<< Previous | Content | Next >>

NOTE 1: STATEMENT OF ACCOUNTING POLICIES

Reporting entity

These non-departmental schedules and statements present financial information on public funds managed by the Ministry on behalf of the Crown.

These non-departmental balances are consolidated into the Financial Statements of the Government for the year ended 30 June 2016. For a full understanding of the Crown’s financial position, results of operations, and cash flows for the year, refer to the Financial Statements of the Government.

The Ministry’s responsibility is to manage the revenue, expenditure, assets and liabilities on behalf of the Crown. The schedules in respect of the activities administered by the Ministry on behalf of the Crown comprise:

  • collection of indirect tax revenues
  • collection of other revenues
  • payment of refunds on claims received
  • joint venture airports.

The schedules and statements have been prepared pursuant to section 35 of the Public Finance Act 1989.

Basis of preparation

The non-departmental statements and schedules have been prepared in accordance with the accounting policies of the Financial Statements of the Government, Treasury Instructions, and Treasury Circulars.

Measurement and recognition rules applied in the preparation of these non-departmental statements and schedules are consistent with New Zealand generally accepted accounting practice (Tier 1 Public Sector Public Benefit Entity Accounting Standards) as appropriate for public benefit entities.

These non-departmental statements and schedules are the first prepared in accordance with the new PBE accounting standards. There are no material adjustments arising on transition to the new PBE accounting standards.

Significant accounting policies

Budget figures

The 2016 budget figures are for the year ended 30 June 2016, which are consistent with the best estimate financial information submitted to Treasury for the Budget Economic and Fiscal Update for the year ended 30 June 2016.

Revenue and receipts

Indirect taxation is deemed to be non-exchange revenue, for the purposes of these financial statements. All other revenue is deemed to be exchange.

Revenues from road user charges, and motor vehicle licensing fees are recognised on an accrual basis.

Revenues from tolling and infringement fees are recognised on a cash basis.

Debtors and other receivables

Receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

Impairment of a receivable is established when there is objective evidence the Ministry will not be able to collect amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter into insolvency, bankruptcy, receivership, or liquidation, and default in payments, are considered indicators the receivable is impaired.

For receivables not individually impaired, a collective assessment of impairment is also carried out.

This considers past practice of collection history across the receivables portfolio. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the schedule of non-departmental expenses.

When a debt is uncollectible, it is written off against the allowance account for debtors. Overdue receivables that are renegotiated are reclassified as current (that is, not past due).

Investments in joint venture airports

Investments represent the Crown’s investment in joint venture airports. Investments in the joint venture airports are accounted using the equity method, consolidating the post acquisition net asset increase or decrease into these non- departmental schedules.

New Plymouth airport is being considered for divestment and so has been valued by an independent valuer, on a commercial basis, consistent with fair market value standard.

Creditors and other payables

Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.

Financial instruments

Crown Vote Transport is party to financial instruments as part of its normal operations. These financial instruments include cash and bank balances, accounts receivable and accounts payable. Revenue and expenses in relation to all financial instruments are recognised in the schedule of non-departmental revenue and receipts and the schedule of non-departmental expenses. All financial instruments are recognised in the schedule of non-departmental assets and the schedule of non-departmental liabilities.

Goods and services tax (GST)

All items in the financial statements, including appropriation statements, are stated exclusive of GST, except for receivables and payables, which are stated on a GST-inclusive basis.

GST is returned on revenue received on behalf of the Crown, where applicable. However, an input tax deduction is not claimed on non-departmental expenses. Instead, the amount of GST applicable to non-departmental expense is recognised as a separate expense and eliminated against GST revenue on consolidation of the Financial Statements of the Government.

Commitments

Commitments are future expenses and liabilities to be incurred on contracts entered into at balance date. Information on non-cancellable capital and lease commitments are reported in the statement of commitments.

Contingent liabilities

Contingent liabilities are disclosed at the point at which the contingency is evident.

Changes in accounting policies

The accounting policies have been applied consistently to all years presented in these schedules and statements.

Back to top

NOTE 2: INDIRECT TAXATION

Actual 2014/15
$000
  Actual 2015/16
$000
Main Estimates 2015/16
$000
Unaudited Supplementary Estimates 2015/16
$000
1,282,969 Road user charges 1,381,114 1,338,835 1,344,587
180,974 Motor vehicle registration fees 214,128 200,337 207,427
1,463,943 Sub-total 1,595,242 1,539,172 1,552,014
(50,752) Fuel excise duty refunds (58,676) (44,605) (53,412)
1,413,191 Total indirect taxation 1,536,566 1,494,567 1,498,602

Back to top

NOTE 3: OTHER ‘SOVEREIGN POWER’ REVENUE

Actual 2014/15
$000
  Actual 2015/16
$000
Main Estimates 2015/16
$000
Unaudited Supplementary Estimates 2015/16
$000
1,351 Infringement fees - tolls and other 985 1,300 1,300
1,351 Total other 'sovereign power' revenue 985 1,300 1,300

Back to top

NOTE 4: OTHER OPERATIONAL REVENUE

Actual 2014/15
$000
  Actual 2015/16
$000
Main Estimates 2015/16
$000
Unaudited Supplementary Estimates 2015/16
$000
8,056 Tolling revenue (note 10) 9,108 8,200 8,200
4,006 Road user charges administration fees 313 - 360
- Other revenue 200 - 200
12,062 Total other operational revenue 9,621 8,200 8,760

Back to top

NOTE 5: NON-DEPARTMENTAL OUTPUT CLASSES

Actual 2014/15
$000
  Actual 2015/16
$000
Main Estimates 2015/16
$000
Unaudited Supplementary Estimates 2015/16
$000
2,038,714 This expense item is equal to the appropriations for non-departmental output classes listed in the appropriation statements 2,027,873 2,051,581 2,090,510
2,038,714 Total non-departmental output classes 2,027,873 2,051,581 2,090,510

Back to top

NOTE 6: PURCHASE OR DEVELOPMENT OF CAPITAL ASSETS

Actual 2014/15
$000
  Actual 2015/16
$000
Main Estimates 2015/16
$000
Unaudited Supplementary Estimates 2015/16
$000
1,074,033 This expenditure is for the construction of, and improvement to the State highway network 857,295 1,008,270 902,842
1,074,033 Total purchase or development of capital assets 857,295 1,008,270 902,842

Back to top

NOTE 7: OTHER EXPENSES TO BE INCURRED BY THE CROWN

Actual 2014/15
$000
  Actual 2015/16
$000
Main Estimates 2015/16
$000
Unaudited Supplementary Estimates 2015/16
$000
577 Membership of international organisations 650 743 653
3,270 Rail – public policy projects 3,270 3,270 3,270
500 Rail – railway safety 500 500 500
26,116 SuperGold Card  – public transport concessions for cardholders 28,264 28,129 28,529
1,250 Tauranga maritime incident response 930 200 1,036
5,000 Urban cycleways – local routes 6,457 20,000 10,000
10,878 Auckland rail development - - -
90,000 Rail – Auckland metro rail electric multiple unit package - - -
137,591 Total other expenses to be incurred by the Crown 40,071 52,842 43,988

Back to top

NOTE 8: RECEIVABLES

Actual 2014/15
$000
  Actual 2015/16
$000
Main Estimates 2015/16
$000
Unaudited Supplementary Estimates 2015/16
$000
  Non-exchange revenue      
46,577 Motor vehicle registration fees 28,944 48,995 54,810
29,276 Road user charge revenue 19,041 12,687 9,201
75,853 Total non-exchange revenue receivables 47,985 61,682 64,011
  Exchange revenue      
1,960 Tolling revenue 2,307 2,371 1,883
471 Infringement revenue 84 100 548
2,431 Total exchange revenue receivables 2,391 2,471 2,431
78,284 Sub-total 50,376 64,153 66,442
(11,842) Provision for doubtful debts (11,287) - -
66,442 Total receivables 39,089 64,153 66,442

For motor vehicle fees and road user charge revenue, debts are assessed for impairment regularly and provision made for non-collectable debts as shown above.

The carrying value of other receivables approximates their fair value. The Ministry has assessed no provision for impairment is required at 30 June 2016 (30 June 2015: $nil) except as above.

The ageing profile of receivables is shown below.

2014/2015   2015/2016
Gross
$000
Impairment
$000
Net
$000
  Gross
$000
Impairment
$000
Net
$000
64,194 (6,176) 58,018 Not past due 37,078 (2,103) 34,975
5,284 (1,057) 4,227 Past due 1-90 days 4,759 (3,287) 1,472
3,366 (1,010) 2,356 Past due 91-180 days 2,839 (1,961) 878
4,155 (2,493) 1,662 Past due 181-365 days 3,341 (2,307) 1,034
1,285 (1,106) 179 past due >365 days 2,359 (1,629) 730
78,284 (11,842) 66,442 Total 50,376 (11,287) 39,089

Back to top

NOTE 9: INVESTMENT IN JOINT VENTURE AIRPORTS

Actual 2014/15
$000
  Actual 2015/16
$000
11,880 New Plymouth 3,250
3,736 Taupo 3,664
5,087 Whanganui 5,087
800 Westport 727
795 Whakatane 941
2,458 Whangarei 2,869
24,756 Total investment in joint venture airports 16,538

The Crown has a 50 percent interest in each airport, with the other 50 percent held by the local council. The value of  the investment at 30 June 2016 is based on the annual financial statements of each airport for the year ended 30 June 2015 (except for Whanganui and New Plymouth – see below), plus capital contributions from the Crown during the year ended 30 June 2016.

For Whanganui airport, the Ministry is using the accounts to 30 June 2014, because these are the most recent accounts available.

For New Plymouth airport, the Crown is currently discussing with New Plymouth District Council the possible divestment of the airport to it.

The change in investment value shown above reflects:

Actual 2014/15
$000
  Actual 2015/16
$000
- Change in valuation of New Plymouth airport (8,630)
(30) Gains/(losses) generated by the other airports 202
(30) Share of net asset increase/(decrease) in joint venture airports (8,428)
384 Capital payments made during the year 210
354 Total change in investment value (8,218)

Back to top

NOTE 10: INVESTMENT IN THE NORTHERN GATEWAY TOLL ROAD

The Crown contributed $158 million to the construction of the Northern Gateway toll road. It issued infrastructure bonds to fund this and the bonds are shown in the Treasury’s financial statements. The toll revenue from the road is intended to cover the costs of the bonds. Tolling revenue is recorded as other operational revenue in Vote Transport (note 4).

It was agreed a notional account would be kept of the ‘cost’ of the project, with an estimated interest rate charged on the contribution. The interest charge is calculated daily, based on the outstanding balance, plus interest, less tolling revenue received. The interest rate used is 6.45 percent – the average rate on the bonds issued to fund the project, plus 15 basis points. The project was modelled using an estimated rate of 6.4 percent. Further information is available at www.tollroad.govt.nz(external link).

Since the commencement of the project

Actual 2014/15
$000
  Actual 2015/16
$000
158,000 Funding provided for construction 158,000
88,799 Notional interest charged since funding first drawn 102,164
(43,757) Tolling revenue since February 2009 (52,865)
203,042 Balance at 30 June 207,299

Current year

Actual 2014/15
$000
  Actual 2015/16
$000
198,083 Balance at 1 July 203,042
13,015 Notional interest charge for the year 13,365
(8,056) Tolling revenue for the year (9,108)
203,042 Balance at 30 June 207,299

Back to top

NOTE 11: PAYABLES

Actual 2014/15
$000
  Actual 2015/16
$000
Main Estimates 2015/16
$000
Unaudited Supplementary Estimates 2015/16
$000
453,282 National Land Transport Fund revenue payable to the New Zealand Transport Agency 356,297 300,000 400,000
17,194 GST payable 18,594 16,334 17,194
15,771 Motor vehicle registration third party collections 14,616 16,808 16,231
4,219 Output funding payable to KiwiRail 398 4,262 4,219
1,532 Road user charges refunds 1,300 1,232 1,208
987 Output funding payable to Maritime New Zealand 537 - -
600 Output funding payable to other parties 82 - -
493,585 Total payables 391,824 338,636 438,852

Payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of payables approximates their fair value.

Back to top

NOTE 12: FINANCIAL INSTRUMENTS

The carrying amounts of financial liabilities in each of the NZ IAS 39 categories are as follows:

Actual 2014/15
$000
  Actual 2015/16
$000
  Loans and receivables  
5,345 Cash and cash equivalents 25,238
66,442 Receivables and advances 39,089
71,787 Total loans and receivables 64,327
  Financial liabilities measured at amortised cost  
493,585 Payables 364,070

Credit risk

Credit risk is the risk a third party will default on its obligation, causing a loss to be incurred. Credit risk arises from debtors and deposits with banks. Funds must be deposited with Westpac, a registered bank.

The maximum credit exposure for each class of financial instruments is represented by the total carrying amount of cash and cash equivalents and net debtors. There is no collateral held as security against these financial instruments, including those instruments that are overdue or impaired. Other than Westpac, there are no significant concentrations of credit risk.

Back to top

NOTE 13: MAJOR BUDGET CHANGES

Changes were made to the non-departmental budgets in the 2015/16 Supplementary Estimates. Explanations for significant variances are provided below.

  Unaudited Main Estimates
$000
Unaudited Supplementary Estimates
$000
Cumulative Vote
$000
Indirect taxation      
Road user charges 1,338,835 5,752 1,344,587
Motor vehicle registration 200,337 7,090 207,427
Fuel excise duty refunds (44,605) (8,807) (53,412)
Total 1,494,567 4,035 1,498,602

Indirect taxation

The National Land Transport Fund Revenue Forecasting Group meets two or three times a year to reforecast the tax revenue expected for the National Land Transport Fund, based on the current economic forecasts. The changes reflect the result of this process.

Non-departmental expense and capital expenditure appropriations

  Unaudited Main Estimates
$000
Change in Supplementary Estimates
$000
Cumulative Vote
$000
Appropriations for non-departmental output expenses      
National Land Transport Programme PLA 2,006,000 38,200 2,044,200
Policy advice and related outputs – maritime MCA 7,243 612 7,855
Policy advice and related outputs – civil aviation MCA 2,219 468 2,687
Search and rescue and recreational boating safety activities PLA 7,478 529 8,007
SuperGold card – administration of the public transport concessions scheme 95 200 295
Non-departmental other expenses      
Bad debt provision – motor vehicle registration/ licenses and road user charges 4,000 1,000 5,000
Membership of international organisations 743 (90) 653
SuperGold Card – public transport concessions for cardholders 28,129 400 28,529
Tauranga maritime incident response 200 836 1,036
Urban cycleways – local routes 20,000 (10,000) 10,000
Capital expenditure      
Auckland Transport Package loan 145,000 4,000 149,000
Joint venture airports – Crown contribution MYA - 750 750
Maritime New Zealand 3,100 3,518 6,618
National Land Transport Programme – new infrastructure for and renewal of State highways PLA 1,008,270 (105,428) 902,842
Rail – KiwiRail equity injection 29,000 (5,990) 23,010
Rail – Wellington metro rail network upgrade 12,023 4,490 16,513
Regional state highways MYA 74,000 (30,000) 44,000
Roading – reinstatement of earthquake damaged roads in Christchurch – loan 123,420 (66,000) 57,420
Urban cycleways – crown assets 15,000 (13,000) 2,000

Explanations for the major changes were outlined in the 2015/16 Supplementary Estimates (pages 711 onwards). They were:

National Land Transport Programme PLA, and
National Land Transport Programme – new infrastructure for and renewal of State highways PLA

The NZ Transport Agency is responsible for the National Land Transport Programme, which delivers the Government objectives laid out in the Government Policy Statement on land transport. Road tax revenue is allocated to the Fund by legislation and is appropriated in these two appropriations – one operating and one capital.

There are three main reasons for the changes in these appropriations:

  • Funding is transferred to the operating appropriation from the capital one, to fund the former for planned activity in a year
  • Road tax revenue is forecast two to three times a year. The State highway capital appropriation is adjusted as required as revenue increases or decreases
  • Unspent funding from previous years may be appropriated.

Any shortfall in funding to be covered by the loan facilities is reflected in the capital appropriation. This is for simplicity and is consistent with prior years. The increase in the operating appropriation is a transfer from the capital appropriation to cover planned expenditure. The decrease in the capital appropriation of $105.428 million is due to:

  • $93.401 million for the balance in the National Land Transport Fund at 1 July 2015 (decrease)
  • $46.351 million from changes in the road tax revenue forecasts (increase)
  • $38.2 million transferred to the operating appropriation as above (decrease)
  • $18.533 million transferred to the Road Policing Programme appropriation in Vote Police (decrease)
  • $1.645 million appropriated to other outputs within Vote Transport that are funded from road tax revenue (decrease).

SuperGold card – administration of the public transport concessions scheme

The appropriation increased by $0.2 million due to increased administration costs.

Search and rescue and recreational boating safety activities PLA

The appropriation increased by $0.529 million due to additional funding for changes to VHF radio and NowCasting services.

Policy advice and related outputs – civil aviation MCA

The appropriation increased by $0.468 million due to additional funding to allow the Civil Aviation Authority to implement its increased responsibilities under the new Health and Safety at Work Act 2015.

Policy advice and related outputs – maritime MCA

The appropriation increased by $0.612 million. This increase was made up of:

  • $0.512 million to allow Maritime New Zealand to implement its increased responsibilities under the new Health and Safety at Work Act 2015
  • $0.1 million was an expense transfer from 2014/15.

Bad debt provision – Motor vehicle registration/ licences and Road user charges

The appropriation increased by $1 million because the NZ Transport Agency has reduced its debt collection threshold, which has resulted in more uncollectable debt.

Membership of international organisations

The appropriation decreased by $0.09 million as unspent funding was returned to the Crown.

SuperGold Card – public transport concessions for cardholders

The appropriation increased by $0.4 million to provide for the forecast increased cost of the scheme.

Tauranga maritime incident response

The appropriation increased by $0.836 million due to:

  • $0.316 million was an expense transfer from 2014/15 (increase)
  • $0.4 million reprioritised from other appropriations in Vote Transport (increase)
  • $0.12 million transferred from other government departments (increase).

Urban cycleways – local routes

This appropriation was reduced by $10 million due to:

  • $4.12 million was an expense transfer from 2014/15 (increase)
  • $12.57 million re-phased to 2016/17 (decrease)
  • $1.55 million transferred to the urban cycleways capital appropriation to fund planned activity (decrease)

Auckland Transport Package loan

This appropriation increased by $4 million as a net result of re-phasing the loan profile over years.

Joint venture airports – Crown contribution MYA

This appropriation increased by $0.750 million due to:

  • $1.05 million was an expense transfer from 2014/15 (increase)
  • $0.3 million transferred to other appropriations in Vote Transport.

Maritime New Zealand

This appropriation increased by $3.518 million due to an expense transfer from 2014/15.

Urban cycleways – crown assets

This appropriation reduced by $13 million due to:

  • $11.67 million transferred to the operational appropriation (decrease)
  • $1.33 million re-phased to 2016/17 (decrease)

Rail – KiwiRail equity injection

This appropriation reduced by $5.990 million to meet forecast expenditure.

Rail – Wellington metro rail network upgrade

This appropriation increased by $4.490 million due to:

  • $7.49 million was an expense transfer from 2014/15 (increase)
  • $3 million was re-phased to outyears to match planned expenditure.

Regional State highways MYA

This appropriation reduced by $30 million due to a re-phasing of expenditure to match planned expenditure.

Roading – reinstatement of earthquake damaged roads in Christchurch – loan

This appropriation decreased by $66 million due to:

  • $48 million was an expense transfer from 2014/15 (increase)
  • $114 million was re-phased to outyears to match planned loan draw downs (decrease).

NOTE 14: MAJOR BUDGET TO ACTUAL VARIANCES

The significant variances between actual results and the Supplementary Estimates forecasts were:

Schedule of non-departmental revenue and receipts

Total revenue and receipts were $30 million lower than forecast, mainly in indirect taxation. These revenues are demand driven and so difficult to forecast.

Schedule of non-departmental expenses

Total expenses were $113 million lower than forecast. The National Land Transport Fund spent less than forecast.

Schedule of non-departmental assets

Non-departmental assets were $31 million lower than forecast. Receivables are lower than forecast by $27 million. There are a number of factors causing this variance, for example revenue and receipts are lower than forecast.

Schedule of non-departmental liabilities

Payables were $47 million lower than forecast. This relates to the National Land Transport Fund spending less than forecast as noted under expenses above.

Back to top

<< Previous | Content | Next >>