Summary of Initiatives in Budget 2016

1  How to Read this Document#

How to Read the Tables in this Document

How the Budget is Put Together

The Budget introduced to Parliament on Budget day seeks authorisation for government spending in the 2016/17 financial year (1 July 2016-30 June 2017), including new initiatives and existing activities. The Budget also provides information on spending for subsequent years out to 2019/20.

Typically, previously agreed spending (the baseline) does not automatically increase each year.[1] Increases to current baselines are provided for from the operating and capital allowances. Operating funding provides for on-going operational costs while capital expenditure provides the one-off investment for the construction or establishment of assets.

The level of the operating and capital allowances is set in advance of each Budget and included in forecasts as “forecast new spending”. The decision-making phase of the Budget process then allocates the allowances to specific initiatives. The additional spending met from allowances and existing baselines forms the total Budget.

For Budget 2016, the operating allowance is $1.6 billion a year and the capital allowance is $1.4 billion. The allowances are calculated in net terms, meaning that increases in spending may be offset by increases in revenue, reductions in spending, or reprioritisation. For example, gross new operating spending in Budget 2016 averages $2.1 billion a year; however, this is offset by $0.5 billion a year of revenue and savings initiatives on average, bringing the total net increase to $1.6 billion a year.

The Budget operating allowance is on a per year basis. The Budget 2016 operating allowance is $1.6 billion a year - over the four years 2016/17-2019/20 this totals $6.4 billion. The Treasury's fiscal forecasts also include allowances to be allocated in future Budgets. As Figure 1 shows, the cumulative impact of these operating allowances will increase the 2019/20 baseline by a further $4.5 billion.

Figure 1 - Budget 2016 (average per year) and future Budget operating allowances

Understanding Appropriations and Votes

“Appropriations” and “Votes” are terms used to describe government spending in a legislative context. Appropriations are the basis on which Parliament authorises the executive government to incur expenses and capital expenditure. Without parliamentary authority, the government has no authorisation to spend public money.

The Appropriation Bill introduced to Parliament on Budget day seeks authority for government spending in the upcoming financial year. The Estimates of Appropriations which are also provided to Parliament on Budget day provide detail on all appropriations.

An appropriation must have a scope statement outlining what the funding can be spent on and an amount which sets the upper limit of the financial authority. Any costs incurred that are not within the scope statement or above the upper limit are considered unlawful.

Related appropriations are grouped into Votes - for example, all the appropriations relating to Arts, Culture and Heritage are collectively described as Vote Arts, Culture and Heritage. Although appropriations in a Vote may be the responsibility of one or more Ministers, a Vote is administered by one department.

Appropriations are a constraint on the amount that can be spent rather than a promise to provide funding, or a requirement to spend it. As appropriations are a constraint or upper limit, they are also not necessarily a forecast of much will be spent.

How do Appropriations Relate to Forecasts

Whereas appropriations describe the upper limit of what the government may spend, core Crown expenses presented in the fiscal forecasts reflect a best estimate of expenditure. Core Crown expenses are also adjusted to eliminate transfers within the Crown (eg, when one government department purchases a service of another government department).

In the Treasury's fiscal forecasts (see the Budget Update), expenses are grouped by functional classification, such as health, education, law and order, environmental protection, transport and communication. This functional analysis of expenses is based on the Classification of the Functions of Government (COFOG) as developed by the Organisation for Economic Co -operation and Development (OECD). The functional analysis of expenses allows for high -level international comparisons.

Disclaimer

The Appropriation (2016/17 Estimates) Bill when enacted will provide parliamentary authority for government spending. Efforts have been made to ensure that the details provided in this document are consistent with those provided in the Appropriation (2016/17 Estimates) Bill and the supporting information in the Estimates of Appropriations. If there are any inconsistencies, the Appropriation (2016/17 Estimates) Bill provides the correct information.

Notes

n/a
not applicable

$m
millions of dollars

(#)
brackets are used to indicate a savings initiative or a revenue increase

 -
zero

0, (0)
not zero, but rounded to zero

Vol.
used in reference to a Volume of the Estimates of Appropriations for 2016/17

Supps
used in reference to the Supplementary Estimates of Appropriations for 2015/16

*
initiatives marked with an asterisk have been partially funded by reprioritisation or are partially offset by a levy

2  Budget 2016 Packages#

The tables in this section provide breakdowns on the four key packages of spending announced as part of Budget 2016.

Initiatives marked with an asterisk have been partially funded by reprioritisation or are partially offset by a levy.

Initiatives marked with an asterisk have been partially funded by reprioritisation or are partially offset by a levy.

Initiatives marked with an asterisk have been partially funded by reprioritisation or are partially offset by a levy.

Initiatives marked with an asterisk have been partially funded by reprioritisation or are partially offset by a levy.

3  Budget 2016 Initiatives, by Area of Spending#

Table 5 below provides a summary of the new spending in Budget 2016 by area of spending. The net spending increase over four years is $1.6 billion on average. Table 6 provides a list of initiatives. Further detail on specific Budget initiatives can be found in Section 5 Notes on Initiatives using the page reference in the left hand column.

Note that numbers may not add owing to rounding.

Table 6 - Initiatives agreed in Budget 2016

Initiatives marked with an asterisk have been partially funded by reprioritisation or are partially offset by a levy.

4  Budget 2016 Initiatives by Vote#

Table 7 below groups Budget initiatives by Vote. Where one initiative affects multiple Votes, only the portion of the initiative relevant to that Vote will be listed.

Further detail on specific Budget initiatives can be found in Section 5 Notes on Initiatives using the page reference in the left hand column. This detail clearly shows where one initiative impacts multiple Votes.

Initiatives marked with an asterisk have been partially funded by reprioritisation or are partially offset by a levy.

5  Notes on Initiatives (A-C)#

This funding will enable the Electoral Commission to meet its statutory objectives and fully discharge its legislative mandate to manage the New Zealand Electoral system and conduct a General Election in 2017.

This funding is for the second tranche of the Accelerated Regional Road Package. Tranche two projects have been assessed by the New Zealand Transport Agency and this funding is for four of these projects: Motu Bridge Replacement, Opawa Bridge Replacement, Awakino Tunnel Bypass and Mt Messenger Bypass. Funding for tranche one projects was provided in Budget 2015. The total government commitment to this package is $212 million.

This funding will continue the Accelerators Programme, which supports the rapid formation of early-stage information technology and digital start-ups. The programme provides mentors, business assistance, pitch training, technical assistance and access to investor networks, in support of the participating firms.

This funding will help the Accident Compensation Corporation (ACC) provide services and support that assist people who are not in paid employment to avoid and recover from injury. It responds to increased demand arising from expected growth in the non-earners' population. This initiative will increase ACC's funding to about $1.23 billion for non-earners in 2016/17, which includes funding for support that will be provided in future years to injured people who need long-term assistance.

This funding will support the continuation of emergency services, such as air and road ambulances and ambulance communication centres.

This funding enables the removal of the need for additional annual decision making on income thresholds by creating new superannuitant-specific income thresholds that can be adjusted as necessary as part of the normal Annual General Adjustment (AGA) process.

This funding provides for an Annual Maximum Fee Movement (the amount tertiary education organisations can increase their domestic fees) of 2% for 2017 and 2018. A 2% increase balances providers' need for flexibility to meet costs and affordability for students, while reflecting the historically low inflation environment in New Zealand. Note that this initiative has not been counted against the operating allowance as the initiative is expected to be broadly fiscally neutral over time.

This funding will sustain Antarctica New Zealand's provision of logistics support and related services, which is used to facilitate research undertaken within the Government's science priorities for Antarctica.