Social Development and Housing Sector - Information Supporting the Estimates 2010/11 - Budget 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.

 

Cover, Contents#

Print this section

Introduction#

Print this section

• 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#

Print this section

• Ministerial Statements of Responsibility
• Chief Executive Statements of Responsibility

Performance Information for Appropriations in Each Vote#

Print this section

• Vote Housing
• Vote Senior Citizens
• Vote Social Development
• Vote Veterans' Affairs - Social Development
• Vote Youth Development

Statements of Forecast Service Performance of Departments#

Print this section

Forecast Financial Statements of Departments#

Print this section

• Statement of Common Accounting Policies
• Department of Building and Housing
• Ministry of Social Development

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

Print this section

• Ministry of Social Development
• Department of Building and Housing

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 basis 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 was 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

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.

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

Limits Created by Appropriations

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 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.

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 being 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 theEstimates

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.

Thetitle 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 that are the responsibility of 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.

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 2.1. Some variations exist for non-standard appropriations, including MCOAs in Parts 2.1 and 2.2 and MYAs in Parts 2.1, 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.
• 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 2010 documents can be accessed in the Budgets section of the website: www.treasury.govt.nz/budget/2010. 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.

Ministerial Statements of Responsibility

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

Chief Executive Statements of Responsibility

Ministry of Social Development

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

This information has been prepared in accordance with the Public Finance Act 1989. It is also consistent with the proposed appropriations set out in the Appropriation (2010/11 Estimates) Bill, as presented to the House of Representatives in accordance with section 13 of the Public Finance Act 1989, and with existing appropriations and financial authorities.

Department of Building and Housing

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

This information has been prepared in accordance with the Public Finance Act 1989. It is also consistent with the proposed appropriations set out in the Appropriation (2010/11 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 Housing

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister for Building and Construction (M9), Minister of Housing (M37)

ADMINISTERING DEPARTMENT: Department of Building and Housing

MINISTER RESPONSIBLE FOR DEPARTMENT OF BUILDING AND HOUSING: Minister for Building and Construction

Part 1 - Summary of the Vote

Part 1.1 - Overview of the Vote

The Minister for Building and Construction is responsible for appropriations in the Vote for the 2010/11 financial year covering the following:

• A Multi-year Appropriation (MYA) was established from 1 July 2010 to provide for flexibility in planning on delivering regulatory and control services for the building industry under the Building Act 2004 and related consumer information. A total of just under $47 million has been appropriated for a three year period. It is expected that just under $17 million will be spent in 2010/11, leaving a balance of $30 million for the remainder of the three year period.
• A Multi-year Appropriation (MYA) was established from 1 July 2010 to provide for flexibility in planning on developing, implementing and maintaining registration and licensing regimes for building practitioners and electrical workers. A total of just over $27 million has been appropriated for a three year period. It is expected that just over $9 million will be spent in 2010/11, leaving a balance of $18 million for the remainder of the three year period.
• A total of just over $4 million on providing sector and regulatory policy advice on the building and housing sector in New Zealand.
• A total of just under $41 million on providing assessment and dispute resolution services under the Weathertight Homes Resolution Services Act 2006.
• A total of just under $7 million on departmental capital expenditure.

The Minister of Housing is responsible for appropriations in the Vote for the 2010/11 financial year covering the following:

• A Multi-year Appropriation (MYA) was established from 1 July 2010 to provide for flexibility in planning on providing services under the Residential Tenancies Act 1986, including advice and guidance, dispute resolution and the administration of residential tenancy bond monies. A total of just under $67 million has been appropriated for a three year period. It is expected that just under $22 million will be spent in 2010/11, leaving a balance of $45 million for the remainder of the three year period.
• A total of just under $1 million on providing purchase and performance monitoring advice to Government in relation to Housing New Zealand Corporation (HNZC).
• A total of just over $11 million on purchasing housing support services.
• A total of just under $3 million on the purchase of housing policy advice from Housing New Zealand Corporation.
• A total of just over $1 million for the management of Crown owned properties.
• A total of just over $7 million on contracted housing support services.
• A total of just under $1 million on housing assistance payments.
• A total of just under $559 million on purchasing of housing and related services for tenants paying income related rent to Housing New Zealand Corporation.
• A total of just over $4 million on KiwiSaver deposit subsidy.
• A total of just under $4 million on the community housing rent relief programme.
• A total of just over $3 million on increase in provision for doubtful debts on IRR Debt.
• A total of just over $37 million for Wellington City Council Social Housing Assistance.
• A total of $8 million on Housing Innovation Fund Grants.
• A total of $4 million for the impairment of Housing Innovation Fund Term Loans.
• A total of just over $201 million on capital expenditure, which includes debt refinancing of just under $161 million.

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

Part 1.3 - Trends in the Vote

Summary of Financial Activity

New Policy Initiatives

Analysis of Significant Trends

Total Vote: All Appropriations

Significant changes in departmental and non-departmental appropriations in Vote Housing are discussed briefly below.

Output Expenses

In 2006/07 the electrical workers registration system was transferred from the Ministry of Economic Development (Vote Energy).

Commencing in 2009/10, funding has been added to Weathertight Homes Resolution Service to develop a solution to the leaky homes issue.

In 2008/09 the Rural Housing programme was funded through a reduced dividend payment to the Crown equal to $10 million. Funding for the Contracted Housing support services appropriation is forecast to decrease over the next two years.

As part of the bringing forward infrastructure spending package, HNZC State House Upgrades appropriation of $22 million and $20 million in 2008/09 and 2009/10 respectively were established.

The income related rental has grown from approximately $395 million in 2005/06 to approximately $527 million in 2009/10. The subsidy is forecast at $705 million for 2013/14. Growth in the income related rent rental subsidy is due to fewer market rents and more income related rents. This appropriation was previously categorised as a Benefits and Other Unrequited Expenses.

Benefits and Other Unrequited Expenses

The funding for the Income Related Rent Subsidy was reclassified to Output Expenses in 20010/11.

Funding for the Housing Assistance appropriation declined significantly in 2009/10 due to a reduction in interest subsidy payments, and a restructuring of the Housing Innovation Fund.

Other Expenses

In 2008/09 the Non-Departmental Other Expense category of appropriations increased due to the funding contributions to the Wellington City Council Social Housing Assistance programme. This appropriation fluctuates over the future years, rising to $43.500 million in 2011/12.

In 2009/10 the Other Expense component of the Housing Innovation Fund was established for the first time. This is currently a two year appropriation.

Capital Expenditure

In Budget 2008 the Non-Departmental Capital appropriations relating to Housing New Zealand Corporation were restructured as a result of the Review of Accountability Documents (RoADs) project to improve the accuracy and transparency of the appropriations.

In February 2009, Cabinet agreed to appropriate new funding in 2008/09 and 2009/10 to bring forward infrastructure spending. This funding was all appropriated to the capital appropriation Acquisitions and Improvement of Housing New Zealand Corporation State Houses.

Loans to Support Social and Affordable Housing was established in 2009/10. This is currently funded for two years only.

The Refinancing of Housing New Zealand Corporation and Housing New Zealand Limited Debt appropriation is for the roll over of existing Housing New Zealand Corporation loans. It peaks in 2009/10 at $234.600 million, reducing to $160.700 million in out years.

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

Building Regulation and Control (M9)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation has now become a multi-year appropriation.

Building Regulation and Control (M9)

Scope of Appropriation and Expenses

Revenue

Reasons for Change in Appropriation

This is a new multi-year appropriation.

Output Performance Measures and Standards

Memorandum Account

Memorandum Account

Current and Past Policy Initiatives

Occupational Licensing (M9)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation has now become a multi-year appropriation.

Occupational Licensing (M9)

Scope of Appropriation and Expenses

Revenue

Reasons for Change in Appropriation

This is a new multi-year appropriation.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Memorandum Account

Current and Past Policy Initiatives

Performance Monitoring and Advice - Housing New Zealand Corporation (M37)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

The increased funding in 2009/10 was for the Housing Shareholders' Advisory Group and enhanced monitoring capability. 2010/11 returns to normal levels.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Residential Tenancy and Unit Title Services (M37)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation has now become a multi-year appropriation.

Residential Tenancy and Unit Title Services (M37)

Scope of Appropriation and Expenses

Revenue

Reasons for Change in Appropriation

This is a new multi-year appropriation.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Sector and Regulatory Policy (M9)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

2009/10 includes funding for the Building Act review of $500,000 which is not included in 2010/11.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Weathertight Homes Resolution Service (M9)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

The appropriation includes an increase of $25.371 million for 2010/11 for the delivery of new services to address weathertight homes claims.

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

Contracted Housing Support Services (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decrease in appropriation is primarily due to the decrease in funding received for the Housing Foundation and the Rural Housing programme which ends on 30 June 2011. Surplus funds in the Shared Equity Pilot were applied to further development of the Housing Foundation's Homeowner Partnerships proposal by way of a fiscally neutral transfer.

Output Performance Measures and Standards

Current and Past Policy Initiatives

HNZC Housing Support Services (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decreased in the appropriation is impacted by an increase for the Welcome Home Loan programme in 2009/10 not continuing in 20010/11.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

HNZC State House Upgrades (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

This appropriation ceased in 2009/10.

Housing Policy Advice (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

There have been no material changes to this appropriation.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Management of Crown Properties held under the Housing Act 1955 (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

There have been no material changes to this appropriation.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Purchase of Housing and Related Services for Tenants Paying Income Related Rent (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

This appropriation has been reclassified in 2010/11 from being a benefit and other unrequited expense appropriation called Income Related Rent Subsidy.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Summary of Service Providers for Non-Departmental Outputs

The above table summarises funding to be allocated through Vote Housing 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

Housing Assistance (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decrease in the appropriation reflects the maturity of the Special Housing Action Zone (SHAZ) loans and the resulting reduction of the interest subsidy attached to these loans.

Current and Past Policy Initiatives

Income Related Rental Subsidy (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

This appropriation has been transferred to Purchase of Housing Related Services for Tenants Paying Income Related Rent.

KiwiSaver Deposit Subsidy (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The increase in the appropriation is due to the commencement of the KiwiSaver deposit subsidy scheme on 1 July 2010.

Conditions on Use of Appropriation

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

Community Housing Rent Relief Programme (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

In the 2009/10 financial year savings were identified in relation to this programme. These included $700,000 in 2009/10 and $532,000 in 2010/11.

Expected Results

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Housing Innovation Fund Grants (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The reduction in appropriation is due the reorientation of the Housing Innovation Fund.

Expected Results

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Housing Innovation Fund Loan Impairments (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decreased appropriation is due to lower levels of term loan being paid in 2010/11.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Increase in Debt Provision (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decrease in appropriation relates to an increased forecast in 2009/10 based on increasing levels of debt.

Wellington City Council Social Housing Assistance (M37)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The increase in appropriation is due to the budget decision to provide funding for the financial assistance package to Wellington City Council to upgrade the Council's social housing portfolio.

Expected Results

Conditions on Use of Appropriation

Current and Past Policy Initiatives

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 Building and Housing - Capital Expenditure PLA (M9)

Scope of Appropriation

Capital Expenditure

Expected Results

Part 6.2 - Non-Departmental Capital Expenditure

Intended Impacts, Outcomes and Objectives

Acquisition and Development of properties under the Housing Act 1955 (M37)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The decrease in appropriation for the Hobsonville Urban development largely reflects the approved carry forward from 2008/09 of $3.610 million to fund capital works delayed as a result of a longer than expected process to obtain the resource consent for the Comprehensive Development Plan for 2009/10. The decrease for the other properties managed under the Housing Act 1955 reflects the cessation of the appropriation for planned acquisitions of surplus Crown land in 2009/10.

Expected Results

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Acquisition and Improvement of Housing New Zealand Corporation state houses (M37)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The decrease in appropriation is due largely to the cessation of the appropriation for the State House Acquisitions and Auckland pensioner housing reconfiguration and development programmes together with the Acquisition and Healthy Housing Bringing Forward Infrastructure Spending programmes. The decrease in the Healthy Housing programme reflects the cessation of the appropriation provided as part of Budget 2007.

Expected Results

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Capital Injections to Housing New Zealand Corporation for Housing Activities (M37)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The decrease in appropriation is due to the one off capital appropriation in 2009/10 to support the increased functionality of information systems within Housing New Zealand Corporation to support the KiwiSaver housing deposit subsidy scheme.

Expected Results

Current and Past Policy Initiatives

Loans to support Homeownership (M37)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The decrease in the appropriation is due to the conclusion of the Shared Equity Home Ownership pilot.

Loans to support Social and Affordable Housing (M37)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The decrease in the appropriation is due to the reorientation of the Housing Innovation Fund.

Expected Results

Current and Past Policy Initiatives

Refinancing of Housing New Zealand Corporation and Housing New Zealand Limited Debt (M37)

Scope of Appropriation

Capital Expenditure

Reasons for Change in Appropriation

The change in appropriation reflects the funding required for facilities being renewed during the year.

Expected Results

Reporting Mechanisms

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 Senior Citizens

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister for Senior Citizens (M61)

ADMINISTERING DEPARTMENT: Ministry of Social Development

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

Part 1 - Summary of the Vote

Part 1.1 - Overview of the Vote

The Minister for Senior Citizens is responsible for the appropriation in the Vote for the 2010/11 financial year covering the following:

• a total of just over $1 million on services from the Office for Senior Citizens in the Ministry of Social Development.

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

Government Priorities and Outcomes - Links to Appropriations

The performance measures contained in the Information Supporting the Estimates are the main measures and standards that demonstrate performance for the significant outputs in each appropriation.

Objectives of the Vote

Vote Senior Citizens, on behalf of the Government, supports older New Zealanders to age positively through the provision of policy advice to protect the rights and interests of older people, and their wellbeing. This fits neatly with the Government's goal of supporting the independence of older people.

The impacts that the appropriations in Vote Senior Citizens are intended to have are reflected in the Ministry of Social Development's outcome - improved quality of life for older people.

The table above maps the Ministry of Social Development's outcome and appropriations to the Government's outcome for older people.

Part 1.3 - Trends in the Vote

Summary of Financial Activity

Analysis of Significant Trends

Total Vote: All Appropriations

Significant changes in departmental appropriations in Vote Senior Citizens are discussed briefly below.

Output Trends 2005/06 to 2010/11

Changes to expenditure in Vote Senior Citizens reflect the nature of policy advice on matters concerning the welfare of senior citizens and related issues in recent years.

In 2005/06 and 2006/07 one-off transfers occurred from Vote Social Development to Vote Senior Citizens of $151,000 and $107,000 to develop a code of practice for home equity release schemes.

From 2008/09 funding for Vote Senior Citizens is forecast to remain stable.

Part 2 - Details and Expected Performance for Output Expenses

Part 2.1 - Departmental Output Expenses

Intended Impacts, Outcomes and Objectives

For further information on the intended impacts, outcomes and objectives of the departmental output expense appropriation, please see the Statement of Intent for the Ministry of Social Development.

Senior Citizens Services (M61)

Scope of Appropriation

Expenses and Revenue

Output Performance Measures and Standards

Note 1 - Standard met means that we have received confirmation from the Minister for Senior Citizens via his office that advice has been delivered in accordance with the work programme.

Note 2 - The work in relation to the internal audit, review or survey for these measures will be conducted during the year and reported on an annual basis.

Note 3 - Under the audit, a random sample of reports is presented to the Minister over the year to assess if they comply with minimum standard.

Note 4 - The quality characteristics in the Ministry's Quality Management System are based on decision making (defining, debating and deciding) and communication (capturing issues, convincing and confirming).

Note 5 - As set out in the Cabinet Guidelines.

Note 6 - The standard for this measure is based on a continuum of standard not met, standard met and standard exceeded.

Conditions on Use of Appropriation

Performance Information for Appropriations Vote Social Development

MINISTER(S) RESPONSIBLE FOR APPROPRIATIONS: Minister for Disability Issues (M23), Minister for Social Development and Employment (M63)

ADMINISTERING DEPARTMENT: Ministry of Social Development

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

Part 1 - Summary of the Vote

Part 1.1 - Overview of the Vote

The Minister for Social Development and Employment is responsible for the appropriations in the Vote for the 2010/11 financial year covering the following:

• a total of over $467 million on Child Youth and Family related services including responding to and preventing child abuse and neglect, managing adoptions and youth justice services
• a total of over $570 million on services to assist people into employment, and to assess and pay the appropriate entitlement of social assistance to beneficiaries, and to protect the integrity of the benefit system, including collection of debt
• a total of nearly $79 million on specialised services, including services for students, seniors and administration of community services and SuperGold cards
• a total of nearly $48 million on social policy advice and crown entity monitoring
• a total of over $43 million on leadership and coordination services to support and strengthen families, communities and whanau
• a total of over $292 million on services from other organisations
• a total of nearly $16 million purchasing services from the Children's Commissioner, the Retirement Commissioner, and the Families Commission
• a total of $947 million on debt write-downs, and a series of assistance programmes
• a total of $8,822 million on payments of New Zealand Superannuation
• a total of $4,878 million on payments for the working age benefits - Domestic Purposes, Unemployment, Sickness, Invalid's and Widow's benefits
• a total of $1,957 million on payments for assistance with expenses related to accommodation, disability, hardship and entering or remaining in the workforce
• a total of $732 million on payments to assist people to obtain a qualification or independent youth to continue education/training or obtain work
• a total of $511 million on other forms of financial assistance such as childcare, care of unsupported children, payments to Australia and special circumstances
• a total of $1,616 million on payments for student loans, and
• a total of $179 million on advances of benefits and other recoverable payments to assist with hardship.

The Minister for Disability Issues is responsible for the appropriation in the Vote for the 2010/11 financial year covering the following:

• a total of just over $1 million on promoting positive outcomes for disabled people.

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

The performance measures contained in the Information Supporting the Estimates are the main measures and standards that demonstrate performance for the significant outputs in each appropriation.

Objectives of the Vote

The Government's overarching priority is economic growth for New Zealand to ensure jobs are available to give families and individuals security and a good standard of living. We believe that paid work is the best route to independence and well being for most people. The Government aims to have an active welfare system that assists people into work as well as alleviating the impact of financial and social pressures on families in genuine need.

The Government's priorities for the Ministry of Social Development are:

• Unrelenting focus on work.
• A fair system.
• Delivering our services better.
• Protecting our children.
• Opportunities for youth.
• Communities - getting on with it.

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

• more people get into work and stay in work
• more children are safe
• more young people stay on track
• reduced re-offending by young people
• improved quality of life for older people
• communities are better able to support themselves
• ensure value for money in everything we do by running efficient programmes and keeping overhead costs low.

The table above maps the Ministry of Social Development's outcomes and appropriations to the Government's priorities. Most of the Ministry's appropriations contribute to more than one outcome.

Part 1.3 - Trends in the Vote

Summary of Financial Activity

New Policy Initiatives

Analysis of Significant Trends

Total Vote: All Appropriations

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

On 1 July 2008 Vote Child, Youth and Family Services merged with Vote Social Development. Data in Part 1.3 Trends in the Vote includes the trends in Vote Child, Youth and Family Services for the period 2004/05 to 2007/08 before the Votes were merged. This data is also reflected in the relevant graphs below, but the numbers quoted in the written trend analyses for 2005/06 to 2007/08 refer only to changes in Vote Social Development before the Votes were merged.

Trends in total voted and actual expenses and capital expenditure

Source: Ministry of Social Development

The movements in departmental and non-departmental appropriations in Vote Social Development, which are detailed in the Summary of Financial Activity table above, are largely driven by movements in Benefits and Other Unrequited Expenses, in particular New Zealand Superannuation. Capital Expenditure and Other Expenses also contributed to growth in the period up to 2009/10.

Departmental Output Expenses

Departmental Output Expenses

Source: Ministry of Social Development

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

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

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

Departmental output expenses remained stable between 2008/09 and 2009/10 with a slight decrease of $2.925 million.

Departmental output expenses increased by $20.508 million between 2009/10 and 2010/11 mainly because funding for A Fresh Start for Young Offenders increased in 2010/11 compared with 2009/10, and a Budget 2008 decision to increase funding for the Youth Justice Central Residential facility in 2010/11 compared with 2009/10.

Non-Departmental Output Expenses

Non-Departmental Output Expenses

Source: Ministry of Social Development

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

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

Non-departmental output expenses increased by $109.616 million between 2007/08 and 2008/09 mainly because Vote Child, Youth and Family Services merged with Vote Social Development, on 1 July 2008 (approximately $67 million). The other main reason was increased funding for the Pathway to Partnership initiative for 2008/09 and outyears.

Non-departmental output expenses increased by $9.264 million between 2008/09 and 2009/10 mainly because funding for the Pathway to Partnership initiative increased in 2009/10 compared with 2008/09.

Non-departmental output expenses decreased by $10.293 million between 2009/10 and 2010/11 mainly as a result of the Review of Contracted Services.

Non-Departmental Other Expenses

Non-Departmental Other Expenses

Source: Ministry of Social Development

The increase in Other Expenses between 2006/07 and 2010/11 is mainly due to an increase in Debt Write-downs to reflect the growth in Student Loans over recent years.

Non-Departmental Capital Expenditure

Non-Departmental Capital Expenditure

Source: Ministry of Social Development

 

Capital Expenditure is dominated by Student Loans, with the next largest item, Recoverable Assistance, making up about 10% of the total, but reaching over 11% in 2008/09. Recoverable Assistance grew rapidly in 2008/09 reflecting sharp price increases in items such as food and fuel as well as the impact of the recession. This latter effect has continued to drive demand up during 2009/10. The increase in capital expenditure up to 2007/08 reflects greater Student Loan borrowing following the introduction of the no interest on loans policy from April 2006. Growth during 2008/09 and 2009/10 arises from the recession related increase in the proportion of eligible students that take up Student Loans combined with cost increases (particularly in 2008/09) and reduced earnings from other sources. These underlying factors combine with policy changes listed in the previous section to produce more subdued growth from 2010/11.

Non-Departmental Benefits and Other Unrequited Expenses

Non-Departmental Benefits and Other Unrequited Expenses

Source: Ministry of Social Development

New Zealand superannuation accounted for nearly 52% of total expenditure in 2005/06 and grew to 55% by 2007/08. This reduced to 52% in 2009/10 but is expected to rise to over 57% by 2013/14. The movement in expenditure between 2005/06 and 2007/08 was mostly driven by New Zealand Superannuation. The net decrease in Unemployment Benefit and Emergency Benefit expenditure during the 2005/06 to 2007/08 period was largely offset by increases in Invalid's Benefit, Sickness Benefit and second tier assistance (Accommodation Assistance, Disability Assistance and Childcare Assistance). This left New Zealand Superannuation as the main driver of the increase in expenditure over those years. During the 2007/08 to 2010/11 periods growth in New Zealand Superannuation was relatively eclipsed by growth in Unemployment Benefit and Emergency Benefit, Domestic Purposes Benefit, Student Allowances, Accommodation Assistance and Hardship Assistance, which all rose primarily as a response to the economic cycle. Nearly 65% of growth in expenditure between 2005/06 and 2013/14 is caused by the cost of living indexation adjustments made each April and includes the impact on the cost of living of the Tax Reform Package for Budget 2010.

New Zealand Superannuation

New Zealand Superannuation

Source: Ministry of Social Development

About 63% of the $4,370 million increase over the 2005/06 to 2013/14 period is explained by annual cost of living indexation adjustments. These include wage floor impacts where relevant, for example the 66% wage floor applied in April 2007 and in April 2010. Tax cuts, for example in October 2008, add directly to gross expenditure through applying the next indexation adjustment to a higher net rate while tax cuts to higher tax brackets (eg, as in April 2009) raise the level at which future wage floors are applied. In particular, the Tax Reform Package for Budget 2010 is expected to cause expenditure to jump to $740 million in 2011/12 (from the year before) compared $530 million in 2010/11 and then back to $590 million in 2012/13. Over the full nine year period the number of recipients is expected to rise by 140,000 or 29% to reach an average of 622,000 during the 2013/14 year. This growth is in line with the projected growth in the New Zealand population aged 65 years and over.

Invalid's Benefit

Invalid's Benefit

Source: Ministry of Social Development

Annual expenditure is projected to increase by $343 million or 32% between 2005/06 and 2013/14. Cost of living indexation adjustments account for nearly all of the increase. This effect varies from year to year, being smaller in earlier years but is projected to be significant in the future. Effects such as income tax cuts reduce the gross of tax expenditure shown in Figure 8 (without reducing net of tax expenditure) while increases in indirect taxes raise the reported consumers price index, affecting the annual cost of living adjustment to Invalid's Benefit. When combined with the expected flatter trend in the number of recipients these factors produce a very high impact from cost of living adjustments. The number of recipients has increased from an average of 75,700 in 2005/06 to an expected 87,500 in 2009/10 and a projected 88,300 on average in 2013/14.

Domestic Purpose Benefit

Domestic Purpose Benefit

Source: Ministry of Social Development

Annual expenditure is expected to rise by nearly $446 million or about 30% between 2005/06 and 2013/14. This increase includes cost of living adjustments of about $450 million over the nine year period. The average number of recipients in 2005/06 was 105,600 and fell steadily to a low of 97,500 in 2007/08, reflecting both a strong labour market for most of that period and the impact of the Working for Families package. Since the onset of the economic recession the number of recipients has increased and is expected to average 109,600 in 2009/10, just above the 2004/05 level. A further increase to reach 113,600 on average during the 2013/14 year is projected. A rise in births, especially in the 18 to 24 year age group, and the deteriorating economy contributed to the rise in recipients over the past two years.

Unemployment Benefit and Emergency Benefit

Unemployment Benefit and Emergency Benefit

Source: Ministry of Social Development

Annual expenditure is expected to rise by about $63 million or nearly 9% between 2005/06 and 2013/14. Cost of living indexation adjustments each April account for nearly treble the overall change during the nine years, at $172 million. Also over the nine year period the number of recipients is expected to reduce by about 7% from an average of 64,300 to 59,900. This purely reflects the starting point, which was much higher in earlier years back to 1998/99. The number of recipients reached a low of 37,400 on average during 2007/08 and is expected to peak at 80,500 on average during 2010/11, up slightly from the current year, before falling in line with an improving economic outlook.

Sickness Benefit

Sickness Benefit

Source: Ministry of Social Development

Annual expenditure is expected to rise by 54% from $541 million in 2005/06 to $832 million in 2013/14. Nearly 65% of this increase relates to the cost of living adjustment of benefit rates each April. The number of recipients rose steadily from 46,700 on average in 2005/06 to reach 50,000 in 2007/08. This accelerated from late 2008/09 and is anticipated to reach an average of 58,200 in 2010/11 before continuing to rise steadily to reach 62,200 during 2013/14. The strong increase over the past eighteen months is mainly due to economic conditions.

Accommodation Assistance

Accommodation Assistance

Source: Ministry of Social Development

Annual expenditure will increase from $843 million in 2005/06 to an estimated $1,251 million in 2013/14, an increase of over $400 million or 48%. Expenditure reached $1,000 million in the twelve months to July 2009 and is expected to reach $1,158 million in 2009/10. There were 249,400 recipients in 2005/06 and are expected to be 312,400 in 2009/10 and 320,900 recipients on average in 2013/14. This 29% increase over nine years reflects two different trends. Between 2005/06 and 2007/08 the fall in Unemployment Benefit and Emergency Benefit recipients was partly offset by a rise in the uptake of Accommodation Assistance by working households, while the rise between 2008/09 and 2010/11 reflects the rise in the number of main benefit recipients. The average amount paid per recipients rose by about 10% in each of 2004/05 and 2005/06 mainly due to Working for Families changes. Since then the increase has been a slower 2% per year, with the 2009/10 year expected to be flat. Overall the average amount paid per week is expected to rise from $65 in 2005/06 to $75 by 2013/14.

Student Allowances

Student Allowances

Source: Ministry of Social Development

Annual expenditure will increase by $198 million from $354 million in 2005/06 to an estimated $552 million in 2013/14, a rise of 56%. The average number of recipients was 32,400 in 2005/06, though the number during term time has typically been 40% greater than the annual average, and shows evidence of growing toward 50% with more summer semesters. The average number of recipients was little changed at 32,300 in 2007/08. It grew rapidly to 36,700 in 2008/09 (a combination of fewer jobs in early 2009 and changes to parental income rules) and is expected to continue its growth to reach 52,800 during 2010/11. This rapid growth over the current and next year are responses to the recession. This higher uptake rate occurs when the under 25 year population is also near a decade high. From 2011/12 the number of recipients is expected to decline back toward its longer term trend. Costs of living adjustments to weekly allowance payment rates accounts for about 53% of the total nine year change in expenditure.

Other Benefits

Other Benefits

Source: Ministry of Social Development

This section covers the other 18 benefits and other unrequited expense appropriations not already discussed. The largest item, Disability Assistance, has about 35% of the annual expenditure in the 'Other Benefits' category and grew at a steady pace of about $20 million per year between 2005/06 ($330 million) and 2009/10 (reaching $390 million). It is expected to grow at a lesser pace of nearer $13 million per year out to 2013/14 (growing to $465 million). About 32% of the growth between 2005/06 and 2013/14 is caused by the cost of living indexation of Disability Assistance. The next three largest contributors are Hardship Assistance, Childcare Assistance and Orphan's Benefit/Unsupported Child's Benefit. Hardship Assistance includes third tier assistance such as Special Needs Grants and Temporary Additional Support, both of which are sensitive to economic conditions. Special Needs Grants rose sharply from late 2008 following policy changes that particularly increased available food grants. After falling until 2006/07, Hardship Assistance stabilised in 2007/08 before increasing to an expected $273 million in 2009/10. It is forecast to peak at $288 million next year before levelling out. Childcare Assistance grew quickly following the introduction of Working for Families in 2004/05. Expenditure was $110 million in 2005/06 and has continued to grow. Expenditure is expected to reach $190 million in 2010/11 and then level out, with a downward drift. Cost of living indexation adjustments account for over 50% of the increase in annual expenditure between 2005/06 and 2013/14. Orphan's Benefit/Unsupported Child's Benefit has grown at an average pace of about $7 million per year from $64 million in 2005/06 to an expected $101 million in 2009/10 and a forecast $126 million in 2013/14. Cost of living adjustments account for about 44% of the nine year growth. These four items account for 74% of the 'Other Benefits' category in 2005/06 and will grow to account for 85% by 2013/14. The exception is 2010/11 when they account for 72%. This is the year when an estimated $160 million will be spent on the new appropriation "Special compensation payment for GST increase". The next most significant items are Widow's Benefit and Payments to Australia, both on a downward trend over the nine year period.

Performance Improvement Actions

 

Part 2 - Details and Expected Performance for Output Expenses

Part 2.1 - Departmental Output Expenses

Intended Impacts, Outcomes and Objectives

For further information on the intended impacts, outcomes and objectives of the departmental output expense appropriations, please see the Statement of Intent for the Ministry of Social Development.

Adoption Services (M63)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation increased largely because a fiscally neutral reallocation of overheads increased costs in 2010/11.

Output Performance Measures and Standards

Note 1 - Research shows educating and preparing prospective adoptive parents, results in more stable adoptions and that there is less placement disruption.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Care and Protection Services (M63)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation decreased mainly because a Budget 2009 decision provided less funding in 2010/11 than in 2009/10 as a result of the Value for money exercise carried out by the Ministry ($4.144 million). This was partially offset by additional funding for Social Workers in Hospitals ($1.405 million).

Output Performance Measures and Standards

Note 2 - The act of assessing information in order to acquire an understanding of a situation or problem, or to estimate the suitability of something or someone.

Note 3 - The timeliness of Family Court planned reviews are directed by the Family Court (eg, Children under seven years old have planned reviews every six months or as directed by the Court. Children and young people over seven years old have planned reviews every 12 months or as directed by the Court).

Conditions on Use of Appropriation

Current and Past Policy Initiatives

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

Scope of Appropriation

Expenses and Revenue

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Development and Funding of Community Services (M63)

Scope of Appropriation

Expenses and Revenue

Output Performance Measures and Standards

Note 4 - This covers all providers contracted under sections 396 and 403 of the Children, Young Persons, and Their Families Act 1989.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Family and Community Services (M63)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation increased largely because additional funding was agreed to establish the NGO Quality Services Fund, to promote efficiencies from community-based social service providers, and to expand the Settling In Programme. This was partially offset by time-limited funding in 2009/10 and an increase in funding removed for the Community Response Contingency in 2010/11 compared with 2009/10.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Income Support and Assistance to Seniors (M63)

Scope of Appropriation

Expenses and Revenue

Output Performance Measures and Standards

Note 5 - This combines timeliness measures for all activities in this output expense. Timeframes standards for each component are as follows:

• Five working days for New Zealand Superannuation entitlement assessments completed for payment in New Zealand.
• Twenty working days for New Zealand Superannuation entitlement assessments completed for payment overseas.
• Twenty working days for residential subsidy entitlement assessments.

Current and Past Policy Initiatives

Management of Service Cards MCOA (M63)

Scope of Appropriation

Explanation for Use of Multi-Class Output Expense Appropriation

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

Expenses and Revenue

Output Performance Measures and Standards

Note 6 - This assessment relates to cards where an entitlement assessment is required. Some cards are issued automatically without requiring an assessment, for example where the recipient commences receiving a benefit.

Note 7 - Recipients of New Zealand Superannuation and Veteran's Pension are automatically issued with a SuperGold card. However, around six per cent of card recipients require their entitlement to be assessed as they either elected not to apply for New Zealand Superannuation upon turning 65, or do not meet the New Zealand Superannuation residency requirements.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Management of Student Support (M63)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

The increase in this appropriation is largely due to additional funding to implement the Student Support Savings package.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Policy Advice and Support to Ministers MCOA (M63)

Scope of Appropriation

Explanation for Use of Multi-Class Output Expense Appropriation

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

Expenses and Revenue

Reasons for Change in Appropriation

The increase in the Social Policy Advice output class output class is largely due to the transfer of Historical Claims funding ($5 million) from 2009/10 to 2010/11.

Output Performance Measures and Standards

Note 8 - The Ministers who receive services are the Minister for Social Development and Employment, the Minister for Disability Issues, and the Minister for the Community and Voluntary Sector.

Note 9 - Standard met means that we have received confirmation from the Ministers via their offices that advice has been delivered in accordance with a work programme.

Note 10 - The work in relation to the internal audit, review or survey for these measures is conducted during the year and reported on an annual basis.

Note 11 - Under the audit, a random sample of reports is presented to the Minister over the year to assess if they comply with minimum standards.

Note 12 - The quality characteristics in the Ministry's Quality Management System are based on decision making (defining, debating and deciding) and communication (capturing issues, convincing and confirming).

Note 13 - As set out in the Cabinet Guidelines.

Note 14 - The standard for this measure is based on a continuum of standard not met, standard met and standard exceeded.

Note 15 - Standard met means that all appointments identified in the report to Cabinet at the start of each calendar year are actioned as agreed with the Minister.

Note 16 - Output agreement also refers to memoranda of understanding where funding is not paid via Vote Social Development.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Prevention Services (M63)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation increased because a fiscally neutral reallocation of overheads was larger in 2009/10 than in 2010/11.

Output Performance Measures and Standards

Note 17 - Key stakeholders include: New Zealand Police, District Health Board, Ministry of Health, and Ministry of Education, ACC and Office of Children's Commissioner, key NGO providers, Ministry of Justice and Department of Corrections.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Promoting Positive Outcomes for Disabled People (M23)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This is a new appropriation in 2010/11.

Output Performance Measures and Standards

Note 18 - Based on 50-100 interviews with disabled people.

Current and Past Policy Initiatives

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

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This appropriation increased mainly because a one-off fiscally neutral transfer reduced the appropriation in 2009/10.

Output Performance Measures and Standards

Note 19 - Response categories range from 'Closed', 'no further action' to 'full investigation'.

Note 20 - This includes cases referred by all sources for further enquiry for example, fraud allegations and data matches.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

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

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

The decrease in this appropriation is largely due to a reduction in funding in 2010/11 for Work and Income volume pressures compared with funding in 2009/10 and one off funding in 2009/10 to meet increased costs. This was partially offset by increased funding for the Limited Service Volunteer Programme in 2010/11 compared with 2009/10.

Output Performance Measures and Standards

Note 21 - The work-focused Job Search Service is aimed at helping people get a job rather than needing a benefit. Jobseekers applying for a benefit are generally required to attend a Work for You seminar where they are assisted with their job-search skills and advised of their responsibilities and obligations.

Note 22 - This measures the total number of weeks a client is in employment through a 12 month period following exit from a core benefit up to 24 months prior.

Note 23 - DPB clients include DPB-Sole Parent, DPB-Women Alone, Widow's Benefit and Emergency Maintenance Allowance.

Note 24 - An assessment of benefit entitlement is deemed accurate when the assessment is financially correct, which means that the right person is receiving the correct benefit, at the correct rate and from the correct commencement date.

Current and Past Policy Initiatives

Vocational Skills Training (M63)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

The decrease in this appropriation is largely due to additional funding in 2008/09 only.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Youth Justice Services (M63)

Scope of Appropriation

Expenses and Revenue

Reasons for Change in Appropriation

This increase in this appropriation is largely due to increased funding for A Fresh Start for Young Offenders in 2010/11 compared with 2009/10, and a Budget 2008 decision to increase funding for the Youth Justice Central Residential facility in 2010/11 compared with 2009/10.

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

For further information on the intended impacts, outcomes and objectives of the non-departmental output expense appropriations, please see the Statements of Intent for the Children's Commissioner, the Families Commission and the Retirement Commissioner.

Assistance to Disadvantaged Persons (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The increase in this appropriation is due to additional funding for Lifetime Design Homes.

Output Performance Measures and Standards

Note 25 - The reduction in Talking Book volumes is due to the Royal New Zealand Foundation for the Blind transitioning to digital recordings which enables multiple titles to be delivered on one postal item.

Current and Past Policy Initiatives

Children's Commissioner (M63)

Scope of Appropriation

Expenses

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Connected Communities (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The increase in this appropriation is largely due to additional funding to expand the Settling In programme.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Counselling and Rehabilitation Services (M63)

Scope of Appropriation

Expenses

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Education and Prevention Services (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decrease in this appropriation is largely due savings identified in the Review of Contracted Services.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Families Commission (M63)

Scope of Appropriation

Expenses

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Family Wellbeing Services (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The increase in this appropriation is mainly due to additional funding for the Teen Parents Programme of Action and a fiscally neutral transfer of funding for Consumer Price Index adjustments to some social service providers. This was partially offset by savings identified in Review of Contracted Services.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Life Skills and Employment-Related Training Activities (M63)

Scope of Appropriation

Expenses

Output Performance Measures and Standards

Retirement Commissioner (M63)

Scope of Appropriation

Expenses

Output Performance Measures and Standards

Note 26 - The Retirement Commissioner provides independent financial information through Sorted resources including www.sorted.org.nz and www.m.sorted.org.nz, as well as printed material.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Strengthening Providers and Communities (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decrease in this appropriation is due to savings identified in the Review of Contracted Services.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Strong Families (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decrease in this appropriation is largely due to more funding allocated to the Community Response Contingency in 2010/11 than in 2009/10, the drawdown of funds from the Community Response Contingency in 2009/10 and a transfer of funds in 2010/11 for community based social services in other appropriations for the Consumer Price Index adjustment to ensure providers are paid from the same appropriation as existing contracts.. This was partially offset by more funding in 2010/11 than 2009/10 for the Pathway to Partnership initiative and new funding for the NGO Quality Services Fund, the Teen Parents programme of Action and Ring-Fenced Funding for Family Support Services.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Student Placement Services (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The decrease in this appropriation is due to one-off funding in 2009/10 for an advertising campaign to create additional jobs for tertiary students over the summer break.

Output Performance Measures and Standards

Current and Past Policy Initiatives

Vocational Services for People with Disabilities (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

This appropriation decreased due to savings identified in the Review of Contracted Services which was partially offset by additional funding for high needs school leavers.

Output Performance Measures and Standards

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Summary of Service Providers for Non-Departmental Outputs

This table presents the 20 major service providers Vote Social Development has funding arrangements with. Contracts are issued to providers for a multi year period. These contracts expire progressively and are considered for renewal. Until renewal of a provider's contract is confirmed the funding is not shown in the table above. The table shows information current at 31 March 2010.

The above table summarises funding to be allocated through Vote Social Development 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

Appropriations for Benefits and Other Unrequited Expenses and for Capital Expenditure items in this Vote are forecast on a mid-point basis. This means it is to be expected that actual expenditure on some of the forecast items will be more than the mid-point forecast and on other forecast items less than the mid-point forecast. As an appropriation is a legal upper limit on expenditure, using a mid-point forecast to determine the amount of the appropriation inevitably means that there will be unappropriated expenditure for some forecast items, requiring separate ministerial approval and parliamentary confirmation, or parliamentary validation.

To reduce the likelihood of unappropriated expenditure on forecast items in this Vote, the cumulative appropriation for each forecast item in this Vote in the 2009/10 Supplementary Estimates includes for the last three months of 2009/10 not the mid-point forecast but a reasonable upper bound of the forecast range. The estimated actual amounts for 2009/10 and the amounts to be appropriated for 2010/11 shown in the 2010/11 Estimates of Appropriations and here in the Information Supporting the Supplementary Estimates for forecast items in this Vote continue to be on a mid-point forecast basis. These are the amounts that continue to be used in the fiscal forecasts in the Budget Economic and Fiscal Update.

In cases where the amounts have been split into subset parts below, the 2009/10 Budgeted figures all exclude any such additional amounts and so equal the Estimated Actual amounts.

Accommodation Assistance (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

Increases in Accommodation Supplement recipients and a rising average payment are expected to increase expenditure from 2009/10 to 2011/12. Expenditure continues rising through to 2013/14 as the rising average payment more than offsets the decreasing trend in the number of recipients.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Benefits Paid in Australia (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

Expenditure on this item will reduce in line with the agreed annual amounts payable. It is subject to Australian cost of living adjustments and exchange rate fluctuations. The large reduction in 2012/13 represents grandparented payments for Disability Support Pension and Parenting Payment ceasing under the Agreement after ten years of payment.

Conditions on Use of Appropriation

Childcare Assistance (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

The number of children for whom this subsidy is paid has been growing for most of the past five years and is now expected to peak at an average of nearly 49,000 during 2010/11 and then show some steady reduction toward 44,000 by 2013/14. This pattern is reflected in the expenditure in the table above. The growth in the number of households eligible for this subsidy will be affected by the slowdown in increases in the income threshold.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Disability Assistance (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

A rising trend in the average amount paid to recipients of Disability Allowance contributes just over half of the growth in Disability Allowance expenditure. Ongoing growth in the number of New Zealand Superannuation recipients aged over 75 years is expected to drive growth in Disability Allowance expenditure. The number of recipients is expected to grow from around 253,000 in 2009/10 to around 272,000 by 2013/14. The number of Child Disability Allowance recipients is expected to decrease contributing to the decrease in Child Disability Allowance expenditure from 2009/10 to 2010/11. Expenditure increases from 2010/11 to 2013/14 as cost of living adjustments more than offsets the decrease in the number of Child Disability Allowance recipients.

Conditions on Use of Appropriation

Current and Past Policy Initiatives

Domestic Purposes Benefit (M63)

Scope of Appropriation

Expenses

Reasons for Change in Appropriation

Around 85% of the increase in expenditure is caused by cost of living adjustments. Growth in the number of recipients contributes to the remainder though it occurs mostly from 2009/10 to 2011/12. A change in the abatement rules as part of Future Focus, which allows benefit recipients to earn more part-time income before their benefit is abated, is expected to increase expenditure from 2010/11 onwards. The Tax Reform Package lowers gross expenditure from 2010/11 onwards.

Conditions on Use of Appropriation

Current and Past Policy Initiatives