parties. Revenue from other departments is eliminated for purposes of reporting the Crown's overall financial performance and position.
Vote A grouping of one or more appropriations that are the responsibility of one or more Ministers of the Crown and are administered by the one department.

The suite of Budget 2009 documents can be accessed in the Budgets section of the website: www.treasury.govt.nz/budget/2009. 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#

Sector Overview Statement#

The External Sector consists of six Votes which are administered by four departments - the Ministry of Foreign Affairs and Trade, the Ministry of Defence, the New Zealand Defence Force (NZDF), and the New Zealand Customs Service. These departments are collectively responsible for managing most of New Zealand's official relationships with the rest of the world and protecting its security at and beyond the border.

The government's overarching goal is to grow the New Zealand economy in order to deliver greater prosperity, security and opportunities to all New Zealanders. The External Sector contributes to this goal in several ways: through its activities to reduce or manage the risks to New Zealand from global and regional insecurity and trans-national threats (a critical pre-condition underpinning economic growth and social wellbeing); through its aid to promote the security and sustainable economic growth of developing countries especially in our region; through its contributions to the development of international rules for dealing with global issues and promoting the conduct of international trade and commerce; through its work to increase the competitiveness of New Zealand business; and through its initiatives to assist the flow of people, capital, trade, technology and ideas to New Zealand to build a more competitive resource base for the economy.

The world economy is currently facing its biggest challenge in 60 years, with global economic growth and world trade in sharp decline. The departments in the External Sector will give priority to maintaining New Zealand's security and managing New Zealand's international relations through the recession, and ensuring New Zealand is well placed to take advantage of the eventual recovery. Each department will also give high priority to improving the value for money received from the resources appropriated in its Votes.

Ministry of Foreign Affairs and Trade#

The Ministry of Foreign Affairs and Trade has primary responsibility for conducting the Government's business with other countries and international organisations. It is responsible for New Zealand's network of overseas posts which provide the platform for government agencies to operate overseas. The heads of its Embassies and High Commissions are the Government's official representatives in other countries.

The Ministry's key activities to further the Government's priorities in 2009/10 are to strengthen relationships with key partner countries to support our security and economic aspirations; intensify efforts to secure the long-term security and economic growth of the South Pacific and key partner countries in the region; pursue a rich agenda of free trade agreements; lead development of a more flexible and productive model for NZ Inc agencies to support New Zealand businesses and pursue New Zealand's interests offshore.

Another priority for the Ministry is its work within the multilateral system to achieve New Zealand goals, particularly in the areas of resource diplomacy and climate change. We will participate in international climate change negotiations to ensure that New Zealand's obligations in any agreement to succeed the Kyoto Protocol maintain our competitiveness and the Government's growth agenda.

Through NZAID, the Ministry will also support sustainable economic growth in developing countries, particularly in the South Pacific, to try to reverse long-run contractionary influences and trends towards dependency, and maximising the efficiency of this support.

New Zealand Defence Force#

The NZDF's contribution to the External Sector is reflected in the deployment of some 400 NZDF personnel on over 10 different operational missions around the world in support of New Zealand's security. The most significant are in Timor-Leste, the Solomon Islands, and Afghanistan. The NZDF also contributes to the External Sector through its network of military adviser and attaché staff serving overseas.

On a day-to-day basis in New Zealand, the force elements of the NZDF train to be ready, if and when required by the Government, to ensure New Zealand's security. Preparedness for operations, wherever and whenever they may be, is the overriding priority for the NZDF.

The Government's main priority for NZDF in 2009/10 is the completion of the Defence Review leading to a White Paper in early 2010. That Review will give clarity to how the NZDF will contribute to the Government's security outcomes for the future. The other main initiatives agreed in these Estimates of Appropriations include funding to further progress key priorities and to provide for 2009/10 operating pressures. These primarily involve sustaining personnel growth, future personnel growth, operating costs and depreciation impacts associated with new equipment.

The NZDF, through Veterans' Affairs New Zealand, is responsible for providing a range of service to veterans. It contributes to the External Sector by ensuring veterans are recognised for their service and that the impacts of service on veterans and their dependents are monitored and addressed. This indirectly contributes to the ongoing recruitment and retention of high quality NZDF personnel. The Government's intent underpinning policy related to veterans is “Respecting Veterans, Honouring Service”. This is supported and implemented by initiatives aligned with the broader principles of:

  • Respecting Veterans
  • Strengthening Communities
  • Dignity for older New Zealanders.

Ministry of Defence#

The roles and functions of the Ministry of Defence are established by the Defence Act 1990. The Ministry contributes to the External Sector by working to ensure that New Zealand is secure and that the security of other nations is enhanced by New Zealand's efforts. It does this through its statutory duty to give advice to the Government on issues relating to New Zealand's defence policy, doctrine, military capabilities and deployments of the NZDF and its responsibility for acquiring major items of equipment for the NZDF and for providing independent audits of the NZDF functions, duties and projects.

The Government has commissioned a Defence Assessment under section 24(2)(c) of the Defence Act 1990. This assessment will review overall defence policy and a number of other aspects of Defence management, including procurement. It will inform the White Paper on defence policy which is scheduled to be published in 2009/10.

New Zealand Customs Service#

Customs contributes to the External Sector through its lead role in managing New Zealand's border interests. The effective management of New Zealand's borders plays a key role in making trade easy, thereby supporting the competitive advantage of New Zealand exporters, as well as contributing to New Zealand's security.

Customs provides policy advice on customs aspects of New Zealand's trade negotiations and agreements. It works closely to provide support for other Customs administrations, including capacity-building in the Pacific, by working with NZAID and other organisations such as the Australian Customs and Border Protection Service, the Oceania Customs Organisation and the World Customs Organisation.

Customs also works with the Ministry of Defence and the NZDF to protect New Zealand from major external threats, particularly through the National Maritime Coordination Centre, which coordinates whole-of-government maritime patrol and surveillance assets and related information for civilian purposes.

The Government's three priorities for Customs in 2009/10 are to advance integration of trans-Tasman border clearance; to develop and implement the Joint Border Management System and Trade Single Window; and to increase interceptions of illicit drugs and precursor materials entering New Zealand.

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 External Sector is in accordance with sections 38 and 41 of the Public Finance Act 1989 and is consistent with the policies and performance expectations of the government.

Hon Murray McCully
Responsible Minister for the Ministry of Foreign Affairs and Trade
22 April 2009

Hon Dr Wayne Mapp
Responsible Minister for the Ministry of Defence
Responsible Minister for the New Zealand Defence Force
22 April 2009

Hon Maurice Williamson
Responsible Minister for the New Zealand Customs Service
22 April 2009

Chief Executive Statements of Responsibility#

Ministry of Foreign Affairs and Trade#

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the External Sector relating to the Ministry of Foreign Affairs and Trade and for the Votes for which the Ministry of Foreign Affairs and Trade is the administering department. Specifically, this information is contained in the Ministry of Foreign Affairs and Trade'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 (2009/10 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.

Simon Murdoch
Secretary of Foreign Affairs and Trade
Ministry of Foreign Affairs and Trade
22 April 2009

Paul Helm
Director of Finance
Ministry of Foreign Affairs and Trade
22 April 2009
Counter-signed

Ministry of Defence#

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the External Sector relating to the Ministry of Defence and for the Vote for which the Ministry of Defence is the administering department. Specifically, this information is contained in the Ministry of Defence'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 (2009/10 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.

John McKinnon
Secretary of Defence
Ministry of Defence
22 April 2009

Bryan Westbury
Deputy Secretary (Finance)/Chief Financial Officer
Ministry of Defence
22 April 2009
Counter-signed

New Zealand Defence Force#

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the External Sector relating to the New Zealand Defence Force and for the Votes for which the New Zealand Defence Force is the administering department. Specifically, this information is contained in the New Zealand Defence Force'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 (2009/10 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.

J Mateparae
Lieutenant General
Chief of Defence Force
New Zealand Defence Force
22 April 2009

M Horner
Corporate Financial Officer
New Zealand Defence Force
22 April 2009
Counter-signed

New Zealand Customs Service#

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the External Sector relating to the New Zealand Customs Service and for the Vote for which the New Zealand Customs Service is the administering department. Specifically, this information is contained in the New Zealand Customs Service'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 (2009/10 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.

Martyn Dunne
Comptroller of Customs
New Zealand Customs Service
22 April 2009

John Kyne
Chief Financial Officer
New Zealand Customs Service
22 April 2009
Counter-signed

Performance Information for Appropriations Vote Customs#

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister of Customs (M21)

ADMINISTERING DEPARTMENT: New Zealand Customs Service

MINISTER RESPONSIBLE FOR NEW ZEALAND CUSTOMS SERVICE: Minister of Customs

Part 1 - Summary of the Vote#

Part 1.1 - Overview of the Vote

The Minister of Customs is responsible for the efficient and timely collection of Crown revenue forecast to be $9,785 million in the 2009/10 financial year.

The Minister of Customs is also responsible for the appropriations in the Vote for the 2009/10 financial year covering the following:

  • a total of over $8 million on policy advice
  • a total of over $4 million on intelligence and risk assessment services
  • a total of over $43 million on clearance of international passengers, crew and craft
  • a total of over $44 million on clearance of import, export and excise transactions
  • a total of nearly $2 million on technical advisory services
  • a total of over $3 million on revenue collection, accounting and debt management
  • a total of nearly $7 million on surveillance, search and containment
  • a total of nearly $1 million on National Maritime Co-ordination Centre
  • a total of over $10 million on investigations of offences
  • a total of nearly $1 million on prosecutions and civil proceedings.

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

Part 1.2 - High-Level Objectives of the Vote#

The New Zealand Customs Service (Customs) contributes to the Government's goal to deliver greater prosperity, security and opportunities to all New Zealanders.

Customs plays its part in delivering greater prosperity for New Zealanders through its role as one of the lead agencies facilitating international trade and travel - managing the risks associated with international trade and travel while not imposing undue cost or delay on legitimate trade and travel - and by collecting approximately 15% of total Crown revenue.

Customs is also a key participant in trade negotiations, providing specialist assistance to the Ministry of Foreign Affairs and Trade to ensure straightforward and consistent customs processes and minimal transaction costs for our exporters and trading partners.

Through its role at the border, Customs manages security and law enforcement risks arising from trans-national organised crime (which includes the importation of illicit drugs and precursor materials, and the trading of other illicit goods).

Customs is responsible for major elements of New Zealand's border infrastructure that are relied on by many other agencies to meet their objectives at the border, including the main border management system. Customs is leading a multi-agency effort to develop more integrated border processes, and to reduce regulatory and compliance demands on those using the border. This includes development of a new border management system to be used by border agencies.

Consistent with, and to deliver on, these Government outcomes, Customs has agreed three priorities with the Minister of Customs on which to focus in 2009/10. These are:

  • advance integration of trans-Tasman border clearance
  • develop and implement the Joint Border Management System and Trade Single Window (an electronic portal that provides an interface between industry and government agencies)
  • increase interceptions of illicit drugs and precursor materials entering New Zealand.

The following table shows how the day-to-day delivery of Customs' Output Expenses, for which appropriations are sought, are linked and contribute to the Government's priorities and the Government outcomes relevant to Customs.

Contribution of Appropriations to Government Priorities and Outcomes#

Contribution of Appropriations to Government Priorities and Outcomes - Part 1.2 HighLevel Objectives of the Vote - Customs
Appropriations Government Priorities Government Outcomes
Policy Advice.
Clearance of International Passengers, Crew 
and Craft.
Clearance of Import, Export and Excise Transactions.
Trans-Tasman facilitation.
Develop and implement the Joint Border Management System and Trade Single Window.
Increase interceptions of illicit drugs and precursor materials entering New Zealand.
Greater prosperity:
  • Grow the economy.
  • Reduce regulatory and compliance demands.
  • Pursue trade liberalisation and trade agreements.
Greater security:
  • Make communities safer.
  • Clamp down on criminal gangs and the "P" trade.
Greater opportunities:
  • Step up infrastructure investmen.t
Intelligence and Risk Assessment Services.
Revenue Collection, Accounting and Debt Management.
Investigation of Offences.
Prosecutions and Civil Proceedings.
Trans-Tasman facilitation.
Increase interceptions of illicit drugs and precursor materials entering New Zealand.
Greater prosperity:
  • Grow the economy.
Greater security:
  • Make communities safer.
  • Clamp down on criminal gangs and the "P" trade.
Surveillance, Search and Containment.
National Maritime Coordination Centre.
Increase interceptions of illicit drugs and precursor materials entering New Zealand. Greater security:
  • Make communities safer.
  • Clamp down on criminal gangs and the "P" trade.
Technical Advisory Services. Trans-Tasman facilitation.
Develop and implement the Joint Border Management System and Trade Single Window.
Greater prosperity:
  • Grow the economy.
  • Reduce regulatory and compliance demands.

Summary of Financial Activity#

Summary of Financial Activity - Customs
  2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
Actual
$000
Actual
$000
Actual
$000
Actual
$000
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 95,668 105,623 110,411 118,306 125,426 123,426 124,289 - 124,289 129,522 129,358 129,358
Benefits and Other Unrequited Expenses - - - - - - N/A - - - - -
Borrowing Expenses - - - - - - - - - - - -
Other Expenses 38 - 52 536 2,063 2,063 - 2,088 2,088 2,088 2,088 2,088
Capital Expenditure - - - 5,153 6,500 6,500 21,301 - 21,301 8,100 7,250 8,000
Intelligence and Security Department Expenses and Capital Expenditure - - - - - - - N/A - - - -

Total Appropriations

95,706 105,623 110,463 123,995 133,989 131,989 145,590 2,088 147,678 139,710 138,696 139,446

Crown Revenue and Capital Receipts

                       
Tax Revenue 7,565,000 8,395,111 8,870,885 9,255,680 9,608,000 9,608,000 N/A 9,785,000 9,785,000 10,148,000 10,710,000 11,354,000
Non-Tax Revenue 120 104 132 270 80 80 N/A 80 80 80 80 80
Capital Receipts - - - - - - N/A - - - - -

Total Crown Revenue and Capital Receipts

7,565,120 8,395,215 8,871,017 9,255,950 9,608,080 9,608,080 N/A 9,785,080 9,785,080 10,148,080 10,710,080 11,354,080

New Policy Initiatives#

Budget Policy Intiatives - Customs
Policy Initiative Appropriation 2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Automated Passenger Clearance Clearance of International Passengers, Crew and Craft (M21)
Departmental Output Expenses
- 1,854 4,375 4,375 4,375
  Departmental Capital Injection - 7,511 - - -
Savings from rationalisation of support functions and rephasing expenditure across financial years Clearance of Import, Export and Excise Transactions (M21)
Departmental Output Expenses
- (881) (46) (46) (46)
  Clearance of International Passengers, Crew and Craft (M21)
Departmental Output Expenses
- (1,353) (455) (455) (455)
  Intelligence and Risk Assessment Services (M21)
Departmental Output Expenses
- (50) (6) (6) (6)
  Investigation of Offences (M21)
Departmental Output Expenses
- (76) (9) (9) (9)
  National Maritime Co-ordination Centre (M21)
Departmental Output Expenses
- (100) - - -
  Policy Advice (M21)
Departmental Output Expenses
- (232) (204) (204) (204)
  Prosecutions and Civil Proceedings (M21)
Departmental Output Expenses
- (6) - - -
  Revenue Collection, Accounting and Debt Management (M21)
Departmental Output Expenses
- (34) (4) (4) (4)
  Surveillance, Search and Containment (M21)
Departmental Output Expenses
- (67) (8) (8) (8)
  Technical Advisory Services (M21)
Departmental Output Expenses
- (51) (68) (68) (68)
Total Initiatives      - 6,515 3,575 3,575 3,575

Crown Revenue 

Crown revenue is collected through customs duties and GST on imports and excise on alcoholic beverages, tobacco, and petroleum products. Figure 1 notes the proportion of collections by category of Crown revenue forecast to be collected in 2009/10.

2009/10 Crown revenue by category
2009/10 Crown revenue by category
Source: New Zealand Customs Service

Figure 2 illustrates growth in Crown revenue collected by category.

Crown Revenue Collections by Category 1999/2000 - 2009/10
Crown Revenue Collections by Category 1999/2000 - 2009/10
Source: New Zealand Customs Service

Departmental Output Expenses

Annual appropriations for the purchase of departmental outputs are expected to decrease by $1.137 million for 2009/10 compared with 2008/09. The net change in the total appropriation is primarily as a result of $2.850 million of savings identified as a result of the Value for Money line-by-line review exercise and the discontinuation of one-off funding provided in 08/09 for border management systems scoping and new trade agreements projects. This is offset by an increase in funding of $1.854 million to commence the implementation of automated passenger processing technology.

Trends in comparative actual and estimated expenses for Output Expense appropriations under this Vote are shown in Figure 3 below.

Trends in total actual and estimated output expenses
Trends in total actual and estimated output expenses
Source: New Zealand Customs Service

The increase in output expenses in 2010/11 and future years is primarily as a result of the implementation of automated passenger processing technology.

Part 2 - Details and Expected Performance for Output Expenses#

Part 2.1 - Departmental Output Expenses#

Intended Impacts, Outcomes and Objectives

Intended Impacts, Outcomes and Objectives - Part 2.1 Departmental Output Expenses - Customs
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Outcome:  Protection
New Zealand is protected, at the border, from the entry, or exit, of people, craft, or goods, and Maori taonga and other treasured items, where the entry or exit may pose a material risk to our national interests.
  • Policy Advice.
  • Intelligence and Risk Assessment Services.
  • Clearance of International Passengers, Crew and Craft.
  • Clearance of Import, Export and Excise Transactions.
  • Revenue Collection, Accounting and Debt Management.
  • Surveillance, Search and Containment.
  • Investigation of Offences.
  • Prosecutions and Civil Proceedings.
  • National Maritime Coordination Centre.
Outcome:  Facilitation
New Zealand's economic, social, environmental, and cultural interests are sustained and enhanced by facilitating the flow of legitimate trade, travel, and goods, and Maori taonga and other treasured items, across the border.
  • Policy Advice.
  • Intelligence and Risk Assessment Services.
  • Clearance of International Passengers, Crew and Craft.
  • Clearance of Import, Export and Excise Transactions.
  • Technical Advisory Services.
Outcome:  Revenue
Due Customs revenue is collected to support Government social, economic and fiscal objectives.
  • Policy Advice.
  • Intelligence and Risk Assessment Services.
  • Clearance of Import, Export and Excise Transactions.
  • Revenue Collection, Accounting & Debt Management.
  • Prosecutions and Civil Proceedings.
  • Technical Advisory Services.

Clearance of Import, Export and Excise Transactions (M21)

Scope of Appropriation

The provision of services relating to validation, checking, inspection, clearance and audit of import and export consignments and excise returns.

Expenses and Revenue

Expenses and Revenue - Clearance of Import, Export and Excise Transactions (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 44,856 44,100 44,497
Revenue from Crown 7,453 7,453 6,758
Revenue from Other 37,403 33,903 37,739

Output Performance Measures and Standards

Output Performance Measures and Standards - Clearance of Import, Export and Excise Transactions (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Trade transactions (estimated between 3.9-4.8 million import transactions and 2.8-3.1 million export transactions) are processed. N/A N/A 100% trade transactions risk assessed.
95% trade transactions (other than those referred for compliance checks) processed (including assessment against business rules and intelligence alerts) within 30 minutes.
95% of import transactions are deemed compliant and proceed without further interventions.
99% of export transactions are deemed compliant and proceed without further interventions.
40%-50% of
container exports
to USA represented
by Secure Exports Scheme (SES) partners.
Mail items (estimated between 65-68 million) are processed N/A N/A 310,000-370,000 mail items are referred for compliance checks.
10%-14% mail compliance checks resulting in enforcement consequences.
Trade Compliance programmes for imports, exports and excise are in place and operating as planned. N/A N/A At least $15 million additional revenue.
Secure Exports Scheme continues to comply with the requirements of the Supply Chain Security Arrangement with USA.
4,800-5,300 excise returns validated.
1,000-1,100 field
audit activities.
20,000-40,000 transactional
audit activities.

Current and Past Policy Initiatives

Current and Past Policy Initiatives - Clearance of Import, Export and Excise Transactions (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (881) (46) (46) (46)
Inter-Agency Resource Needs for Trade Agreements. 2008/09 485 - - - -
Customs Wellington Head Office Relocation and Modernisation. 2007/08 932 932 932 932 932
Customs Border Management Systems Replacement Programme. 2007/08 770 770 770 770 770
Establishment of a Customs Position in Washington DC. 2005/06 466 466 466 466 466
Remuneration and organisational development. 2005/06 3,836 3,836 3,836 3,836 3,836
Customs' Cargo X-Ray Capability. 2004/05 17,364 17,364 17,364 17,364 17,364

Clearance of International Passengers, Crew and Craft (M21)#

Scope of Appropriation#

The clearance of international passengers, crew and craft arriving in and departing from New Zealand.

Expenses and Revenue#

Expenses and Revenue - Clearance of International Passengers, Crew and Craft (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 41,365 40,800 43,313
Revenue from Crown 40,011 40,011 42,389
Revenue from Other 1,354 1,354 924

Reasons for Change in Appropriation#

The increase in the appropriation is largely due to additional funding for the implementation of automated passenger processing technology.

Output Performance Measures and Standards#

Output Performance Measures and Standards - Clearance of International Passengers, Crew and Craft (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
All international travellers (estimated between 9.6-10 million) are risk assessed. N/A N/A 100% arriving international travellers are risk assessed.
All compliant international travellers are facilitated within agreed time standards. N/A N/A A minimum of 90% of arriving international
air passengers exit Customs Primary processing points
within 45 minutes
of arrival.
A minimum of 98% of arriving international
air passengers exit Customs Primary processing points within 60 minutes of arrival.
98% or more of
arriving international
air passengers are deemed compliant and facilitated without further interventions.
All international air and marine passengers identified as risks are subject to interventions. N/A N/A At least 99.9% of air and marine passengers subject to an alert are processed in accordance with the alert instruction.
1.1%-1.5% of arriving international air passengers selected
for risk assessment
at Customs'
secondary areas.
30%-40% of arriving international air passengers selected for further risk assessment subsequently subject to a full or partial baggage examination.
20%-30% of interventions resulting from further risk assessment result in an enforcement consequence.
Commercial marine craft arriving and departing (estimated between 4,950-5,250) are processed. 100% of arriving commercial marine craft boarded at first port of arrival in New Zealand. 100% 100% of commercial marine craft arriving are boarded at first port
of arrival.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Clearance of International Passengers, Crew and Craft (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (1,353) (455) (455) (455)
Automated Passenger Clearance. 2009/10 - 1,854 4,375 4,375 4,375
Passenger Processing Facilities at Auckland International Airport. 2008/09 210 210 210 210 210
Customs Border Management Systems Replacement Programme. 2007/08 415 415 415 415 415
Customs Wellington Head Office Relocation and Modernisation. 2007/08 640 640 640 640 640
Remuneration and organisational development. 2005/06 5,454 5,454 5,454 5,454 5,454
Enhanced border security capability for the New Zealand Customs Service in the air and marine environments. 2004/05 6,667 6,667 6,667 6,667 6,667
Enhancing Customs and Immigration systems integration. 2004/05 178 178 178 178 178
Funding to Relieve Congestion at Auckland and Christchurch Airports. 2004/05 4,800 4,800 4,800 4,800 4,800

Intelligence and Risk Assessment Services (M21)#

Scope of Appropriation#

The provision of intelligence and risk assessments that inform intervention strategies, including alerts for goods, people and craft.

Expenses and Revenue#

Expenses and Revenue - Intelligence and Risk Assessment Services (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 4,363 4,285 4,214
Revenue from Crown 4,277 4,277 4,114
Revenue from Other 86 86 100

Output Performance Measures and Standards#

Output Performance Measures and Standards - Intelligence and Risk Assessment Services (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
External clients' satisfaction with intelligence and risk products (estimated between 1,700-1,900) disseminated by Customs. 80% minimum external national and international clients satisfied. Annual survey not yet completed. At least 80% of external clients satisfied.
External clients' satisfaction with Customs' management of alerts created by the other agencies (estimated between 18,000-22,000). N/A N/A At least 80% of external clients satisfied.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Intelligence and Risk Assessment Services (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (50) (6) (6) (6)
Customs Wellington Head Office Relocation and Modernisation. 2007/08 96 96 96 96 96
Implementing a Data Match for Student Loans. 2006/07 98 98 98 98 98
Remuneration and organisational development. 2005/06 567 567 567 567 567

Investigation of Offences (M21)#

Scope of Appropriation#

The proactive and reactive investigation of serious transnational crime, transnational crime and other border and revenue offences.

Expenses and Revenue#

Expenses and Revenue - Investigation of Offences (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 10,431 10,200 10,324
Revenue from Crown 10,102 10,102 10,042
Revenue from Other 329 329 282

Output Performance Measures and Standards#

Output Performance Measures and Standards - Investigation of Offences (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Investigation cases are commenced (estimated between
1,400-2,000) and finalised.
A minimum of 90% of investigation cases finalised within 12 months of commencement. 85% An estimated minimum 75% of investigation cases finalised within 12 months of commencement.
Serious offences will be investigated to significantly reduce the potential harm to New Zealand. N/A N/A At least 90% of drug investigation cases where an interception of a Class A Controlled Drug or significant community-
harm occurred or is suspected to occur will identify offenders.
At least 95% of offenders in cases of Class A Controlled Drug or significant community-harm interceptions will be placed before the courts, where Customs has a mandate to prosecute.
At least 90% of investigation cases of revenue and goods clearance offences will identify offenders.
At least 95% of offenders in cases of revenue and goods clearance offences will be placed before the courts, where Customs has a mandate to prosecute.
At least 90% of investigation cases of harm-related commodities will identify offenders.
At least 95% of offenders in cases of harm-related commodities will be placed before the courts, where Customs has a mandate to prosecute.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Investigation of Offences (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (76) (9) (9) (9)
Customs Wellington Head Office Relocation and Modernisation. 2007/08 206 206 206 206 206
Remuneration and organisational development. 2005/06 929 929 929 929 929

National Maritime Co-ordination Centre (M21)#

Scope of Appropriation#

Co-ordination services for civilian purposes that support the effective and efficient use of New Zealand's 'whole-of-government' maritime patrol and surveillance assets.

Expenses and Revenue#

Expenses and Revenue - National Maritime Coordination Centre (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 662 600 755
Revenue from Crown 651 651 755
Revenue from Other 11 11 -

Reasons for Change in Appropriation#

The increase in the appropriation is due to the 2008 budget initiative relating to National Maritime Coordination Centre (NMCC) Staff and Information Systems.

Output Performance Measures and Standards#

Output Performance Measures and Standards - National Maritime Coordination Centre (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Available patrol and surveillance assets are allocated to meet civilian demand. N/A N/A 100% civilian demand met where assets
are available.
Satisfaction of requesting agencies and assets providers with National Maritime Coordination Centre's coordination of tasking. A minimum of 90% satisfaction in relation to responsiveness, transparency, and prioritisation. Annual survey not yet completed. At least 90% satisfaction in relation to responsiveness, transparency, and prioritisation.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - National Maritime Coordination Centre (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (100) - - -
National Maritime Coordination Centre (NMCC) Staff and Information Systems. 2008/09 284 399 456 446 446
Customs' People Capability. 2007/08 6 6 6 6 6

Policy Advice (M21)#

Scope of Appropriation#

The provision of policy advice and related services relating to border security, border management and Customs revenue.

Expenses and Revenue#

Expenses and Revenue - Policy Advice (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 10,801 10,600 8,292
Revenue from Crown 9,157 9,157 7,419
Revenue from Other 1,644 1,644 873

Reasons for Change in Appropriation#

The decrease in the appropriation is largely due to savings as a result of the value for money line-by-line review exercise, discontinuation of one-off funding in 2008/09 for Stage 1 and Stage 2 JBMS Business case and implementation of Free Trade Agreement and updated costing allocations.

Output Performance Measures and Standards#

Output Performance Measures and Standards - Policy Advice (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Policy advice is provided to the Minister on:
  • proposed changes to the Customs and Excise Act 1996
  • policy proposals from other agencies impacting on border and revenue management
  • Budget matters
  • improved facilitation at airports
  • proposed Free Trade Agreements or changes to Free Trade Agreements
  • World Customs Organisation proposals
  • bilateral customs agreements
  • international customs capacity building and other matters
as agreed with or directed by the Minister.
N/A N/A Policy work programme and international work programme are advanced as agreed or subsequently amended by agreement between the Minister and Chief Executive during the year.
Compliance with Customs' quality standards for policy advice and international work programme (as set out in the Conditions of Use), as assessed by the Minister, meets and sometimes exceeds expectations.
Policy papers assessed by external reviewer (NZIER) maintain or better a median score of 7.5 out of 10.
Draft replies to ministerial correspondence are provided within agreed timeframes from time of receipt by Customs. 90% draft replies to ministerial correspondence will be provided to the Minister within 20 working days from the time of receipt by Customs or as agreed with the Minister. 97.4% 90% draft replies
to ministerial correspondence will be provided to the Minister within 20 working days from the time of receipt
by Customs or as
agreed with the Minister.
  100% draft replies
to ministerial correspondence will be provided to the Minister within 30 working days from the time of receipt by Customs or as agreed with the Minister.
100% 100% draft replies
to ministerial correspondence will be provided to the Minister within 30 working days from the time of receipt by Customs or as agreed with the Minister.

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - Policy Advice (M21) - Customs
Reference Conditions
Dimensions for quality for policy advice  
Purpose The objective for the advice is clearly stated; it answers issues raised by the Minister and demonstrates a clear understanding of the desired outcome(s) of the Government and/or the Minister.
Problem definition Any policy problem, including the underlying causes, size and materiality of issues, is identified and supported by data or other evidence.
Context There is a clear and logical statement of the issue or problem and why it necessitates Ministerial action.
Logic An appropriate analytical framework is used. The assumptions behind the advice are explicit and the argument is logical and supported by facts.
Accuracy All facts are present and accurate. The facts are based on reliable research, evaluation findings or other appropriate information. Known gaps that could significantly affect the conclusions are identified and the range of uncertainty is stated.
Options A range of options is presented that provides clearly differentiated choices and these are rigorously evaluated against the analytical framework. Costs, benefits, consequences and risks/opportunities of the options are assessed as part of the analysis. Reasons are given in cases when it is not appropriate to use a range of options.
Recommendations Recommendations are clear, logical and action-oriented and can stand alone from the rest of the advice. They are sufficient to enable a decision to be made on the proposal or to move to the next decision/action point.
Consultation Thorough and timely consultation has been carried out with other government departments and interested parties. Their views, including objections, are incorporated as appropriate.
Practicality Issues of implementation, technical feasibility, practicality and timing are considered. The advice accurately identifies political, legislative, compliance, transitional, legal, machinery of government, or other issues or risks that require management.
Communication Guidance is provided on how communications arising from decisions on the advice should be handled. This includes identifying which key stakeholders should be informed and how.
Presentation Material is presented to suit the audience and:
  • is concise and structured in a way that assists others to understand the purpose of the advice, key features of the information, analysis and recommendations, and their key implications
  • uses appropriate language and style
  • uses empirical evidence
  • avoids cliches and technical jargon (or where the latter is not possible, it is used appropriately for the audience)
  • is consistent with departmental and Cabinet Office presentation requirements.

Note - Not all aspects of the standards may apply to specific pieces of policy advice, given considerations of urgency or the particular nature of the advice to be provided.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Policy Advice (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (232) (204) (204) (204)
Scoping of Cross-Agency Border Management Trade Single Window. 2008/09 1,000 - - - -
Customs' Border Management Systems Replacement Programme. 2007/08 720 - - - -
Customs Wellington Head Office Relocation and Modernisation. 2007/08 242 242 242 242 242
Remuneration and organisational development. 2005/06 434 434 434 434 434
Customs' Cargo X-Ray Capability. 2004/05 100 100 100 100 100
Growth and Innovation Framework (GIF). 2004/05 750 750 750 750 750

Prosecutions and Civil Proceedings (M21)#

Scope of Appropriation#

The prosecution of offences and civil proceedings relating to the hearing of applications for the release of seized goods.

Expenses and Revenue#

Expenses and Revenue - Prosecutions and Civil Proceedings (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 707 701 744
Revenue from Crown 695 695 727
Revenue from Other 12 12 17

Output Performance Measures and Standards#

Output Performance Measures and Standards - Prosecutions and Civil Proceedings (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Decisions on prosecutions and other resolutions are taken in accordance with professional standards. N/A N/A All prosecutions
are conducted in accordance with the Solicitor-General's guidelines for prosecutions.
Other resolutions
are administered in accordance with legal requirements and relevant professional guidelines.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Prosecutions and Civil Proceedings (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (6) - - -
Customs Wellington Head Office Relocation and Modernisation. 2007/08 19 19 19 19 19
Remuneration and organisational development. 2005/06 81 81 81 81 81

Revenue Collection, Accounting and Debt Management (M21)#

Scope of Appropriation#

The provision of services relating to receipt and processing of revenues owing from import tariffs, goods and services tax and excise-equivalent duties on imported goods and excise duty on domestically manufactured fuel, tobacco and alcohol products.

Expenses and Revenue#

Expenses and Revenue - Revenue Collection, Accounting and Debt Management (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 3,282 3,250 3,352
Revenue from Crown 3,018 3,018 3,071
Revenue from Other 264 264 281

Output Performance Measures and Standards#

Output Performance Measures and Standards - Revenue Collection, Accounting and Debt Management (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Revenue collected on behalf of the Crown. $9,418 million $9,608 million $9,785 million, as advised by Treasury.
Revenue collected for other agencies. $335 - $350 million
(for 5 agencies)
$340 million $335 - $350 million,
as advised by
agencies involved.
Revenue collected efficiently and with minimum compliance costs. N/A N/A Over 95% collected electronically.
Over 98% revenue collected on due date.
Over 8,000 clients that meet credit criteria have access to the deferred payment scheme.
The integrity of the revenue collection system is maintained in a cost-effective manner. N/A N/A Value of aged debt and dishonours collected is
at least $6 million or
over 8 times the cost of operating the Customs National Credit
Control Unit.
Debt write-offs as % total revenue collected in that year is no more
than 0.02%.
95% of debt over
3 months old is reviewed at least 4 times a year.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Revenue Collection, Accounting and Debt Management (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (34) (4) (4) (4)
Customs Wellington Head Office Relocation and Modernisation. 2007/08 87 87 87 87 87
Remuneration and organisational development. 2005/06 403 403 403 403 403
Customs' Cargo X-Ray Capability. 2004/05 94 94 94 94 94

Surveillance, Search and Containment (M21)#

Scope of Appropriation#

The targeted surveillance, search and containment of risk craft, persons or goods.

Expenses and Revenue#

Expenses and Revenue - Surveillance, Search and Containment (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 7,116 7,090 6,947
Revenue from Crown 6,949 6,949 6,810
Revenue from Other 167 167 137

Output Performance Measures and Standards#

Output Performance Measures and Standards - Surveillance, Search and Containment (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Arriving vessels are risk assessed. N/A N/A 100% of arriving vessels are risk assessed.
At least 95% of vessels risk assessed as high or very high will be targeted.
At least 5% of all arriving commercial vessels
will be targeted.
At least 80% of targeted responses carried out in accordance with the intelligence-directed recommendations based on level of risk.
135-165 operational responses completed.
Routine patrol and surveillance is carried out. N/A N/A At least 80% of planned patrol and surveillance days are completed.
Patrols and surveillance are carried out in accordance with the patrol and surveillance plans for each location.
Event readiness exercises (estimated between 5-10) are subject to agreed plans and/or guidelines and debriefed with agencies involved. Yes Yes 100% of event readiness exercises subject to agreed plans or guidelines and debriefed.
Operational support is provided to external agencies. N/A N/A At least 6 multi-agency targeted operations undertaken.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Surveillance, Search and Containment (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (67) (8) (8) (8)
Customs Wellington Head Office Relocation and Modernisation. 2007/08 95 95 95 95 95
Remuneration and organisational development. 2005/06 823 823 823 823 823

Technical Advisory Services (M21)#

Scope of Appropriation#

The provision of Customs rulings on tariff and excise classifications, concession interpretations, origin qualification and general advice to business.

Expenses and Revenue#

Expenses and Revenue - Technical Advisory Services (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 1,843 1,800 1,851
Revenue from Crown 161 161 215
Revenue from Other 1,682 1,682 1,636

Output Performance Measures and Standards#

Output Performance Measures and Standards - Technical Advisory Services (M21) - Customs
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Classification and concession rulings made (estimated between
200-300) are issued within time standards.
A minimum of 90%
of classification and concession rulings will be issued within 20 working days of lodgement of all necessary information.
96.9% At least 90% of classification and concession rulings will be issued within 20 working days of lodgement of all necessary information.
Rulings given and not appealed or taken to appeal and sustained. N/A N/A A minimum of 95%
Number of calls responded to by the National Call Centre. 99,900-123,000 99,800 99,900-123,000
Availability of public information. A minimum of 99% availability on a 24 hours a day, 7 days a week basis of the Customs' 0800 telephone number and the Customs' website. 99.9% At least 99% availability on a 24 hours a day,
7 days a week basis of the Customs' 0800 telephone number and the Customs' website.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Technical Advisory Services (M21) - Customs
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Savings from rationalisation of support functions and rephasing expenditure across financial years. 2009/10 - (51) (68) (68) (68)
Customs Wellington Head Office Relocation and Modernisation. 2007/08 61 61 61 61 61
Remuneration and organisational development. 2005/06 184 184 184 184 184

Part 5 - Details and Expected Results for Other Expenses#

Part 5.2 - Non-Departmental Other Expenses#

Intended Impacts, Outcomes and Objectives

Intended Impacts, Outcomes and Objectives - Part 5.2 NonDepartmental Other Expenses - Customs
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Objective: To manage debts owed to the Crown and to minimise the impact on Crown Revenue of debts owed to the Crown. Change in Doubtful Debt Provision.
Objective: To meet international obligations and participate in, and contribute to, the international customs community. World Customs Organisation.

Change in Doubtful Debt Provision (M21)

Scope of Appropriation

Provisioning of Doubtful Debts on Customs Crown Revenue.

Expenses

Expenses - Change in Doubtful Debt Provision (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 2,000 200 2,000

World Customs Organisation (M21)#

Scope of Appropriation#

New Zealand's contribution to the operating budget of the WCO.

Expenses#

Expenses - World Customs Organisation (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 63 63 88

Reporting Mechanisms#

Reporting Mechanisms - Reporting Mechanisms - Customs
Appropriation Reporting Mechanism
Change in Doubtful Debt Provision. Annual Report of New Zealand Customs Service.
World Customs Organisation. Annual Report of New Zealand Customs Service.

The above table indicates the mechanisms to be used for reporting actual performance for each non-departmental other expenses appropriation.

Part 6 - Details and Expected Results for Capital Expenditure#

Part 6.1 - Departmental Capital Expenditure#

Intended Impacts, Outcomes and Objectives

Intended Impacts, Outcomes and Objectives - Part 6.1 Departmental Capital Expenditure - Customs
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Objective:  To maintain and upgrade capability through the maintenance and replacement of assets. New Zealand Customs Service - Capital Expenditure PLA.

New Zealand Customs Service - Capital Expenditure PLA (M21)

Scope of Appropriation

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

Capital Expenditure

Capital Expenditure - New Zealand Customs Service Capital Expenditure PLA (M21) - Customs
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Forests/Agricultural - - -
Land - - -
Property, Plant and Equipment 5,100 5,100 17,413
Intangibles 1,400 1,400 3,888
Other - - -

Total Appropriation

6,500 6,500 21,301
Forests/Agricultural - - -
Land - - -
Property, Plant and Equipment 5,100 5,100 17,413
Intangibles 1,400 1,400 3,888
Other - - -

Total Appropriation

6,500 6,500 21,301

Reasons for Change in Appropriation

The 2009/10 budgeted capital expenditure includes $7.300 million for upgrades of accommodation and passenger processing infrastructure along with the routine replacement and upgrade of plant and equipment. It is expected that
$6.500 million will be committed to enable the fit-out of the Wellington Customhouse to be advanced. The move to the new building is scheduled for 2010/11. A further $7.500 million is allocated to the development and installation of automated Trans-Tasman passenger systems.

Performance Information for Appropriations Vote Defence#

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister of Defence (M22)

ADMINISTERING DEPARTMENT: Ministry of Defence

MINISTER RESPONSIBLE FOR MINISTRY OF DEFENCE: Minister of Defence

Part 1 - Summary of the Vote#

Part 1.1 - Overview of the Vote

The Minister of Defence is responsible for appropriations in the Vote for the 2009/10 financial year covering the following:

  • a total of nearly $2 million for audits and assessments of the New Zealand Defence Force and Ministry of Defence
  • a total of nearly $4 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 nearly $4.700 million for policy advice, management of international defence relations and services to the Minister
  • a total of just over $369 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 2-6 below.

Part 1.2 - High-Level Objectives of the Vote#

The high level outcome for Vote Defence is to ensure that New Zealand is secure and the security of other nations is enhanced by New Zealand's efforts.

A secure New Zealand is a critical pre-condition to economic growth and social well-being. New Zealanders need to live free from physical threat from external parties to be able to achieve their aspirations. As well, New Zealand's security is directly affected by the security of other countries, by the stability of other regions and by the maintenance of multilateral systems that ensure stability and security.

An essential part of the Ministry's business, therefore, lies in understanding events in the international environment because these affect the demands likely to be placed on our Defence Force now and in the future, and thus inform the Ministry's statutory duty to give advice to the Government on issues relating to New Zealand's defence policy, doctrine, military capabilities and deployments of the New Zealand Defence Force. The Ministry is also statutorily responsible for acquiring major items of equipment for the New Zealand Defence Force and for providing independent audits of the New Zealand Defence Force functions, duties and projects.

The Government has commissioned a Defence assessment under Section 24(2)(c) of the Defence Act 1990. The assessment will establish defence policy objectives and a number of other aspects of Defence management, including procurement. This assessment is scheduled to be completed by March 2010. It will inform a White Paper on defence policy which is also scheduled to be published in 2009/10.

New Zealand's Defence Policy Objectives#

The current Defence policy objectives are:

  • To defend New Zealand and to protect its people, land, territorial waters, exclusive economic zone, natural resources and critical infrastructure.
  • To meet New Zealand's alliance commitments to Australia by maintaining a close defence partnership in pursuit of common security interests.
  • To assist in the maintenance of security in the South Pacific and to provide assistance to New Zealand's Pacific neighbours.
  • To play an appropriate role in the maintenance of security in the Asia Pacific region, including meeting New Zealand's obligations as a member of the Five Power Defence Arrangements.
  • To contribute to global security and peacekeeping through participation in the full range of United Nations and other appropriate multilateral peace support and humanitarian relief operations.

The following table shows how the delivery of the Ministry of Defence's output expenses and capital expenditure, for which appropriations are sought, are linked and contribute to the Government's priorities and outcomes for Defence.

Contribution of Appropriations to Government Priorities and Outcomes#

Contribution of Appropriations to Government Priorities and Outcomes - Part 1.2 HighLevel Objectives of the Vote - Defence
Appropriations Government Priorities Government Outcomes
Departmental Output Expenses
Audit and Assessment of Performance
Management of Equipment Procurement
Policy Advice
Policy Theme: NZ is secure High Level Outcome
New Zealand is secure and the security of other nations is enhanced by New Zealand's efforts.
Intermediate Level Outcomes
The New Zealand identifies all credible military threats to its security environment.
New Zealand's military capabilities are aligned with our requirements.
New Zealand's defence relationships are aligned with our security interests and foreign policy goals.
New Zealand's military deployments support our regional and wider international objectives.
Non Departmental Capital Expenditure
Defence Equipment
Policy Theme: NZ is secure High Level Outcome
New Zealand is secure and the security of other nations is enhanced by New Zealand's efforts.
Intermediate Level Outcome
The New Zealand identifies all credible military threats to its security environment.
New Zealand's military capabilities are aligned with our requirements.
New Zealand's defence relationships are aligned with our security interests and foreign policy goals.
New Zealand's military deployments support our regional and wider international objectives.

Summary of Financial Activity#

Summary of Financial Activity - Defence
  2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
  Actual
$000
Actual
$000
Actual
$000
Actual
$000
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 8,529 8,450 9,006 9,476 11,342 11,342 10,511 - 10,511 9,801 9,801 9,801
Benefits and Other Unrequited Expenses - - - - - - N/A - - - - -
Borrowing Expenses - - - - - - - - - - - -
Other Expenses - - - - - - - - - - - -
Capital Expenditure 313,468 415,478 471,597 279,995 281,352 227,414 245 369,004 369,249 241,472 38,496 3,917
Intelligence and Security Department Expenses and Capital Expenditure - - - - - - - N/A - - - -

Total Appropriations

321,997 423,928 480,603 289,471 292,694 238,756 10,756 369,004 379,760 251,273 48,297 13,718

Crown Revenue and Capital Receipts

                       
Tax Revenue - - - - - - N/A - - - - -
Non-Tax Revenue 237 570 754 578 400 400 N/A 400 400 400 400 400
Capital Receipts 282,357 395,882 509,267 253,230 228,583 228,583 N/A 442,791 442,791 230,272 169,138 4,604

Total Crown Revenue and Capital Receipts

282,594 396,452 510,021 253,808 228,983 228,983 N/A 443,191 443,191 230,672 169,538 5,004

New Policy Initiatives#

Budget Policy Intiatives - Defence
Policy Initiative Appropriation 2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Defence Review 09 Policy Advice                           290 710 - - -
Acquisition resources Management of Equipment Procurement                            200 200 200 200
Training Light Utility Project Non Departmental Capital Expenditure 82,066 5,604 48,100 3,496 -
Defence Command and Control System Non Departmental Capital Expenditure 13,952 7,000 1,469 461 3,632
ANZAC Platform System Upgrade Non Departmental Capital Expenditure 2,296 3,965 1,146 1,743 -

The departmental appropriations in Vote Ministry of Defence, which are detailed in the Summary of Financial Activity table in Part 1.3 above, show the significant changes discussed below.

Departmental Output Expense Appropriations

Significant movements over this time period are:

  • The total increase of $79,000 between 2004/05 and 2005/06 is mainly due to an increase of $57,000 in the cost of contributions to employee retirement schemes.
  • The total increase of $556,000 between 2005/06 and 2006/07 is mainly due to an increase of $158,000 in depreciation and capital charge on the Aitken Street building and expenditure of $396,000 on the Defence Capability Resourcing Review.
  • The total increase of $470,000 between 2006/07 and 2007/08 is mainly due to an increase of $448,000 in expenditure on the Defence Capability Resourcing Review.
  • The total increase of $1.866 million between 2007/08 and 2008/09 is mainly due to and increase of $290,000 for the Defence Review 09 and an increase of $1.399 million on pre-acquisition costs.
  • The total decrease of $831,000 between 2008/09 and 2009/10 is mainly due to an increase of $200,000 for additional project management resources, a further $420,000 to total $710,000 on the Defence Review 2009, and a reduction of $1.451 million in pre-acquisition costs. Pre-acquisition costs for years beyond 2009/10 and beyond are provided for in the appropriations of NZDF.
  • The reduction of $710,000 in funding between 2009/10 and 2010/11 is mainly due to the completion of the Defence Review 09 in 2009/10 and cessation of associated one-off funding of $710,000 for that financial year.
  • There is no movement in the appropriation currently planned for years 2010/2011 to 2012/13.

Departmental Capital Expenditure

The majority of the capital expenditure over the years relates to the Ministry of Defence's contribution towards the construction of the new Defence House in Aitken Street in Wellington. Other capital expenditure relates primarily IT software and equipment identified as new and replacement items required by the Ministry to deliver its stated outcomes and outputs.

Non-Departmental Capital Expenditure

The movements in capital expenditure in each of the years 2004/05 to 2012/13 relates to the volume of projects underway in each financial year and changes in the forecast timing of achievement of project milestones and associated changes in the timing of payments for those milestones.

Capital Receipts

The Ministry of Defence receives Capital Receipts from the New Zealand Defence Force from the sale of defence equipment. Changes in Capital Receipts during the years 2004/05 to 2008/09 reflect the number, structure and scope of the projects undertaken on behalf of the Crown during the same time period. Years 2009/2010 to 2012/13 reflect the anticipated number, structure and scope of the projects to be undertaken on behalf of the Crown during the same time period.

Part 2 - Details and Expected Performance for Output Expenses#

Part 2.1 - Departmental Output Expenses#

Intended Impacts, Outcomes and Objectives

Intended Impacts, Outcomes and Objectives - Part 2.1 Departmental Output Expenses - Defence
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
An approved schedule of audits and assessments is satisfactorily completed, and other audits and assessments are conducted as required by the Minister of Defence. Audit and Assessment of Performance
Military assets are procured on behalf of the Crown and transferred to the New Zealand Defence Force.
Warranty issues which arise from the procurement of assets are well managed.
Industry receives advice on defence requirements facilitating effective communication to enable opportunities for New Zealand industry to provide goods and services as required and receive opportunities to compete for work consistent with government procurement policies.
Management of Equipment Procurement
Government receives advice on significant issues that have an impact on defence policy and international relations.
Capability reviews in cooperation with the New Zealand Defence Force identify options for achieving the Government's defence policy goals.
International defence relationships with Australia and other regional countries and participation in regional multilateral security dialogues contribute to New Zealand's security.
Policy Advice

Audit and Assessment of Performance (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

Expenses and Revenue - Audit and Assessment of Performance (M22) - Defence
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 1,921 1,921 1,909
Revenue from Crown 1,854 1,854 1,842
Revenue from Other 67 67 67

Reasons for Change in Appropriation

A small amount of cost savings have been identified within Audit and Assessment of Performance.

Output Performance Measures and Standards

Output Performance Measures and Standards - Audit and Assessment of Performance (M22) - Defence
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Delivery of a target number of audit reports to the Minister of Defence. 15 -18 17 15-18
Reports will be of quality, timeliness and effectiveness that is acceptable to key stakeholders. Achieved Achieved Achieved
Audits will be performed in accordance with the Ministry's Auditing Standards. Achieved Achieved Achieved

Conditions on Use of Appropriation

Conditions on Use of Appropriation - Audit and Assessment of Performance (M22) - Defence
Reference Conditions

Auditing Standards for Audits and Assessments of Performance

 
Scope and Objectives The audit or assessment will have clear scope and objectives.
Relevance The audit or assessment will be selected on the basis of relevance and risk to the Minister and the New Zealand Defence Force or the Ministry.
Focus The audit or assessment will have suitable criteria that focus the work and provide a basis for developing observations and conclusions.
Evidence The audit or assessment will have sufficient appropriate evidence to support the content of the report.
Objectivity The audit or assessment will involve objective evaluation of the evidence against criteria to develop observations and conclusions.
Recommendations The audit or assessment will include recommendations that will, if implemented, add value, improve efficiency and effectiveness, or ameliorate risk.

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#

Expenses and Revenue - Management of Equipment Procurement (M22) - Defence
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 5,179 5,179 3,933
Revenue from Crown 3,660 3,660 3,865
Revenue from Other 1,519 1,519 68

Reasons for Change in Appropriation#

It is anticipated that there will be no costs incurred in the 2009/10 year associated with the Protector procurement project. Included in the changes is an increase of $200,000 to the costs for additional resources in Management of Equipment Procurement.

Output Performance Measures and Standards#

Output Performance Measures and Standards - Management of Equipment Procurement (M22) - Defence
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
New equipment procurement or refurbishment projects will be managed:
  • within the approved budget, and
  • to the quality standards negotiated for each project in accordance with the agreed Statement of Compliance issued on completion.
Achieved Achieved Achieved
To reduce the average project schedule overrun. - - 10%
Confirmation by the Defence Industry Committee of New Zealand that the Ministry of Defence and its agent, the Industry Capability Network has adequately promoted domestic suppliers capabilities to overseas based prime contractors. Confirmation Received Confirmation Received Confirmation Received

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - Management of Equipment Procurement (M22) - Defence
Reference Conditions

Quality Standards for Equipment Procurement

 
Recommendations Recommendations are clear, and logical.
They are sufficient to enable a decision to be made on a proposal or move to the next decision/action point.
Options A range of options is presented that provide clearly differentiated choices and these are rigorously evaluated against the analytical framework. Costs, benefits, consequences, and risks/opportunities of the options are assessed as part of the analysis. Where it is not possible to use a range of options the reasons are clearly stated.
Consultation Evidence of thorough and timely consultation with other government departments and interested parties is presented, and their views, including objections, incorporated as appropriate.

Quality Standards for the promotion of domestic suppliers capabilities

 
Consultation Evidence of thorough and timely consultation with other government departments and interest parties is presented.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Management of Equipment Procurement (M22) - Defence
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Pre Acquisition Costs 2004/05 1,451 - - - -
Additional Project Management Resources 2008/09   200 200 200 200

Policy Advice (M22)#

Scope of Appropriation#

Policy advice, management of international defence relations and services to the Minister.

Expenses and Revenue#

Expenses and Revenue - Policy Advice (M22) - Defence
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 4,242 4,242 4,669
Revenue from Crown 4,174 4,174 4,601
Revenue from Other 68 68 68

Reasons for Change in Appropriation#

Appropriation will increase 2009/10 due to the additional costs associated with undertaking and finalising the Defence review.

Output Performance Measures and Standards#

Output Performance Measures and Standards - Policy Advice (M22) - Defence
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Submission of policy papers for the Minister including Cabinet papers. 24-30 24-30 -
Prepare Ministerial correspondence for the Minister. 35-55 35-55 -
Prepare answers to Parliamentary questions for the Minister. 90-100 90-100 -
Prepare answers to Select Committee questions for the Minister. 20-30 20-30 -
The supply of individual policy papers will be of high quality, which will be assessed by the percentage of first drafts of all policy papers accepted by the Minister. 90% 90% 90%
Submission of policy papers for the Ministers including Cabinet papers which will be of high quality and which will be assessed by the percentage of all policy papers substantially meeting the Minister and Associate Ministers requirements. N/A 90% 90%
Prepare Ministerial correspondence for the Minister which will be of high quality and which will be assessed by the percentage of first drafts of all correspondence accepted by the Ministers. N/A 90% 90%
Prepare answers to Parliamentary questions for the Ministers which will be of high quality and which will be assessed by the percentage of first drafts of all questions accepted by the Ministers. N/A 90% 90%
Prepare answers to Select Committee questions for the Minister which will be of high quality and which will be assessed by the percentage of first drafts of all answers accepted by the Minister. N/A 90% 90%
The supply of all other responses will be of high quality, which will be assessed by the percentage of responses accepted without substantive amendment. 95% 95% 95%
All reports and oral advice will be delivered within the agreed or statutory time frame. Ministerials within 14 working days of receipt of the request, replies to Parliamentary Questions for Written Answer provided by the due date, and replies to Parliamentary Questions for oral answer provided by midday on the day that the reply is due in the House. Achieved Achieved Achieved

Conditions on Use of Appropriation#

Conditions on Use of Appropriation - Policy Advice (M22) - Defence
Reference Conditions

Quality Standards for Analysis and Advice

 
Purpose The objective for the advice is clearly stated, it answers any defence and security issues raised by the Minister and demonstrates a clear understanding of the desired outcome(s) of the Government and/or the Minister.
Problem definition Any public policy problem, including the underlying causes, size and materiality of issue, is identified and supported by data or other evidence.
Context It is clear where the advice stands in the context of the wider policy process, including what has already been undertaken and what is expected to occur in the future.
Logic An appropriate analytical framework is used. Assumptions behind the advice are explicit and the argument is logical and supported by facts.
Accuracy All material facts are present and accurate. Known gaps that could significantly affect the conclusions are identified and the range of uncertainty stated.
Options A range of options is presented that provides clearly differentiated choices and these are rigorously evaluated against the analytical framework. Costs, benefits, consequences, and risks/opportunities of the options are assessed as part of the analysis. Where it is not possible to use a range of options the reasons are clearly stated.
Recommendations Recommendations are clear, logical and action oriented and can stand alone from the rest of the advice. They are sufficient to enable a decision to be made on the proposal or to move to the next decision/action point.
Consultation Evidence of thorough and timely consultation with other government departments and interested parties is presented and their views, including objections, incorporated as appropriate.
Practicality Issues of implementation, technical feasibility, practicality and timing are considered and budgetary implications identified.
Presentation Material is presented to suit the target audience and:
  • is concise and structured in a way which assists others to understand the aim of the advice, key features of the information, analysis and recommendations, and their key implications
  • uses appropriate language and style
  • is consistent with departmental and Cabinet Office presentation requirements.

Current and Past Policy Initiatives#

Current and Past Policy Initiatives - Policy Advice (M22) - Defence
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Defence Capability and Resourcing Review - Improved Organisational Capability 2005/06 844 844 844 844 844
Defence Review 09 and white paper 2008/09 290 710 - - -

Part 6 - Details and Expected Results for Capital Expenditure#

Part 6.1 - Departmental Capital Expenditure#

Intended Impacts, Outcomes and Objectives

Intended Impacts, Outcomes and Objectives - Part 6.1 Departmental Capital Expenditure - Defence
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Maintain and upgrade capability through routine replacement of the Ministry's information technology and office equipment. Ministry of Defence - Capital Expenditure PLA

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

Capital Expenditure - Ministry of Defence Capital Expenditure PLA (M22) - Defence
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Forests/Agricultural - - -
Land - - -
Property, Plant and Equipment 300 300 125
Intangibles 75 75 120
Other - - -

Total Appropriation

375 375 245
Forests/Agricultural - - -
Land - - -
Property, Plant and Equipment 300 300 125
Intangibles 75 75 120
Other - - -

Total Appropriation

375 375 245

Reasons for Change in Appropriation

The decrease in appropriation for 2009/10 is due to the timing for upgrades and replacement of information technology infrastructure.

Part 6.2 - Non-Departmental Capital Expenditure#

Intended Impacts, Outcomes and Objectives#

Intended Impacts, Outcomes and Objectives - Part 6.2 NonDepartmental Capital Expenditure - Defence
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations
Maintain and/or upgrade military capability through upgrades or procurement of new defence equipment for the New Zealand Defence Force. Defence
 Equipment

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

Capital Expenditure - Defence Equipment (M22) - Defence
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 280,977 227,039 369,004

Reasons for Change in Appropriation

The appropriation for Defence Equipment varies depending upon the number and scope of projects.

Conditions on Use of Appropriation

Conditions on Use of Appropriation - Defence Equipment (M22) - Defence
Reference Conditions
Defence Act 1990 Section 24
Quality Standards for Defence Equipment  
  • Effective Management
Equipment procurement, modification and refurbishment projects will be managed within the approved budget and to the quality standards negotiated for each project.
  • Options
A range of options are considered that provides clearly differentiated choices and these are rigorously evaluated.
 Costs, benefits, consequences, and risks/opportunities of the options are assessed as part of the analysis.
  • Practicality
Issues of implementation, technical feasibility, practicality and timing are accurately identified and addressed.

Current and Past Policy Initiatives

Current and Past Policy Initiatives - Defence Equipment (M22) - Defence
Policy Initiative Year of
First
Impact
2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
ANZAC Platform Systems Upgrade 2008/09 7,921 480 286 1,323 -
Defence Control and Command System 2008/09 5,258 10,692 2,400 900 3,632
Training Light Utility Helicopter 2008/09 17,140 39,803 32,390 20,159 -
ANZAC Close in Weapon System 2006/07 6,055 7,943 2,836 0 -
C-130 Life Extension 2006/07 32,879 15,236 9,993 3,290 -
Medium Utility Helicopter Capability 2006/07 89,478 226,783 151,648 305 -
B757 Acquisition and Modification 2005/06 36,289 - - - -
P-3 Mission Management, Communication and Navigation Systems Upgrade 2004/05 34,154 68,067 41,829 12,234 -
Project Protector 2004/05 35,865 - - - -

Reporting Mechanisms#

Reporting Mechanisms - Reporting Mechanisms - Defence
Appropriation Reporting Mechanism
Defence Equipment Annual Report of the Ministry of Defence

The above table indicates the mechanisms to be used for reporting actual results for each non-departmental capital expenditure appropriation.

Performance Information for Appropriations Vote Defence Force#

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister of Defence (M22)

ADMINISTERING DEPARTMENT: New Zealand Defence Force

MINISTER RESPONSIBLE FOR NEW ZEALAND DEFENCE FORCE: Minister of Defence

Part 1 - Summary of the Vote#

Part 1.1 - Overview of the Vote

The Minister of Defence is responsible for appropriations in Vote Defence Force, totalling just over $2,827 million, for the 2009/10 financial year covering the following:

  • a total of just over $2,037 million on the Navy, Army, and Air Force to provide the Government with a range of military forces to protect and advance the security and interests of New Zealand. These forces are held at appropriate levels of capability and preparedness to protect New Zealand's territorial sovereignty and to contribute to regional and global security efforts. Most of these forces will also contribute a range of services to other government departments and the New Zealand community when not committed to operations overseas. The breakdown of appropriations, by Service, is as follows:
    • Navy: just under $634 million
    • Army: just over $791 million
    • Air Force: just over $612 million
  • a total of just under $82 million on Operationally Deployed Forces
  • a total of just over $17 million on a Multi-Class Output Appropriation (MCOA), Miscellaneous Support Activities, that includes New Zealand Defence Force support to the Mutual Assistance Programme, the New Zealand Cadet Forces, the Limited Service Volunteer Scheme (a service provided to the Ministry of Social Development) and Service Military Museums
  • a total of just over $13 million on military policy development, coordination and advice to the Government
  • a Capital Expenditure appropriation of just under $678 million for the purchase of assets, including items on the Defence Long-Term Development Plan.

The New Zealand Defence Force expects to recognise about $24 million in third-party revenue (Revenue Department and Revenue Other) in 2009/10.

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

Part 1.2 - High-Level Objectives of the Vote#

Defence Act 1990#

Under the Defence Act 1990, New Zealand's Armed Forces are raised and maintained for:

  • the defence of New Zealand and the protection of its interests, whether in New Zealand or elsewhere
  • the contribution of forces under collective security treaties, agreements or arrangements
  • the contribution of forces to the UN or other organisations or States for operations in accordance with the principles of the charter of the UN.

The Defence Act 1990 also allows the Armed Forces to be made available for the performance of public services and assistance to the civil power in time of emergency, either in New Zealand or elsewhere.

Primary Mission of the New Zealand Defence Force#

The primary mission of the NZDF remains:

"To secure New Zealand against external threat, to protect our sovereign interests, including in the Exclusive Economic Zone, and to be able to take action to meet likely contingencies in our strategic area of interest".

The following table shows how the day to day delivery of NZDF Output Expenses, for which appropriations are sought, are linked and contribute to the Government's Priorities and Outcomes for Defence.

Contribution of Appropriations to Government Priorities and Outcomes#

Contribution of Appropriations to Government Priorities and Outcomes - Part 1.2 HighLevel Objectives of the Vote - Defence Force
Appropriations Government Priorities Government Outcomes
Departmental Appropriations:
Military Policy Development, Coordination and Advice
For Navy:
Naval Combat Forces (the two ANZAC class frigates)
Naval Support Forces (Amphibious Sealift Ship and Fleet Replenishment Ship)
Mine Counter Measure (MCM) and MCM Diving Forces (MCM Vessel and Operational Diving Team)
Naval Patrol Forces (the two Offshore and four Inshore Patrol Vessels)
Military Hydrography, and Hydrographic Data Collection and Processing for Land Information New Zealand
For Army:
Land Combat Forces [command and control, intelligence and manoeuvre force elements (infantry and reconnaissance)]
Land Combat Support Forces (artillery, engineers, communications and military police)
Land Combat Service Support Forces (transport, medical, supply, repair and movements)
Special Operations Forces (special land operations, counter-terrorist operations, and forces to deal with chemical, biological, radiological and explosive improvised explosive devices)
Key Priorities: The key priorities for Defence for 2009/10, with contributions from the NZDF as applicable, are:
  • 2009 Defence Review. Contribution to the 2009 Defence Review (White Paper). The focus is on "how well the NZDF meets the tasks that are expected of it by the Government". The objective is that the NZDF be capable of doing more with current funding.
  • Current Operations. Ensure that, in concert with the priority on Capability Management (below), current operations, both international and domestic, are effective and sustainable.
  • Capability Management. Ensure effective management of major capability acquisition, Project Protector (new vessels for the Navy) in particular. Other major contracts underway include the upgrading of the RNZAF's aircraft and purchase of new helicopters.
  • Value for Money. Other than essential additional funding the NZDF is required to manage within its current funding envelope. Ensure that value for money is evident in and pervades Vote Defence Force for 2009/10.
Main Outcome: New Zealand secure and protected from external threats now and in the future.
Intermediate Outcomes:
  • Secure New Zealand, including its people, land, territorial waters, exclusive economic zone, natural resources and critical infrastructure
  • Reduced risks to New Zealand from regional and global insecurity
  • New Zealand values and interests advanced through participation in regional and international security systems
  • New Zealand is able to meet future national security challenges.
For Air Force:
Naval Helicopter Forces (five Seasprite SH-2G maritime helicopters)
Maritime Patrol Forces (six P-3K Orion surveillance aircraft)
Fixed Wing Transport Forces (two Boeing 757 and five C-130 Hercules Aircraft)
Rotary Wing Transport Forces (fourteen UH-1H Iroquois helicopters)
   
Others:
Operationally Deployed Forces (operational commitments as approved by the Government)
Miscellaneous Support Activities (support to the Mutual Assistance Programme, New Zealand Cadet Forces, Limited Service Volunteers, and Service Military Museums)
   

Summary of Financial Activity#

Summary of Financial Activity - Defence Force
  2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
  Actual
$000
Actual
$000
Actual
$000
Actual
$000
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 1,522,510 1,657,820 1,814,698 1,879,436 2,099,297 2,099,297 2,149,823 - 2,149,823 2,143,909 2,146,279 2,145,783
Benefits and Other Unrequited Expenses - - - - - - N/A - - - - -
Borrowing Expenses - - - - - - - - - - - -
Other Expenses - - 1,665 - 3,340 3,340 - - - - - -
Capital Expenditure 338,619 428,827 611,993 356,586 388,366 388,366 677,852 - 677,852 354,747 341,301 254,869
Intelligence and Security Department Expenses and Capital Expenditure - - - - - - - N/A - - - -

Total Appropriations

1,861,129 2,086,647 2,428,356 2,236,022 2,491,003 2,491,003 2,827,675 - 2,827,675 2,498,656 2,487,580 2,400,652

Crown Revenue and Capital Receipts

                       
Tax Revenue - - - - - - N/A - - - - -
Non-Tax Revenue - - - - - - N/A - - - - -
Capital Receipts - - - - - - N/A - - - - -

Total Crown Revenue and Capital Receipts

- - - - - - N/A - - - - -

New Policy Initiatives#

Budget Policy Intiatives - Defence Force
Policy Initiative Appropriation 2008/09
Budgeted
$000
2009/10
Budget
$000
2010/11
Estimated
$000
2011/12
Estimated
$000
2012/13
Estimated
$000
Defence Funding Package - Year 5
[To provide for the recognition of the Budget 2009 element of a Budget 2005 agreement to restore military and organisational capability through eventual new funding as a charge against future budgets].
Military Policy Development, Coordination and Advice
Departmental Output Expense
- 1,472 1,472 1,472 1,472
Naval Combat Forces
Departmental Output Expense
- (38,623) (31,756) (31,756) (31,756)
  Naval Support Forces
Departmental Output Expense
- (5,979) (4,119) (4,119) (4,119)
  Mine Countermeasures (MCM) and MCM Diving Forces
Departmental Output Expense
- (11,444) (11,145) (11,145) (11,145)
  Naval Patrol Forces
Departmental Output Expense
- 12,046 13,948 13,948 13,948
  Military Hydrography, and Hydrographic Data Collection and Processing for LINZ
Departmental Output Expense
- 323 416 416 416
  Land Combat Forces
Departmental Output Expense
- 14,910 22,197 22,197 22,197
  Land Combat Support  Forces
Departmental Output Expense
- 12,086 15,957 15,957 15,957
  Land Combat Service Support Forces
Departmental Output Expense
- 16,304 19,446 19,446 19,446
  Special Operations Forces
Departmental Output Expense
- 7,970 9,594 9,594 9,594
  Naval Helicopter Forces
Departmental Output Expense
- (3,122) (1,974) (1,974) (1,974)
  Maritime Patrol Forces
Departmental Output Expense
- 6,362 8,501 8,501 8,501
  Fixed Wing Transport Forces
Departmental Output Expense
- 21,820 24,228 24,228 24,228
  Rotary Wing Transport Forces
Departmental Output Expense
- 14,811 15,889 15,889 15,889
  Miscellaneous Support Activities
Departmental MCOA
- 3,064 3,064 3,064 3,064
Sub Total    - 52,000 85,718 85,718 85,718
Savings to meet Operationally Deployed Force Pressures. Military Policy Development, Coordination and Advice
Departmental Output Expense
(14) - - - -
(Baseline savings identified to contribute to the costs of Operationally Deployed Forces in 2008/09 and 2009/10). Naval Combat Forces
Departmental Output Expense
(9,287) - - - -
Naval Support Forces
Departmental Output Expense
(2,851) - - - -
Mine Countermeasures (MCM) and MCM Diving Forces
Departmental Output Expense
(680) - - - -
  Naval Patrol Forces
Departmental Output Expense
(2,449) - - - -
  Military Hydrography, and Hydrographic Data Collection and Processing for LINZ
Departmental Output Expense
(141) - - - -
  Land Combat Forces
Departmental Output Expense
(7,556) - - - -
  Land Combat Support  Forces
Departmental Output Expense
(4,479) - - - -
  Land Combat Service Support Forces
Departmental Output Expense
(3,616) - - - -
  Special Operations Forces
Departmental Output Expense
(1,783) - - - -
  Naval Helicopter Forces
Departmental Output Expense
(1,523) - - - -
  Maritime Patrol Forces
Departmental Output Expense
(2,309) - - - -
  Fixed Wing Transport Forces
Departmental Output Expense
(2,396) - - - -
  Rotary Wing Transport Forces
Departmental Output Expense
(916) - - - -
Sub Total   (40,000) - - - -
Funding for Operationally Deployed Forces Operationally Deployed Forces
Departmental Output Expense
24,390 31,863 - - -
Sub Total   24,390 31,863 - - -
Total Initiatives   (15,610) 83,863 85,178 85,178 85,178

Total Vote: All Appropriations

The departmental appropriations in Vote Defence Force, which are detailed in the Summary of Financial Activity table in Part 1.3 above, show the significant changes discussed below.

Departmental Output Expense Appropriations

The following changes are noted:

  • The total increase of $135 million between 2004/05 and 2005/06 was primarily made up from: increases from the first year (2005/06) DSI funding package allocation and Project Protector operating costs of some $64 million; a transfer from 2004/05 to 2005/06 of $19 million; an asset revaluation of $37 million; and a decrease from the transfer of $7 million to the Multi-Year Appropriation (MYA) Operationally Deployed Forces.
  • The total increase in annually appropriated output expenses of almost $157 million between 2005/06 and 2006/07 is shown in the following table:
Cost Increase between 2005/06 and 2006/07 Explained - Defence Force
Item $ million
DSI Funding Package (2006/07) 73
Project Protector funding 26
New Defence House funding 5
Expense Transfer from 2004/05 to 2005/06 (19)
Operation Enduring Freedom funding transfer to MYA (11)
Capital Charge adjustments for 2006/07, including rate reduction to 7.5% (3)
2006/07 Capital Charge savings (rate-related) 2
Depreciation Impact of 30 June 2006 Asset Revaluation 42
Gross Capital Charge Impact of 20 June 2006 Asset Revaluation 33
Absorb 0.001% Capital Charge savings ex Rate Change 2006 March Baseline Update (5)
Reinstate prior transfers from MYA 10
Transfer Depreciation savings to 2007/08 Capital Injection (10)
Operationally Deployed Forces - MYA phasing difference 13
Miscellaneous 1
Total 157
  • The total increase in annually appropriated output expenses of $65 million between 2006/07 and 2007/08 is shown in the following table:
Cost Increase between 2006/07 and 2007/08 Explained - Defence Force
Item $ million
2006/07 Surplus 6
DSI Funding Package (2007/08) 58
Project Protector increment 29
Transfer Depreciation Savings 10
Technical Adjustment (mainly Capital Charge) 2
Expense Transfer to 2008/09 from 2007/08 (68)
Operationally Deployed Forces (Phasing Differences) 34
2007/08 Surplus on Outputs (6)
Total 65
  • The major items that contributed to the $220 million increase in annual departmental output expense appropriations between 2007/08 and 2008/09 are shown in the following table:
Cost Increase between 2007/08 and 2008/09 Explained - Defence Force
Item $ million
DSI Funding Package (2008/09) 69
Expense Transfer (comparative) 2007/08 decrease 68
Expense Transfer (comparative) 2008/09 increase 68
Project Protector increment 8
2007/08 Output Surplus 7
Capital Charge - historic technical changes 6
Response to Joint Working Group - Concerns of Vietnam Veterans - in 2007/08 only (1)
Historic Transfers to MYA (Operationally Deployed Forces) from Annual Expenses (2)
Operationally Deployed Forces - Difference between MYA ($71 million) in 2007/08 and Annual in 2008/09 ($79 million) 8
Project KiwImage (All of Government Imagery Purchase) 1
Capital Charge for 30 June 2008 Asset Revaluation 33
Expense Transfer from 2008/09 to 2009/10 (10)
Return of 2008/09 Savings to the Crown (40)
Revised Tax Treatment for 2008/09 1
Miscellaneous Revenue differences 4
Total 220

Other Expenses

  • The Other Expense appropriation of $1.665 million in 2006/07, by way of a write-off, was a technical adjustment to provide for asset-related costs held on the NZDF balance sheet to be written off by 30 June 2007, in accordance with Audit New Zealand advice.
  • An Other Expense of $2.700 million, for expensing by 30 June 2008, related to the disposal cost of items included in the NZDF Statement of Financial Position, in accordance with Audit New Zealand advice.

Comparison: 2008/09 with 2009/10

Departmental Output Expenses

As advised in this Vote since 2005/06, funding for the Output Expense Operationally Deployed Forces was placed under a three-year, Multi-Year Appropriation (MYA) for the period 2005/06 - 2007/08. From 1 July 2008 Operationally Deployed Forces has been appropriated on an annual basis.

Appropriations for the purchase of NZDF outputs for the year ending 30 June 2010 include the following Cabinet-agreed departmental output expense funding changes that were considered during the 2009 Budget process:

  • An increase of $52 million in 2009/10, and $85.718 in outyears, being the fifth year funding package under the Defence Sustainability Initiative (DSI). This increase in funding will go towards, primarily, sustainment of personnel growth, future personnel growth, operating costs, depreciation impacts associated with new equipment, and continuation of the maintenance upgrade of NZDF infrastructure.
  • Baseline savings of $40 million identified in 2008/09 to contribute to the costs of Operationally Deployed Forces in 2008/09 and 2009/10.
  • An increase of $24.390 million in 2008/09 and $31.863 in 2009/10 for Operationally Deployed Forces expenses.
  • Expense Transfer of $10 million from 2008/09 to 2009/10 to provide for 2009/10 operating pressures.
  • An increase of $1.700 million in 2008/09 and $6.900 million in 2009/10 and out years to meet costs that will result from an IRD review of tax treatment for non-operational allowances paid to NZDF personnel serving overseas.

The annual departmental output expense appropriations sought for Vote Defence Force in 2009/10 exceed those for 2008/09 by about $50 million. The major items and values that contribute to this increase are shown in the following table:

Cost Increase between 2008/09 and 2009/10 Explained - Defence Force
Item $ million
Expense Transfer (comparative) from 2007/08 into 2008/09 only (68)
Verification Service Levy Transfer in 2009/10 (1)
Transfer Residual MYA from 2007/08 into 2008/09 only for Operationally Deployed Forces (7)
Miscellaneous Operationally Deployed Forces difference 1
2008/09 Savings returned to the Crown 40
Expense Transfer (2008/09 decrease) 10
Expense Transfer (2009/10 increase) 10
Revised Tax Treatment increase over 2008/09 5
Supplementary Operationally Deployed Forces funding 8
Defence Funding Package (Budget 2009) 52
Total 50

Other Expenses

  • Disposal costs, as an Other Expense of $3 million, should it be necessary, for the expensing, by 30 June 2009, of costs included in the NZDF Statement of Financial Position.

Capital Expenditure

  • The Capital Expenditure appropriations shown in the Trends table between 2004/05 and 2012/13 disclose the annual payments for equipment purchases under the Defence Long-Term Development Plan (LTDP) to be made to the Ministry of Defence, and for NZDF managed capital projects.

Outyears: 2010/11 - 2012/13

Subject to the outcomes of Defence Review 2009, there are no significant forecast changes for the outyears 2010/11 - 2012/13.

Part 2 - Details and Expected Performance for Output Expenses#

Part 2.1 - Departmental Output Expenses#

Intended Impacts, Outcomes and Objectives

Most of the NZDF's day-to-day activities in New Zealand, and for which it is funded, are designed to prepare the force elements of the Navy, Army and Air Force to contribute to operations as approved by the Government of the day. This makes the NZDF different from most other government departments in that those departments, in their day-to-day activities, are actually delivering their 'end product' (their services), whereas the NZDF's ultimate 'end product' is the effective contribution of NZDF force elements to operational missions - through the NZDF Output Expense 'Operationally Deployed Forces' and, in the New Zealand environment, 'Multi-Agency Operations and Tasks (MAO&T)'. The focus of what the NZDF does, therefore, is primarily geared to this ultimate 'end product' or goal. The impacts that the NZDF is striving to achieve through the delivery of current NZDF Outputs are shown in the following table:

Intended Impacts, Outcomes and Objectives - Part 2.1 Departmental Output Expenses - Defence Force
Intended Impacts, Outcomes or Objectives of Appropriations Appropriations

NZDF contributions to Government-approved operational missions and deployments is of a high standard in terms of personnel and equipment; personnel and equipment that is Ready, Combat Capable, Deployable, and Sustainable.

Operationally Deployed Forces

On-going and improved advice to Government in the areas of:

  • Military Intelligence
  • Military Policy - generally (in concert with the Ministry of Defence)
  • Operational Military Policy
  • Ministerial Correspondence and Parliamentary Questions
Military Policy Development, Coordination and Advice

Enhanced military capability of the Force Elements of the Navy, Army and Air Force:

  • To better provide Government with choice in the deployment of NZDF capabilities
  • To better provide support for Multi-Agency Operations and Tasks (supporting other government departments)
  • To support the wider New Zealand community, when available and not committed to operations
Naval Combat Forces
Naval Support Forces
Mine Countermeasures (MCM) and MCM Diving Forces
Naval Patrol Forces
Military Hydrography, and Hydrographic Data Collection and Processing for Land information New Zealand (LINZ)
Land Combat Forces
Land Combat Support Forces
Land Combat Service Support Forces
Special Operations Forces
Naval Helicopter Forces
Maritime Patrol Forces
Fixed Wing Transport Forces
Rotary Wing Transport Forces

Continued high quality support to NZDF miscellaneous activities, namely:

Multi-Class Output Appropriation (MCOA)
  • Support to the Mutual Assistance Programme (MAP)
  • Support to New Zealand Cadet Forces
  • Support to Limited Service Volunteer (LSV) Training
  • Support to Service Military Museums
Miscellaneous Support Activities

NZDF Performance Information

Prior to detailing the expected performance of each of the NZDF's Output Expenses [including the Multi-Class Output Appropriation (MCOA)] for which appropriations are sought, it is necessary to provide information on three essential elements of the NZDF's performance measurement process. This information is necessary for a proper understanding of the performance indicators and performance rating scale, used under the NZDF's Operational Preparedness and Reporting System (OPRES), and Employment Contexts which, together, form the basis against which 13 of the NZDF's 16 Output Expenses are assessed. Rather than repeating this information against every one of the relevant 13 Output Expenses, it is recorded here to refer back to, as required. The information is contained under the next few headings.

Indicative Key Performance Indicators and Performance Measures

The table that follows shows the indicative Key Performance Indicators (KPIs) and Performance Measures used for all Force Elements of the Navy, Army and Air Force. These are applicable to all NZDF Output Expenses relating to the Navy, Army and Air Force which appear later in this part of the Information Supporting the Estimates of Appropriations. The table is indicative as the actual measures used by each of the Services do vary slightly; this reflects that the Navy and Air Force are primarily based on platforms, whereas the Army is based more on personnel. The Service-specific KPIs are detailed in appropriate NZDF directives.

Within the NZDF Operational Preparedness and Reporting System (OPRES), the performance of all force elements is assessed against the four elements of Preparedness of Readiness, Combat Viability, Deployment and Sustainability. Within each of these elements, measures are applied to, predominately, personnel and equipment - as shown in the following table:

Key Performance Indicators and Performance Measures - Defence Force
Key Performance Indicators Performance Measures

Readiness:

 
Directed Level of Capability (DLOC) Establishment Filled % of Unit's DLOC Establishment that is filled
Personnel Continuity % of personnel turnover (quarterly basis)
Key Personnel Appointments Filled Over Time % of key appointments filled by qualified personnel
Equipment Serviceability % of Unit Establishment platforms/equipments that are serviceable
Individual and Unit Level Training Completed % of individual/unit Readiness Training Activities (RTA) completed within reporting period
Mission Critical Platform/Combat System/DLOC Aircraft Availability % of programmed operating time in which the ship's platform/combat systems were available/% of DLOC aircraft available
Sufficiency of Readiness Training Activities (RTA) Equipments, Expendable Stocks and Munitions % of stocks and live/practice munitions available for required Readiness Training Activities

Combat Viability:

 
Adequacy of Tactics, Techniques and Procedures % mission success and element survivability enabled by tactics, techniques and procedures
Collective Proficiency in Employment Context (EC) Tasks % of collective/joint/ combined exercises covering EC essential tasks completed
Standardisation The degrees of interoperability allowed by the level of standardization with international friendly forces for the EC Mission Essential Tasks (METs). [Measured as defined by the North Atlantic Treaty Organisation (NATO), Air Standardisation Interoperability Council (ASIC) and American, British, Canadian, Australian (ABCA) Armies Standardisation Programme
Mission Critical Equipment Operational Viability or Suitability % mission success enabled (or restrictions on mission) by technology or equipment performance
Equipment Reliability for Mission Critical Systems % degradation of EC essential tasks at OLOC operating tempo due to equipment reliability

Deployability:

 
EC Specific Operational Level of Capability (OLOC) Generation and Contingency Plans Plans distributed, reviewed and validated current (annually)
Critical Equipment Deficiency Correction within Response Time % of Critical Deficiencies that can be corrected within Response Time (RT)
Sufficiency of Deployment Expendable Stocks and Munitions % of live/practice munitions and stocks available for OLOC generation and retention, including the Operational Viability Period (OVP)
Serviceability and Availability of OLOC Generation Equipments % of OLOC generation equipments serviceable and available
Availability of OLOC Generation Personnel % of Personnel available for OLOC generation

Sustainability:

 
Availability of Replacement Personnel % of Service personnel to provide for sustainment
Key Equipment Repairability % of operating time during which Force Element availability is degraded at OLOC operating tempo by repair times
Availability of Sustainment Equipment, Stocks and Munitions % of sustainment equipment, stocks and munitions avail or obtainable within RT + OVP
Availability of Replacement Equipment % of replacement equipment avail or obtainable within RT + OVP
Materiel Supply Times % of operating time during which Force Element availability is degraded at OLOC operating tempo by supply times.
Ability to Achieve and Sustain Operating Tempo to Achieve Tactical Objectives % operating tempo able to sustain throughout duration of deployment (due to aircraft/equipment serviceability and availability).

NZDF Operational Preparedness and Reporting System (OPRES) Performance Rating Scale

The following Performance Rating Scale is used, within OPRES, to quantify Force Element performance in achieving preparedness relative to the Directed Level of Operational Capability (DLOC). These rating scale definitions are used within the Output Expense tables that follow:

Performance Rating Scale Definitions - Defence Force
Rating Meaning

P1

Fully Prepared. It means that the standards required for all measurement areas, under OPRES, have been achieved by between 90 to 100%

P2

Substantially Prepared. The force element requires minimal resource input such that the Response Time is projected to be extended by up to the order of 33% in the applicable Employment Context (EC). It means that the standards required for all measurement areas, under OPRES, have been achieved by between 80 and 89%

P3

Partially Prepared. The force element requires a substantial resource input such that the Response Time is projected to be extended by a period in the order of between 34% and 50% in the applicable EC. It means that the standards required for all measurement areas, under OPRES, have been achieved by between 70 to 79%

P4

Not Prepared. The force element requires a level of resource input such that the Response Time for the applicable EC could be expected to be extended by more than 50%. It means that the standards required for all measurement areas, under OPRES, have been achieved by less than 70%

P5

Unavailable for Assessment - The force element/capability is unavailable for assessment. This could be as a result of a capability being deployed, commissioned, or introduced.

Note - DLOC should be seen as a band within which there are five ratings (P1 to P5). A force element that has been set a P1 rating is at DLOC if it achieves a P1 rating. If that force element only achieves a P2 rating, it is below its DLOC. Similarly, a force element that has been set a P2 rating for the year is at DLOC if it achieves a P2 rating - even though it is not 'fully prepared'. For reporting purposes, if a force element is below its stated "P" rating, an explanation as to what is required to return it to its stated "P" rating must be provided; this will include one or more of time, personnel, equipment or training.

External Audit of the NZDF's Performance

It should also be noted that, other than the NZDF's internal mechanisms for measuring performance, the following agencies also have a major role to play in evaluating the performance of the NZDF, including Output performance:

  • The Evaluation Division of the Ministry of Defence
  • The Office of the Controller and Auditor General, and
  • Audit New Zealand.

Employment Contexts

Strategic guidance provides information on the circumstances in which the Government may choose to use military forces. The NZDF uses this guidance to develop geographically grouped Employment Contexts. Employment Contexts are descriptions of representative and illustrative security events for which there is a likelihood that a New Zealand Government would expect to make a military response should they occur. Employment Contexts are selected through assessment of New Zealand's geo-strategic situation and international security trends. The Employment Contexts are chosen on the basis of their likelihood of occurrence in the near and longer terms and the consequences for New Zealand's Defence Outcomes if the NZDF was unable to provide an appropriate response. Employment Contexts include high level Operational Concepts which, in turn, drive Services' and joint Mission Essential Tasks (METs), that is, those tasks that the deployed forces must be able to perform. The METs drive the priorities for the Services' and joint annual training activities and which determine the output parameters that need to be delivered in order to meet the Government's requirements. The Employment Contexts also designate the anticipated time (known as the Response Time) available for the final preparation of force elements for their operational deployment; this affects the level of capability that must be maintained on an annual basis. Concepts for Operations and Contingency Plans can then be developed for relevant Employment Contexts. Current Employment Context Operational Concepts list the most likely force elements that would be involved in each security event. These force element lists are a guide only and are not exhaustive; each security event may require the addition or deletion of some force elements. Employment Contexts provide the detail that ensures the NZDF output quality dimension is consistent with defence policy. The Employment Contexts (ECs), which are covered in more detail in the NZDF Output Plan and other NZDF-internal documents, are as listed below. The 'bolded' ECs (such as EC 1D, 2B, 4A, etc) are those that have been fully developed and against which the Force Elements of the NZDF, as applicable, are assessed for preparedness - as shown in the Output Expense tables that follow.

  • EC 1 - Security Challenges and Defence Tasks in New Zealand and its environs:
    • EC 1A - Illegal exploitation of marine resources within the New Zealand EEZ, and other low-level threats to New Zealand territorial sovereignty.
    • EC 1B - Natural and manmade disasters.
    • EC 1C - Support to the delivery and maintenance of essential services in exceptional circumstances, including the hosting of major events.
    • EC 1D - Terrorist and Asymmetric Threats.
    • EC 1E - Support for Antarctic presence.
  • EC 2 - Security Challenges to New Zealand's Interests in the South Pacific:
    • EC 2A - Illegal exploitation of marine resources within South Pacific EEZs, and other low-level threats to South Pacific nations' territorial sovereignty.
    • EC 2B - Natural and manmade disasters.
    • EC 2C - State failure or fragility leading to internal conflict and/or humanitarian crisis.
    • EC 2D - Terrorist Threats.
    • EC 2E - Challenges to legitimate governments, including civil war and secessionist conflict.
  • EC 3 - Challenges to New Zealand and Australia Common Security Interests:
    • EC 3A - Illegal exploitation of marine resources within Australia's EEZ, and other low-level threats to Australia's territorial sovereignty.
    • EC 3B - Natural or manmade disasters.
    • EC 3C - External aggression against Australia.
    • EC 3D - Terrorist or Asymmetric Threats.
  • EC 4 - Security Challenges to New Zealand's Interests in the Asia-Pacific Region:
    • EC 4A - Aggression to alter maritime boundaries or seize resources, or threats to freedom of navigation.
    • EC 4B - Natural or manmade disasters.
    • EC 4C - State failure or fragility leading to internal conflict and/or humanitarian crisis.
    • EC 4D - Terrorist Threats.
    • EC 4E - Weapons of Mass Destruction (WMD) proliferation.
    • EC 4F - Inter-State conflict.
    • EC 4G - Acts of piracy and people smuggling.
  • EC 5 - Security Challenges to New Zealand's Interests in Global Peace and Security:
    • EC 5A - Aggression to alter maritime boundaries or seize resources, or threats to freedom of navigation.
    • EC 5B - Unresolved conflict or conflict resolution process where protagonists have sought third party resolution assistance.
    • EC 5C - State failure or fragility leading to internal conflict and/or humanitarian crisis.
    • EC 5D - Terrorist Threats (the 'War against Terrorism') .
    • EC 5E - WMD proliferation.
    • EC 5F - Contravention of international norms that triggers a multi-national response.
    • EC 5G - Major breakdown in international security leading to wide-scale war.

Services in Support of the Community - including Multi-Agency Operations and Tasks (MAO&T)

General

Conducting the training activities needed to maintain the Directed Level of Capability (DLOC) for operational employment also produces within the NZDF the capacity to deliver a range of services in support of other government departments, the community, and foreign and defence policy objectives.

Approval levels for the provision of these services range from Cabinet/Ministerial level for significant events to unit commanders for minor local support tasks. Generally, however, tasks will be approved on the direction of the Chief of Defence Force, a Service Chief (Navy/Army/Air Force), or the Commander Joint Forces NZ. Details are contained in Defence Force Orders 1 (DFO 1), Chapter 13 - Assistance to Community Organisations.

Some general services are pre-planned or are, at least, reasonably predictable. Such tasks include ceremonial support, and planned assistance to the NZ Antarctic Programme, the Department of Conservation (DOC) and the NZ Police. The frequency of other tasks, primarily of an emergency nature such as search and rescue, assistance to civil defence and fire fighting, are, obviously, less predictable. The NZDF maintains elements at specified degrees of notice (DON) for response to such emergencies.

The main NZDF elements that are to be available for emergency tasks, listed by Service, are shown in the following table:

Service Elements Available for Emergency Tasks - Defence Force
Service Elements Available for Emergency Tasks [with Degree of Notice (DON) where applicable]

Navy

  • One frigate (or alternative vessel) at 8 hours DON for emergency tasks, including Search and Rescue (SAR) and Medical Assistance/Evacuation.
  • One Inshore Patrol Vessel (IPV), once in service, at 8 hours DON for emergency tasks, including SAR.
  • One Diving Team at 12 hours DON for emergency tasks, including under-water search and Explosive Ordnance Disposal (EOD) (see Note 1).
  • One 25-person Civil Defence Response Group.
  • On-shore personnel for fire fighting, as available.

Army

  • Personnel in the North Island and South Island at 48 hours DON for emergency tasks, including SAR, Fire Fighting, and Casualty/Medical Evacuation.
  • HQ elements on call for Civil Defence in the North Island and South Island to support a Civil Defence HQ.
  • Four 25-person Civil Defence Response Groups.
  • Two 100-person Civil Defence Response National Reserve Groups.
  • One 500-person Reserve for Civil Defence.
  • EOD Teams in North Island and South Island at 12 hours DON (see Note 1).
  • In-camp personnel for fire fighting, as available.

Air Force

  • One Iroquois helicopter at 2 hours DON for emergency tasks, including SAR, Fire Fighting and Casualty Evacuation.
  • One Orion (or one Hercules if an Orion is not available) at 2 hours DON for emergency tasks, including SAR and Aeromedical Evacuation.
  • One Hercules at 14 hours DON for emergency tasks.
  • One EOD Team at 12 hours DON (see Note 1).
  • One 25-person Civil Defence Response Group at each Air Base, and elements to support a Civil Defence HQ.
  • On-base personnel for fire fighting, as available.

Note 1 - EOD only as Improvised Explosive Device Disposal (IEDD) comes under Output Expense Special Operations Forces.

Multi-Agency Operations and Tasks (MAO&T)

The term Multi-Agency Operations and Tasks (MAO&T) is used in many of the NZDF Output Performance Tables contained in this document. The term is used within the relevant tables to draw a clear distinction between "general support" to the community and the more formal, pre-planned support to specific government departments and agencies, under the whole of government approach to, for example, protection of the New Zealand EEZ and border security. MAO&T refer to the formal operational support and training for such operations and tasks that the NZDF (Navy, Army and Air Force) provides, and that are being developed, with other government departments and agencies - such as the Ministry of Fisheries, NZ Customs Service, NZ Police, Ministry of Foreign Affairs and Trade, Department of Conservation, Maritime New Zealand (MNZ), and related agencies. The Navy and Air Force, in particular, work closely, individually and/or collectively, with such agencies. The Government has emphasised the general direction and increased importance of the civilian/military requirements associated with the NZ EEZ and border control.

The NZDF will continue to work closely with other government departments and agencies to plan formal arrangements for these requirements. It needs to be noted that, while existing formal support to other government departments and agencies will continue during 2009/10, any significant increase in this support cannot be guaranteed until new / replacement / upgraded vessels and aircraft are introduced into service.

The reporting of MAO&T, such as in the NZDF Annual Report, will be, by exception, against the table below.

A list of indicative NZDF MAO&T, general support to the government and the community, and tasks in support of foreign and defence policy objectives are listed in the following table. The scale and frequency of such tasks, unless pre-programmed, are not forecast. However, a summary of actual support provided is required for reporting purposes, and will be included in the Annual Report of the NZDF.

List of Indicative MAO&T and General Support
List of Indicative Multi-Agency Operations and Tasks (MAO&T) and General Support - Defence Force
NZDF Support to: Indicative Support Details / Remarks
NZ Police (excluding Search and Rescue) Typically involves:
  • MAO&T (including about 400 pre-planned Iroquois helicopter flying hours support).
  • RNZN ships (sea days).
  • Diving support.
  • Other general and "one-off" support and assistance.
  • Explosive Ordnance Disposal (EOD). Typically involves the provision of specialist EOD Team/s to render stray military ordnance safe. Requests for assistance are normally channelled through Regional or Local police direct to appropriate NZDF agencies (see Note 1).
Land, Sea and Air SAR (in support of NZ Police, Rescue Coordination Centre New Zealand (RCCNZ), NadiRCC, SuvaMCC, or other requesting agency) Typically involves:
  • Orion / Hercules / Iroquois (flying hours) (see Note 2).
  • RNZN ships (sea days).
  • Diving support.
  • Land search teams (man days).
  • Land transport (km).
  • Medical assistance (as required).
  • Rescue Coordination Centre New Zealand (RCCNZ) staffing support.
  • Logistic and other support (as required).
Ministry of Civil Defence and Emergency Management Typically involves assistance, as requested, to declared national, regional or local Civil Defence emergencies (Details in DFO 91(1) NZJSP 102) and may involve:
  • Sea transport (sea days).
  • Fixed and rotary wing aircraft (flying hours).
  • Road transport (km).
  • Manpower (man days).
  • Logistic and other support.
  • Reporting (for Quarterly and Annual reporting purposes) is to be provided on:
  • Actual support provided for specific Civil Defence Emergencies during the period.
  • Other general support (including manning of various CD HQs for training exercises).
Department of Conservation (DOC) Typically involves:
  • Sea or air transport to off-shore islands (sea days / flying hours).
  • Manpower assistance on land (man days).
  • MAO&T.
  • Other general support and assistance.
For planning purposes, 400 x P-3K Orion flying hours are planned to enable the National Maritime Coordination Centre (NMCC) to provide support for the Ministry of Fisheries, NZ Customs Service, Department of Conservation, and other agencies.
Department of Corrections Various support and assistance.
Environmental Risk Management Authority Various support and assistance.
NZ Fire Service and National Rural Fire Authority Typically involves:
  • Fire fighting assistance, mainly in rural areas.
  • Support for specific fire-fighting operations (includes 20 Iroquois flying hours).
  • Other general support and assistance, including training.
Ministry of Fisheries
  • MAO&T (including RNZN ships and RNZAF aircraft - sea days and air flying hours).
  • Any other general support and assistance.
For planning purposes, 400 x P-3K Orion flying hours are planned to enable the National Maritime Coordination Centre (NMCC) to provide support for the Ministry of Fisheries, NZ Customs Service, Department of Conservation, and other agencies.
Ministry of Foreign Affairs and Trade (MFAT)
  • Port Visits, in support of MFAT. Typically involves 10 to 14 visits per year by major RNZN ships.
  • Disaster Relief (South Pacific). Typically involves: Air reconnaissance (flying hours); Air and sea transport (flying hours and sea days); Helicopter support (flying hours); Land manpower support (man days); and Logistic and other support (as required). For planning purposes, flying hours provided for Disaster Relief Support are 50 Hercules hours and 15 Orion hours.
  • Support for any specific events.
  • Any other general support and assistance.
Government House Any major support for specific events/activities. (It does not include routine, on-going NZDF staff support and Aides-De-Camp assistance).
Ministry of Health Support for any specific events (such as health surveys or assistance in hospitals).
Department of Internal Affairs Typically involves:
  • Waitangi Guard ship.
  • Provision of ceremonial guards for visiting dignitaries.
  • Support to Anniversaries, such as ANZAC Day.
  • Provision of national military contingents to overseas commemorations as directed.
  • Other ceremonial support, including logistic support, as required.
Maritime New Zealand (MNZ)
  • MAO&T (including RNZN ships and RNZAF aircraft - sea days and air flying hours).
  • Professional Maritime advice.
  • Any other support.
  • Detection of Pollution (involves the detection and reporting of pollution, and any NZDF response / assistance as may be requested).
New Zealand Customs Service
  • MAO&T (including RNZN ships and RNZAF aircraft - sea days and air flying hours).
  • Any other support.
For planning purposes, 400 x P-3K Orion flying hours are planned to enable the National Maritime Coordination Centre (NMCC) to provide support for the Ministry of Fisheries, NZ Customs Service, Department of Conservation, and other agencies.
Department of Prime Minister and Cabinet (DPMC) Typically involves:
  • Air transport (flying hours), including VIP flying.
  • Sea transport (sea days / hours).
  • Road transport (km).
  • Logistic and administrative support as required (man days).
For planning purposes, flying hours provided for VIP flying are: 70 Boeing 757 hours, 25 Iroquois hours, and 100 King Air hours.
Support to the NZ Antarctic Programme (NZAP) Involves NZDF support in accordance with an annual NZAP/NZDF agreed plan. Typically involves:
  • Hercules tasks to McMurdo Sound as agreed between the NZDF and Antarctic NZ.
  • Freight movement, terminal operations and training assistance.
  • Other assistance, on an annual basis, such as engineer support.
General Medical Assistance/Support Typically involves:
  • Medical / mercy flights (flying hours).
  • Medical rescue by RNZN ship (sea days).
  • Hospital assistance, including ambulance support.
  • Hyperbaric treatment (number of treatments).
General Community Support Typically involves:
  • Assistance to significant national and community events and could involve provision of:
  • Manpower (man days).
  • Sea, land and air transport (sea days / km / flying hours).
  • Logistic and other support.
General Training Courses Typically involves the provision of training courses to other government departments and the community (schools / community groups):
  • Number of courses.
  • Manpower (man days).
This does not include NZDF support to the Limited Service Volunteer (LSV) Scheme or Mutual Assistance Programme (MAP) that is reported separately under the Multi-Class Output Appropriation (MCOA) Miscellaneous Support Activities.

Note 1 - This does not include CBRE / IEDD that comes under Output Expense Special Operations Forces.

Note 2 - For planning purposes flying hours provided for SAR are: 150 Orion hours, 16 Hercules hours, and 60 Iroquois hours.

 

Fixed Wing Transport Forces (M22)

Scope of Appropriation

Provision of the capabilities of No 40 Squadron RNZAF (Boeing 757-200 and C-130 Hercules aircraft) prepared to conduct strategic and tactical air transport operations, including aeromedical evacuation, in accordance with NZDF Output Plan specifications, and to contribute support services to the community.

Expenses and Revenue

Expenses and Revenue - Fixed Wing Transport Forces (M22) - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 218,885 218,885 226,490
Revenue from Crown 217,466 217,466 225,228
Revenue from Other 1,419 1,419 1,262

Output Performance Measures and Standards

Output Performance Measures and Standards - Fixed Wing Transport Forces (M22) - Defence Force
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Number of B757-200 available for strategic military transport tasks - from a total fleet of two aircraft. 1 Aircraft 1 Aircraft 1 Aircraft
Number of C-130 aircraft available for deployed military tasks (from a total fleet of five aircraft) (see Note 1). 2 Aircraft 2 Aircraft 2 Aircraft
Number of additional C-130 aircraft available for EC 1D and emergency tasks, as required (see Note 1). 1 Aircraft 1 Aircraft 1 Aircraft
An Aeromedical Evacuation (AE) element for strategic and tactical AE in support of land operations. AE element required Delivered AE element required
The RNZAF is required to provide forward, tactical and strategic Aeromedical Evacuation (AE) services, including responsibility for the provision of AE-qualified personnel and associated AE equipment. For fixed wing tactical and strategic AE it is likely that, for high dependency cases, specialist support would be sought from other Services of the NZDF and/or non-defence resources.      
Undertake MAO&T (Multi-Agency Operations/Tasks), and contribute to a range of services in support of other government departments, the community, and foreign and defence policy objectives when not committed to operations, using the capabilities developed for the operational role.
While specific, pre-planned operations/tasks (under MAO&T) normally require specific quality standards, the quality of other assistance to the government and the community may rely on the satisfaction expressed by the supported party/agency. (For details see the section on "Services in Support of the Government and the Community, including MAO&T", in Part 2.1.)
Satisfaction of supported department / agency Delivered Satisfaction of supported department / agency
Total Air Flying Hours:      
Boeing 757 (target range in hours). 1,330 - 1,470 1,000 1,330 - 1,470
Hercules C-130 (target range in hours). 2,090 -2,310 2,100 1,995 - 2,205
The total C-130 annual flying hours allocation has been adjusted to reflect the reduction in the number of C-130 aircraft available and the total number of hours that can be generated and supported by the C-130 fleet during the period.      

Preparedness - Fixed Wing Transport Forces: Employment Context

     
Security Challenges and Defence Tasks in New Zealand and its environs
     
Terrorist and Asymmetric Threats (EC 1D).      
B757 Transport Force. Fully Prepared Substantially Prepared Fully Prepared
C-130 Transport Force. Fully Prepared Substantially Prepared Fully Prepared
Security Challenges to New Zealand's Interests in the South Pacific
     
Natural and manmade disasters (EC 2B).      
B757 Transport Force. Fully Prepared Substantially Prepared Fully Prepared
C-130 Transport Force. Fully Prepared Substantially Prepared Fully Prepared
State failure or fragility leading to internal conflict and/or humanitarian crisis (EC 2C).      
B757 Transport Force. Fully Prepared Substantially Prepared Fully Prepared
C-130 Transport Force. Fully Prepared Substantially Prepared Fully Prepared
Challenges to legitimate governments, including civil war and secessionist conflict (EC 2E).      
B757 Transport Force. Fully Prepared Substantially Prepared Fully Prepared
C-130 Transport Force. Fully Prepared Substantially Prepared Fully Prepared
Security Challenges to New Zealand's Interests in the Asia-Pacific Region
     
Aggression to alter maritime boundaries or seize resources, or threats to freedom of navigation (EC 4A).      
B757 Transport Force. Substantially Prepared Substantially Prepared Substantially Prepared
C-130 Transport Force. Substantially Prepared Partially Prepared Substantially Prepared
Inter-State conflict (EC 4F).      
B757 Transport Force. Substantially Prepared Substantially Prepared Substantially Prepared
C-130 Transport Force. Substantially Prepared Partially Prepared Substantially Prepared
Security Challenges to New Zealand's Interests in Global Peace and Security
     
Terrorist Threats (EC 5D).      
B757 Transport Force. Substantially Prepared Substantially Prepared Substantially Prepared
C-130 Transport Force. Substantially Prepared Partially Prepared Substantially Prepared

Note - The Key Measurement Areas (Readiness, Combat Viability, Sustainability and Deployability), the Performance Rating Scale, and the Employment Contexts (ECs) are explained earlier in this part.

Note 1 - The number of C-130 Hercules aircraft available during 2009/10 (through to 20011/12) will be affected by the Long-Term Development Programme project to upgrade the C-130 fleet and will reduce the full capacity of this output. At least two C-130 aircraft will be removed from service at any one time during the upgrade programme. While the number of aircraft required by the NZDF Output Plan for OLOC should be maintained for the period, there will be periods where aircraft availability will be reduced - given the need to continue to cycle aircraft through group and phase servicing requirements. The reduced fleet size will have an affect on the duration of any operational deployments and the ability to rotate any such deployments. The requirement to sustain core and DLOC training will also affect the nature and extent of tasking that can be undertaken by the C-130 fleet during the period. Completion of the Boeing 757 upgrade with the ability to carry palletised freight will help compensate for reduced C-130 availability during the period.

Land Combat Forces (M22)#

Scope of Appropriation#

Provision of the capabilities of the Land Combat Forces (command, control, intelligence and manoeuvre force elements) prepared to conduct land operations and to contribute support services to the community, in accordance with NZDF Output Plan specifications.

Expenses and Revenue#

Expenses and Revenue - Land Combat Forces (M22) - Defence Force
  2008/09 2009/10
  Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 357,046 357,046 373,762
Revenue from Crown 354,983 354,983 371,499
Revenue from Other 2,063 2,063 2,263

Reasons for Change in Appropriation#

The $16.716 million increase in this appropriation reflects the impact of the Defence Funding Package for 2009/10 and comparative impact of one-off savings in 2008/09.

Output Performance Measures and Standards#

Output Performance Measures and Standards - Land Combat Forces (M22) - Defence Force
  2008/09 2009/10
Performance Measures Budgeted
Standard
Estimated Actual
Standard
Budget
Standard
Army, drawing on Headquarters 2 Land Force Group (HQ 2 LFG), HQ 3 LFG, 1 RNZIR, 2/1 RNZIR, QAMR and 1 NZ Military Intelligence Company, and with supplementation from the Territorial Force, as required, will provide the initial and rotation land combat force elements to constitute, generally:      
  • A Company Group (motorised, non-motorised or composite) for tasks under ECs 1 and 2.
Available Delivered Available
  • Up to an Infantry Battalion Group (motorised, non-motorised or composite) for tasks under ECs 2 - 5.
Available for 'Surge' only Available for 'Surge' only