Financial Summary
In 2005/2006 the Ministry expects to earn $58.964 million (GST exclusive) in revenue from the Crown and $44.058 million (GST exclusive) from other purchasers of the services it will supply under the 18 departmental output classes detailed in this report. The Ministry expects to incur expenses of $109.470 million (GST exclusive) in providing these services.
The Ministry expects to incur a deficit of $6.448 million in 2005/2006.
In addition, the Ministry administers the following non-departmental appropriations:
- Output classes across six Votes (Commerce; Communications; Consumer Affairs; Energy; Economic, Industry and Regional Development; and Tourism) totalling $345.114 million for services supplied by the Commerce Commission, Securities Commission, Accounting Standards Review Board, Takeovers Panel, New Zealand Trade and Enterprise, Electricity Commission, New Zealand Citizens Advice Bureaux, local and national delivery organisations for economic, industry and regional development programmes, and New Zealand Tourism Board.
- Appropriations across five Votes (Commerce; Communications; Energy; Economic, Industry and Regional Development; and Tourism) totalling $107.229 million for regional development programme initiatives and grants, subscriptions and other expenses.
- Six multi-year appropriations of $126.827 million for the four-year period 2004/2005 - 2008/2009. These appropriations reflect:
- two multi-year appropriations in Vote Communications totalling $38.202 million over a four-year term between 2005/2006 to 2008/2009 for digital strategy initiatives;
- three multi-year appropriations totalling $47.000 million in Vote Energy over a two- to four-year term between 2005/2006 to 2008/2009 to provide for non-operating and maintenance security of supply costs relating to the Whirinaki reserve generation station, purchase of demand side management and reserve energy production, and for the acquisition of seismic data in New Zealand's offshore petroleum basins; and
- one multi-year appropriation in Vote Economic, Industry and Regional Development totalling $56.625 million, applying over a three-year term between 2004/2005 and 2006/2007 for advice and grants to help regional partnerships to identify, develop and implement sustainable economic growth strategies.
The Ministry is responsible for making payments for the services supplied within appropriation under non-departmental output classes and for other expenditures on behalf of the relevant Vote Ministers. Each non-departmental output class provider is directly accountable to the responsible Minister for its performance. The Ministry is responsible for managing and monitoring contracts with non-departmental output class providers on behalf of the responsible Minister.
The Ministry expects to collect $213.007 million of Crown revenue in 2005/2006, with the major portion coming from levies on electricity industry participants and energy resource levies and royalties.
Details of how the non-departmental appropriations will be applied appear in Parts B1, B2, C2, D and E of Votes Commerce; Communications; Consumer Affairs; Energy; Economic, Industry and Regional Development; and Tourism, in the Estimates of Appropriations for the Government of New Zealand for the year ended 30 June 2006.
Financial Highlights
| | 2004/2005
Budget1 | 2004/2005
Estimated
Actual | 2005/2006
Forecast | Change between
2004/2005 Budget
and 2005/2006 |
| | $000 | $000 | $000 | $000 | % change |
| Revenue: Crown | 56,533 | 55,500 | 58,964 | 2,431 | 4.30 |
| Revenue: Other | 44,259 | 43,951 | 44,058 | (201) | (0.45) |
| Output expenses | 106,359 | 104,175 | 109,470 | 3,111 | 2.90 |
| Net surplus | (5,567) | (4,724) | (6,448) | (881) | (15.83) |
| Taxpayers' Funds | 14,578 | 14,578 | 21,152 | 6,574 | 45.10 |
The most significant movements in budgets between 2004/2005 and 2005/2006 are explained below.
Revenue Crown (+$2.431 million)
The main drivers of the change are as follows:
Vote Economic, Industry and Regional Development (+$1.280 million)
- the full year impact of transferring the Growth and Innovation Advisory Board secretariat functions from the Ministry of Research, Science and Technology (MoRST);
- the full year impact of implementing a regional statistics programme;
- increasing the Ministry's presence in Auckland to allow the Ministry to more effectively engage with Auckland stakeholders;
- increasing the Ministry's capacity and capability needs to contribute to infrastructure policy beyond energy and ICT sectors;
- additional funding to develop mechanisms to give national guidance on network infrastructure under the Resource Management Act 1991; and
- maintaining capability on policy advice for SMEs.
Offset in part by reductions for:
- one-off funding provided in 2004/2005 for research to develop a blueprint enabling Small and Medium Enterprises (SME) to enter export markets using e-commerce, and for growing and sustaining SME in New Zealand policy work; and
- one-off funding provided in 2004/2005 for undertaking a Regional Development Conference based around the theme, Our Future - Our Potential - Our Choices, in March 2005.
Vote Commerce (-$1.358 million)
- the transfer of policy responsibilities for the Charities Commission to the Department of Internal Affairs;
- the transfer of policy responsibilities for building policy to the Department of Building and Housing;
- higher funding provided in 2004/2005 for travel costs in support of WTO negotiations and bilateral CEP/FTAs; and
- one-off funding provided in 2004/2005 to establish a Steering Group on the Regulation of Financial Intermediaries.
Offset in part by an increase for:
- additional funding to strengthen the capability for the provision of policy advice.
Vote Communications (+$558,000)
- increased funding provided in 2005/2006 to administer the development of initiatives that will improve capability and skills to use ICT, and develop community-driven requirements for digital content; and
- increased funding provided in 2005/2006 to administer the establishment of a contestable fund for partnerships that have projects that extend high-speed broadband to regional centres and businesses and make broadband available to smaller communities.
Vote Energy (+$725,000)
- increased funding provided in 2005/2006 for the development and registration functions under the Kyoto Protocol.
Vote Tourism (+$1.406 million)
- increased funding transferred from 2004/2005 to 2005/2006 to cover costs associated with Tourism Research, Māori Tourism, Cultural Tourism and Labour Market Research projects;
- one-off funding provided in 2005/2006 for the Tourism Offshore Marketing Baseline Review; and
- a phased increase in funding for enhancing policy and research.
Offset in part by a reduction for:
- one-off funding provided in 2004/2005 for the development policy phase of the Local Authority Tourism Infrastructure Grant Scheme.
Other Revenue (-$201,000)
The main drivers of the change are as follows:
Vote Commerce (-$1.455 million)
- one-off increases in 2004/2005, mainly due to marginal cost increases associated with processing an increase in volumes of trade mark applications and costs relating to the increase in statutory registration activity; and
- one-off funding provided in 2004/2005 for hosting a seminar on The Use of Timber in Construction.
Vote Energy (+$1.370 million)
- one-off increase in forecast revenue associated with holding the 2006 New Zealand Petroleum Conference; and
- the introduction of new levies associated with the implementation of the LPG safety regime.
Offset in part by a reduction to account for:
- one-off forecast increases in 2004/2005 relating to exploration annual fees.
Output Expenses (+$3.111 million)
The main drivers of the changes reflect the expense side of the non-forecast related revenue related changes referred to above.
Forecast Net Surplus (-$881,000)
This mainly reflects the forecast impact of a long-term strategy to reduce memorandum account balances administered by the Ministry.
Memorandum accounts are operated in Registration and Provision of Statutory Information, the Registration and Granting of Intellectual Property Rights (both in Vote Commerce), Administration of the Radiocommunications Act 1989 (Vote Communications), the Motor Vehicle Traders Registration activities (Vote Commerce and Vote Consumer Affairs), and Administration of Gas and Electricity Regulations (Vote Energy).
Further information on how the Ministry is working towards reducing surpluses further are outlined in the Forecast of Memorandum Accounts Balances statement that forms part of the forecast financial statements.
Taxpayers' Funds (+$6.574 million)
The change reflects additional equity for the Ministry.
The increase mainly reflects additional funding for:
- the development and implementation of a national unit register under the Climate Change Response Act 2002 ($2.500 million);
- providing additional equity for the Ministry of Economic Development to provide it with a sustainable long-term equity base ($4.000 million); and
- costs associated with the implementation of the LPG safety regime ($0.074 million).
Additional capital is also forecast to be provided, totalling $8.661 million, to fund the forecast deficits noted above in the memorandum accounts operated in Registration and Provision of Statutory Information (Vote Commerce), and Administration of the Radiocommunications Act 1989 (Vote Communications).
The following diagram represents the contribution each Vote makes to the Ministry's total departmental output class appropriation base:
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