Government Finance and Administration Sector - Information Supporting the Estimates 2008/09 - Budget 2008

Introduction

Purpose of Information Supporting the Estimates

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

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

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

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

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

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

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

Votes and Departments in Each Sector

Purpose and Nature of Appropriations

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

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

Limits Created by Appropriations

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

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

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

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

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

Responsibility for Appropriations

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

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

Types of Appropriation

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

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

Types of Output Expense Appropriations

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

Appropriation Period

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

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

Guide to Reading Information Supporting the Estimates

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

Sector Overview

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

Performance Information for Appropriations in Each Vote

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

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

Part 1 - Summary of the Vote

The Summary of the Vote comprises:

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

Part 2 - Details and Expected Performance for Output Expenses

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

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

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

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

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

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

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

Part 3 - Details for Benefits and Other Unrequited Expenses

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

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

Guide to Reading Information Supporting the Estimates (continued)

Part 4 - Details for Borrowing Expenses

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

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

Part 5 - Details and Expected Results for Other Expenses

Part 5 provides detail about appropriations for:

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

Part 6 - Details and Expectations of Capital Expenditure

This Part provides details about appropriations for capital expenditure.

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

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

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

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

Overview of Performance Information

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

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

Guide to Reading Information Supporting the Estimates (continued)

Statement of Forecast Service Performance of Departments

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

Forecast Financial Statements of Departments

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

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

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

Statements of Intent of Departments

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

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

Terms and Definitions

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

Useful Links

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

Sector Overview - Finance and Government Administration Sector

Sector Overview Statement

The Finance and Government Administration sector covers a range of Votes that fund the delivery of functions and services (including the administration of major legislation), which covers how Government and Parliament operate and the delivery of a range of services to New Zealanders. A key focus across the sector relates to the behaviour and adherence of the public sector to its legal and constitutional constraints and commitments; its relationships with stakeholders and the public; and the management and collection of Crown revenue.

Speaker's Overview of the Parliamentary Votes in this Sector

My part of this sector provides a range of services that support a functioning legislature in which members of Parliament are able to discharge their constitutional duties in respect of the consideration of legislation and other parliamentary business (Vote Office of the Clerk and Vote Parliamentary Service).

Agencies responsible to me also include the Officers of Parliament who have an oversight role on behalf of Parliament relating to the behaviour of the public sector; how it administers the law; and meets and performs its agreed and public responsibilities (Vote Audit and Vote Ombudsmen).

The key budget initiatives for Budget 2008 within the Votes in my part of this sector are:

Office of the Clerk

• roll-out of eCommittee system to all select committees

Office of the Ombudsmen

• the Ombudsmen adopting an enhanced role in the investigation of serious incidents that occur within prisons.

Ministers' Overview of the Votes (other than the Parliamentary Votes) in this Sector

Our sector also funds advice to Government on financial matters, including input on expenditure and budgeting (Vote Finance and Vote Revenue); manages the collection and distribution of Crown revenue and other payments (Vote Revenue and Vote Finance); monitors and advises on the performance of State-Owned Enterprises (Vote State-Owned Enterprises); and advises and provides services to improve the performance of the State sector (Vote Prime Minister and Cabinet, Vote State Services and Vote Finance). The State Services Commission manages the appointment of Chief Executives to government departments (Vote State Services).

The agencies in the sector that are responsible to us provide a number of services to New Zealanders, which includes a range of government social support programmes (Vote Revenue). We also fund delivery of services relating to the ability of central Government to function efficiently and effectively, carrying out its constitutional role as the government of New Zealand and in support of the Crown and the official responsibilities of our nation (Vote Prime Minister and Cabinet and Vote Ministerial Services). The sector also delivers services in support of maintaining national security (Vote Communication Security Intelligence and Vote Security Intelligence).

We take a keen interest in the level of service provided by our departments and in what contribution each has indicated they will make to support our three themes, Economic transformation, Families - young and old, and National identity. We are pleased to draw your attention to the increasing level of co-ordination between the agencies in the sector, as well as with those having complimentary roles in other sectors. We particularly note the consistency of their Statements of Intent, with evident purpose shown in increasing the productivity of the State sector. This will be reported on to Cabinet through the year. Those providing direct services to the public are making a determined effort to offer the customer service improvements we expect, through use of technology and in direct accessibility, but doing so with due consideration to providing value for money.

The Statements of Intent for 2008 of our respective agencies set out how their activities during the next three to five years focus on meeting the Government's three priority themes as these relate to individual agency roles. They outline what they are seeking to achieve, what they will do and how this will be measured, so that the combined progress contributes a positive impact and does so in a manner that offers the maximum benefit to New Zealanders.

Initiatives of note for Budget 2008-2009 within this part of the sector are:

Department of Prime Minister and Cabinet

• renovation and refurbishment of Government House, Wellington

Finance

• all Government Superannuation Fund and National Provident Fund annuitants receive 100% of the Consumer Price Index as a cost of living adjustment
• New Zealand Export Credit Office development of US contract bonds and trade finance export products
• funding for the development and maintenance of rail infrastructure
• equity injections to the Reserve Bank, Industrial Research Limited, Timberlands West Coast and a new Hawke's Bay airport company
• compensation to Landcorp for retaining protected land under the Protected Land Agreement
• funding of negotiations with Atihau-Whanganui Incorporation in respect to claimed Māori vested land lease losses

Revenue

• ‘Student Loans’ redesign
• services to inform the public about entitlements and meeting obligations.

(Please refer to section 1.3 of each Vote for a list of all budget initiatives. In addition, please note that the Department of Internal Affairs' Statement of Intent is included in the National Identity Sector and under section 45E(2) of the Public Finance Act 1989, intelligence and security departments are not required to present information on their future operating intentions to the House of Representatives or produce a statement of forecast service performance.)

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 Finance and Government Administration Sector is in accordance with sections 38, 40 and 41 of the Public Finance Act 1989 and is consistent with the policies and performance expectations of the government.

Speaker's Statement of Responsibility

I am satisfied that the information on future operating intentions provided by the Office of the Clerk of the House of Representatives and the Parliamentary Service and included in the Information Supporting the Estimates for the Finance and Government Administration Sector is in accordance with sections 38, 40 and 41 of the Public Finance Act 1989 and is consistent with my requirements and performance expectations as Responsible Minister for the Office and the Service.

Chief Executive Statements of Responsibility

Department of the Prime Minister and Cabinet

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

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

State Services Commission

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

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

The Treasury

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

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

Inland Revenue Department

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

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

Office of the Clerk of the House of Representatives

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the Finance and Government Administration Sector relating to the Office of the Clerk of the House of Representatives and for the Vote/Votes for which the Office of the Clerk of the House of Representatives is the administering department. Specifically, this information is contained in the Office of the Clerk of the House of Representatives's statement of forecast service performance, forecast financial statements and Statement of Intent.

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

Chief Executive Statements of Responsibility (continued)

Parliamentary Service

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the Finance and Government Administration Sector relating to the Parliamentary Service and for the Vote/Votes for which the Parliamentary Service is the administering department. Specifically, this information is contained in the Parliamentary 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 (2008/09 Estimates) Bill, as presented to the House of Representatives in accordance with section 13 of the Public Finance Act 1989, and with existing appropriations and financial authorities.

Controller and Auditor-General

In signing this statement, I acknowledge that I am responsible for the information contained in the Information Supporting the Estimates for the Finance and Government Administration Sector relating to the Controller and Auditor-General and for the Vote/Votes for which the Controller and Auditor-General is the administering department. Specifically, this information is contained in the Controller and Auditor-General's statement of forecast service performance, forecast financial statements and Annual Plan.

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

Office of the Ombudsmen

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

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

Performance Information for Appropriations Vote Prime Minister and Cabinet

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Prime Minister (M52)

ADMINISTERING DEPARTMENT: Department of the Prime Minister and Cabinet

MINISTER RESPONSIBLE FOR DEPARTMENT OF THE PRIME MINISTER AND CABINET: Prime Minister

Part 1 - Summary of the Vote

Part 1.1 - Overview of the Vote

The Prime Minister is responsible for appropriations in the Vote: Prime Minister and Cabinet for the 2008/09 financial year covering the following:

• a total of just over $8.500 million (33.5% of the Vote) on free and frank advice on policy issues; services to facilitate inter-departmental co-ordination of policy development and promote a more collective approach to performance across the state sector; and co-ordination of central government activities aimed at protecting New Zealand's domestic and external security. From the Cabinet Office, advice on constitutional policy and procedural issues for the Governor-General, and the Prime Minister and Cabinet; coordination of the Government's legislation programme; secretariat services to Cabinet, Cabinet committees and the Executive Council; and administration of the New Zealand Royal Honours system
• a total of nearly $3.600 million (14.1% of the Vote) on support services to the Governor-General and maintenance of the two Government Houses
• a total of nearly $3.400 million (13.3% of the Vote) for the provision of information and reports on events and trends overseas affecting New Zealand's interests
• a total of nearly $6.700 million (26.1% of the Vote) on Government House capital investment, including the renovation and refurbishment of Government House, Wellington
• a total of nearly $1.200 million (4.6% of the Vote) under permanent legislative authority (Civil List Act 1979) for payments for the salary, the personal allowance and travel expenses of the Governor-General
• a total of just over $1.300 million (5.2% of the Vote) on departmental capital expenditure
• a total of nearly $47,000 (0.2% of the Vote) under permanent legislative authority (NZSIS Amendment (No. 2) Act 1999) for payments to the Commissioner of Security Warrants
• a total of nearly $765,000 (3.0% of the Vote) for depreciation expenses on Crown assets (two Government Houses and their contents).

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

Part 1.2 - High-Level Objectives of the Vote

Government Priorities and Outcomes - Links to Appropriations

Objectives of the Vote

The appropriations for Vote Prime Minister and Cabinet are directed towards the overarching objective to work to achieve good government.

Part 1.3 - Trends in the Vote

Summary of Financial Activity

Budget Policy Initiatives

Analysis of Significant Trends

Total Vote: All Appropriations

The movements in departmental and non-departmental appropriations in Prime Minister and Cabinet, which are detailed in the Summary of Financial Activity table above, are largely driven by movements in Output Expenses and Crown Capital Expenditure.

Details of significant movements within each appropriation category are detailed below.

Departmental Output Expenses

Figure 1 - Trends in output appropriations

Trends in Departmental Output Expenses Trends

Source: Department of Prime Minister and Cabinet

The baseline increase in 2004/05 is largely due to one-off funding for the Foreshore and Seabed Group.

The increase in 2007/08 is largely due to one-off funding for the climate change solutions package.

The increase in 2008/09 is additional capital funding to maintain information and communications technology infrastructure and for operating costs associated with the renovation and conservation of Government House, Wellington.

Non-Departmental Capital Expenditure

Figure 2 -Trends in capital expenditure

Trends in Non-Departmental Capital Expenditure

Source: Department of Prime Minister and Cabinet

This appropriation includes capital additions, alterations and renovation activities to the two Government Houses in order to maintain or increase their on-going use, functionality, and value as heritage assets.

The increase in 2004/05 is due to additional funding for extensions and renovation carried out at Government House, Auckland.

The increase in 2007/08 is due to additional funding for detailed design for the proposed refurbishment of Government House, Wellington.

The increase in 2008/09 is due to additional funding for the renovation and conservation of Government House, Wellington. This funding is time limited to 2011/12.

Part 1.4 - Reconciliation of Changes in Appropriation Structure

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

Part 2 - Details and Expected Performance for Output Expenses

Part 2.1 - Departmental Output Expenses

Intended Impacts, Outcomes and Objectives

Intelligence Assessments on Developments Overseas (M52)

Scope of Appropriation

Expenses and Revenue

Output Performance Measures and Standards

Current and Past Policy Initiatives

Policy Advice and Secretariat and Coordination Services (M52)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

There was a one-off appropriation for the climate change solutions package in 2007/08.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Support Services to the Governor-General and Maintenance of the two Government Houses (M52)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

The increase is due mainly to additional appropriation for operating costs associated with the renovation and conservation of Government House, Wellington.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Part 5 - Details and Expected Results for Other Expenses

Part 5.2 - Non-Departmental Other Expenses

Intended Impacts, Outcomes and Objectives

Depreciation Expenses on Crown Assets (M52)

Scope of Appropriation

Expenses

Fees for the Commissioner of Security Warrants PLA (M52)

Scope of Appropriation

Expenses

Governor-General - Remuneration and Travel PLA (M52)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The increase in 2008/09 is for anticipated increases in the Governor-General's remuneration, personal allowance and travel.

Reporting Mechanisms

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

Department of the Prime Minister and Cabinet - Capital Expenditure PLA (M52)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The increase is for the one-off purchase and replacement of information and communications technology infrastructure including hardware and software.

Expected Results

Part 6.2 - Non-Departmental Capital Expenditure

Intended Impacts, Outcomes and Objectives

Government House - Capital Investment (M52)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The significant increase in 2008/09 is for the extensive renovation and conservation of Government House, Wellington which will be completed in 2011/12.

Expected Results

Current and Past Policy Initiatives

Reporting Mechanisms

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

Performance Information for Appropriations Vote Communications Security and Intelligence

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister Responsible for the Government Communications Security Bureau (M60)

ADMINISTERING DEPARTMENT: Government Communications Security Bureau

MINISTER RESPONSIBLE FOR GOVERNMENT COMMUNICATIONS SECURITY BUREAU: Prime Minister

Part 1 - Summary of the Vote

Part 1.3 - Trends in the Vote

Summary of Financial Activity

Performance Information for Appropriations Vote Security Intelligence

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister in Charge of the New Zealand Security Intelligence Service (M59)

ADMINISTERING DEPARTMENT: New Zealand Security Intelligence Service

MINISTER RESPONSIBLE FOR NEW ZEALAND SECURITY INTELLIGENCE SERVICE: Minister in Charge of the New Zealand Security Intelligence Service

Part 1 - Summary of the Vote

Part 1.3 - Trends in the Vote

Summary of Financial Activity

Performance Information for Appropriations Vote State Services

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister of State Services (M66)

ADMINISTERING DEPARTMENT: State Services Commission

MINISTER RESPONSIBLE FOR STATE SERVICES COMMISSION: Minister of State Services

Part 1 - Summary of the Vote

Part 1.1 - Overview of the Vote

The Minister of State Services is responsible for $205.362 million of appropriations in the Vote for the 2008/09 financial year covering the following:

• a total of $19.987 million (9.7% of appropriations in this Vote) on E-government Development and Operations
• a total of $15.268 million (7.4% of appropriations in this Vote) on Government Shared Network
• a total of $11.431 million (5.6% of appropriations in this Vote) on State Services Development, Governance and Performance
• a total of $13.872 million (6.8% of appropriations in this Vote) on State Services People Capability
• a total of $116,000 (0.1% of appropriations in this Vote) on Development of On-line Authentication Services
• a total of $3.851 million (1.9% of appropriations in this Vote) on the Mainstream Supported Employment Programme
• a total of $2.000 million (1.0% of appropriations in this Vote) on the KiwiSaver: State Sector Employer Contributions
• a total of $12.972 million (6.3% of appropriations in this Vote) for the Remuneration and Related Employment costs of Chief Executives
• a total of $196,000 (0.1% of appropriations in this Vote) on the Settlement of Legal Liabilities incurred by now disestablished Public Service departments
• a total of $116.564 million (56.8% of appropriations in this Vote) for the State Sector Retirement Savings Scheme
• a total of $9.105 million (4.4% of appropriations in this Vote) for capital expenditure.

The Commission expects to collect $11.805 million in Crown revenue from government departments relating to the reimbursement of the costs of chief executives' remuneration.

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

Part 1.2 - High-Level Objectives of the Vote

Government Priorities and Outcomes - Links to Appropriations

Objectives of the Vote

The State Services Commission (SSC), together with the two other central agencies - the Department of the Prime Minister and Cabinet (DPMC) and the Treasury - share the responsibility of providing leadership to State Services agencies in realising the Government's vision. The central agencies' key roles in lifting performance across the system and making sure Ministers receive the best possible advice before making decisions underpin all of the Government priorities.

Part 1.3 - Trends in the Vote

Summary of Financial Activity

Summary of Financial Activity

Budget Policy Initiatives

Analysis of Significant Trends

Appropriations for departmental output expenses have increased by $28 million or 87% over the past five years. The principle driver has been projects relating to E-government initiatives ($25 million) such as the Authentication programme (including the Identity Verification and Government Logon Services) and the Government Shared Network.

Figure 1 - Trends in departmental output expenses

Figure 1 - Trends in Departmental Output Expenses

Source: State Services Commission

Figure 2 - Departmental output expenses

Figure 2 - Departmental Output Expenses

Source: State Services Commission

Figure 3 - Trends in non-departmental expenses

The growth in Non-Departmental expenditure, reflected in the graph below, largely relates to the reimbursement of employer contributions to the State Sector Retirement Savings Scheme and KiwiSaver for employees of state sector employers.

Figure 3 - Trends in Non-Departmental Expenditure

Source: State Services Commission

Part 2 - Details and Expected Performance for Output Expenses

Part 2.1 - Departmental Output Expenses

Intended Impacts, Outcomes and Objectives

E-government Development and Operations (M66)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

The Government Logon Service is now operational and crown funding in the 2008/09 year reduces to match the reducing level of associated expenditure.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Government Shared Network (M66)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

A technical change in the accounting treatment of Government Shared Network (GSN) funding occured in October 2007. There has been a delay in completion of the project resulting in lower than anticipated revenue in 2007/08. The increase in appropriation and revenues is due to increased uptake of the GSN products.

Output Performance Measures and Standards

Memorandum Account

Current and Past Policy Initiatives

State Services Development, Governance and Performance (M66)

Scope of Appropriation

Expenses and Revenue

Output Performance Measures and Standards

State Services People Capability (M66)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

An expense transfer from 2007/08 to 2008/09 is proposed. Increased revenue has been offset by increased expenditure.

Output Performance Measures and Standards

Part 2.2 - Non-Departmental Output Expenses

Intended Impacts, Outcomes and Objectives

Development of On-line Authentication Services (M66)

Scope of Appropriation

Expenses

Output Performance Measures and Standards

Summary of Service Providers

The above table summarises funding to be allocated through Vote State Services to non-departmental providers, along with an indication of the mechanism to be used for reporting actual performance and (where determined) the length of the funding commitment.

Part 3 - Details for Benefits and Other Unrequited Expenses

Part 3.2 - Non-Departmental Benefits and Other Unrequited Expenses

Intended Impacts, Outcomes and Objectives

Mainstream Supported Employment Programme (M66)

Scope of Appropriation

Expenses

Part 5 - Details and Expected Results for Other Expenses

Part 5.2 - Non-Departmental Other Expenses

Intended Impacts, Outcomes and Objectives

KiwiSaver: State Sector Employer Contributions (M66)

Scope of Appropriation

Expenses

Expected Results

Current and Past Policy Initiatives

Remuneration and Related Employment Costs of Chief Executives (M66)

Scope of Appropriation

Expenses

Expected Results

Settlement of Legal Liabilities (M66)

Scope of Appropriation

Expenses

Expected Results

State Sector Retirement Savings Scheme: State Sector Employer Contributions (M66)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

Uptake of State Sector Retirement Savings Scheme by State sector employees is forecast to increase.

Expected Results

Reporting Mechanisms

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

State Services Commission - Capital Expenditure PLA (M66)

Scope of Appropriation

Capital Expenditure

Current and Past Policy Initiatives

Expected Results

Performance Information for Appropriations Vote Finance

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister of Finance (M31)

ADMINISTERING DEPARTMENT: The Treasury

MINISTER RESPONSIBLE FOR THE TREASURY: Minister of Finance

Part 1 - Summary of the Vote

Part 1.1 - Overview of the Vote

The Minister of Finance is responsible for appropriations in the Vote for the 2008/09 financial year covering the following:

• a total of nearly $13 million for macroeconomic policy and management including Budget management, macroeconomic, tax and fiscal forecasting; advice on fiscal policy and strategy; and fiscal reporting and departmental financial management controls including the development and application of generally accepted accounting practice to the Crown
• a total of over $36 million for policy advice on improving New Zealand's overall economic performance and state sector performance
• a total of over $1,996 million for the payment of interest and other costs relating to the Crown's debt
• a total of over $3,204 million in superannuation costs
• a total of over $623 million for capital in the Reserve Bank of New Zealand, Landcorp Farming Limited, Industrial Research Limited and Hawke's Bay Airport company
• a total of nearly $430 million for the development and maintenance of rail infrastructure
• a total of $200 million for New Zealand's membership of the international financial institutions
• a total of over $15 million for the purchase of Maui gas in accordance with the Crown's contractual obligations
• a total of over $17 million for New Zealand House, London costs
• a total of nearly $2 million for the purchase of Treasury departmental assets
• a total of nearly $2 million for unclaimed money and various Crown liabilities.

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

Part 1.2 - High-Level Objectives of the Vote

Government Priorities and Outcomes - Links to Appropriations

Objectives of the Vote

Vote Finance provides the Government with financial and economic advice and services to help improve New Zealand's economic performance, including the performance of the state sector and macroeconomic stability. The Government goal that Vote Finance contributes most directly to is that of economic transformation.

Part 1.3 - Trends in the Vote

Summary of Financial Activity

Budget Policy Initiatives

Analysis of Significant Trends

Total Vote: All Appropriations

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

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

Fig 1. Trends in total actual and estimated operating and capital expenditure

Source: The Treasury

The movements in departmental and non-departmental appropriations in Vote Finance, which are detailed in the Summary of Financial Activity table above, are largely owing to movements in capital expenditure and movements in the Government Superannuation Fund unfunded liability.

Details of significant movements within each appropriation category are shown below.

Departmental Output Expenses

Baselines increase by nearly $4 million in 2007/08 largely owing to the increase in one-off funding for Building Industry Authority litigation management costs.

Non-Departmental Output Expenses

Expenditure increased in 2003/04 to fund the management of the Auckland rail corridor infrastructure. Funding continued for part of 2004/05 until responsibility for this expenditure transferred to the New Zealand Railways Corporation (now ONTRACK) on 1 September 2004, and the appropriation ceased.

Non-Departmental Benefits and Other Unrequited Expenses

The Government Superannuation Fund Authority - Subsidies to Government Superannuation Fund Schemes has been reclassified as a non-departmental other expense appropriation from 2007/08. Prior to 2007/08 the movements in the appropriation were largely owing to net movements in the Crown's liability to the Government Superannuation Fund.

Non-Departmental Borrowing Expenses

Debt servicing costs trend downwards up to 2009/10 before rising in 2010/11 and 2011/12.

Non-Departmental Other Expenses

Expenditure was broadly stable until 2007/08. From 2007/08 the movement in the Government Superannuation Fund unfunded liability was recorded in non-departmental other expenses which causes the large increase in that year relative to prior years. From a peak in 2009/10, expenditure decreases, largely owing to forecast Auckland rail development and movements in the Government Superannuation Fund unfunded liability.

Non-Departmental Capital Expenditure

This appropriation category comprises purchases of debt and equity by the Crown in various Crown entities, and capital additions to the Crown's physical assets. In 2003/04 the initial contribution to the New Zealand Superannuation Fund was made. This initial contribution was higher than in the following years because it was for an 18 month period. In 2004/05, the Reserve Bank received a $1 billion capital injection to support its capacity for intervention in the foreign exchange markets. In 2007/08 a one-off provision was made for the purchase of Toll NZ Ltd's rail business. In 2008/09 capital expenditure increases again, largely owing to a Reserve Bank equity injection of $600 million, forecast capital to International Financial Institutions of $200 million and an increased contribution to the New Zealand Superannuation Fund.

Crown Revenue

Crown revenue largely comprises capital charge, interest from securities and deposits, and dividends from state-owned enterprises and Crown entities. Crown revenue is broadly stable apart from peaks in 2005/06 and 2006/07. These peaks are largely due to one off special dividends from Meridian Energy Limited in 2005/06 following the sale of its Australian investments and increased Air New Zealand dividends. In 2006/07, the Government Superannuation Fund liability decreased resulting in a $1,129 million increase in revenue.

Crown Capital Receipts

Capital revenue arises from the sale of Crown assets, the repayment of Crown loans, capital withdrawals from Crown companies, and transactions arising from the corporatisation of Crown entities. Variances in Crown capital receipts are largely owing to International Monetary Fund capital returns and capital withdrawals from Crown companies.

Part 2 - Details and Expected Performance for Output Expenses

Part 2.1 - Departmental Output Expenses

Intended Impacts, Outcomes and Objectives

Debt and Related Financial Asset Management (M31)

Scope of Appropriation

Expenses and Revenue

Output Performance Measures and Standards

Conditions on Use of Appropriation

Treasury quality standards for policy

Quality policy advice is fit for purpose

This Quality Standard for Policy Advice sets out the characteristics or dimensions of policy advice that will best enable it to promote well-informed high-quality decision making by Ministers. However, the quality dimensions below are not a checklist and not all dimensions will be equally important in every case - judgements are required at the outset about how to apply and balance the quality dimensions to ensure a particular piece of advice is fit for purpose in achieving the result sought.

When undertaking a piece of work, explicit consideration needs to be given to the following:

• What point are Ministers at in their decision-making process? Can Treasury add value? What are our opportunities to have an impact?
• What result are we seeking by providing a piece of advice?
• How should the quality dimensions below be applied and balanced to achieve this result?
• What is the relative priority of this piece of work?
• What level of investment is warranted?

Dimensions of quality policy advice

Quality involves continuous improvement

At the end:

• Did we achieve the result we were seeking?
• Were our judgements about what would be fit for purpose correct?
• What would we do differently next time?
• How can we capture and share this learning?

Policy Advice and Management: Macroeconomic (M31)

Scope of Appropriation

Expenses and Revenue

Output Performance Measures and Standards

Conditions on Use of Appropriation

State Sector and Economic Performance Policy Advice and Management MCOA (M31)

Scope of Appropriation

Explanation for Use of Multi-Class Output Expense Appropriation

These output classes all contribute to the outcomes of improving New Zealand's overall economic performance and improving state sector performance.

Expenses and Revenue

Reasons for Change in Appropriation

Funding of over $3 million for the management of litigation against the former Building Industry Authority relating to the weathertightness of homes was not required in 2007/08 and was therefore carried forward to 2008/09. In addition, $450,000 was provided in 2008/09 for the costs of negotiating with the Atihau-Whanganui Incorporation.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Part 2.2 - Non-Departmental Output Expenses

Intended Impacts, Outcomes and Objectives

Management of New Zealand House, London (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The contingency to cover unfavourable foreign exchange movements was not required in 2007/08.

Output Performance Measures and Standards

Management of the Crown's Obligations for Geothermal Wells (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

A one-off expense of $200,000 is budgeted for in 2007/08 to perform remedial work on redundant geothermal assets at Wairakei.

Output Performance Measures and Standards

Management of the New Zealand Superannuation Fund (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The 2007/08 budget was increased owing to higher board and legal fees.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Summary of Service Providers

The above table summarises funding to be allocated through Vote Finance to non-departmental providers, along with an indication of the mechanism to be used for reporting actual performance and (where determined) the length of the funding commitment.

Part 4 - Details for Borrowing Expenses

Part 4.2 - Non-Departmental Borrowing Expenses

Debt Servicing PLA (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The amount varies with interest rates and the amount of debt outstanding.

Part 5 - Details and Expected Results for Other Expenses

Part 5.2 - Non-Departmental Other Expenses

Intended Impacts, Outcomes and Objectives

Auckland Rail Development (M31)

Scope of Appropriation and Expenses

Reasons for Change in Appropriation

This multi-year appropriation replaces the previous Auckland Rail Development appropriation that was revoked as of 1 July 2007. The funding of this new appropriation comes from the 2005/06 unspent balance of $21.314 million and a transfer from 2006/07 of $400 million, both from the previous Auckland Rail Development appropriations. A further adjustment was made in 2007/08 when the unspent balance from 2006/07 was also transferred to this new Auckland Rail Development appropriation.

Expected Results

Current and Past Policy Initiatives

Crown Residual Liabilities (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The amount required is reducing over time as liabilities are resolved.

Expected Results

Geothermal Wells Fund (M31)

Scope of Appropriation

Expenses

Expected Results

Government Superannuation Appeals Board (M31)

Scope of Appropriation

Expenses

Expected Results

Government Superannuation Fund Authority - Crown's Share of Expenses PLA (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The increase in custodial, investment and administration costs is a result of the transition from passive to active management of global equities following changes to New Zealand tax legislation.

Expected Results

Government Superannuation Fund Unfunded Liability PLA (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

Return on assets are forecast to be higher in 2008/09 relative to 2007/08, which partly offsets the forecast increase in the liability.

Expected Results

Maui Gas Contracts (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

Gas purchases are forecast to reduce as the Crown's right to call for gas reduces.

Expected Results

National Rail Network Improvements (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

A new appropriation commencing from 1 July 2008 that was approved in Budget 2007.

Expected Results

Current and Past Policy Initiatives

New Zealand House, London (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The budget variance between years is largely due to the timing of maintenance projects.

Expected Results

ONTRACK Operating and Maintenance Costs (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The change between years is owing to increases in ONTRACK's operating and depreciation costs.

Expected Results

Current and Past Policy Initiatives

Unclaimed Money PLA (M31)

Scope of Appropriation

Expenses

Expected Results

Unclaimed Trust Money PLA (M31)

Scope of Appropriation

Expenses

Expected Results

Urban Rail Development (M31)

Scope of Appropriation and Expenses

Reasons for Change in Appropriation

During 2007/08, $25,000 was transferred from the National Rail Network Improvements appropriation to the Urban Rail Development multi year appropriation above, to provide additional funds for the upgrade of the Wellington urban network.

Expected Results

Current and Past Policy Initiatives

Wellington Railway Station Expenses (M31)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The Wellington Railway Station is expected to be transferred to ONTRACK by 30 June 2008.  However, a reduced budget in 2008/09 has been retained in the event that the transfer is delayed.

Expected Results

Reporting Mechanisms

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

The Treasury - Capital Expenditure PLA (M31)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The 2007/08 budgeted capital expenditure is $289,000 more than that budgeted in 2008/09 primarily owing to some of the routine replacement and upgrade of the department's information technology being delayed from 2006/07 into 2007/08.

Expected Results

The budgeted capital expenditure for the 2008/09 financial year is for the routine replacement and upgrade of the department's information technology. The forecast capital expenditure will support the efficient delivery of services as set out in the Department's Statement of Intent.

Part 6.2 - Non-Departmental Capital Expenditure

Intended Impacts, Outcomes and Objectives

Hawke's Bay Airport Equity Injection (M31)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

This is a one-off payment in 2008/09 to acquire 50% of the shares in the corporatised Hawke's Bay Airport.

Current and Past Policy Initiatives

Industrial Research Limited Equity Injection (M31)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The changes in the appropriation reflect Industrial Research Limited's capital programme to upgrade facilities and ensure its financial viability.

Expected Results

Current and Past Policy Initiatives

International Financial Institutions PLA (M31)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

New Zealand membership of the Multilateral Investment Guarantee Agency was ratified during 2007/08 and the budget is for the subscription to it.  The 2008/09 budget is for possible capital subscriptions to the International Monetary Fund, International Bank for Reconstruction and Development, International Finance Corporation and Multilateral Investment Guarantee Agency.

Expected Results

Landcorp Protected Land Agreement (M31)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

Under the terms of the Protected Land Agreement, an initial payment of $52.2 million was paid in cash to Landcorp in 2007/08. The balance of the compensation will be through the reinvestment of dividends spread over several years.

Current and Past Policy Initiatives

NZ Superannuation Fund - Contributions (M31)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The Crown's contribution to the New Zealand Superannuation Fund is calculated according to the formula in the New Zealand Superannuation Act 2001. The contribution calculation is based on forecasts of gross domestic product and expected New Zealand superannuation entitlements.

Expected Results

ONTRACK Equity Injection (M31)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The transfer of the Wellington Railway Station will be completed in 2007/08 and ONTRACK's share of the costs for replacing the Arahura bridge will be incurred in 2008/09.

Expected Results