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for the year ended 30 June 2013

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.

The Ministry’s responsibility is to manage the revenue, expenditure, assets and liabilities on behalf of the Crown. The non-departmental balances are consolidated into the Crown financial statements. For a full understanding of the Crown’s financial position and the results of its operations and cash flows for the year, reference should be made to the consolidated audited Crown financial statements for the year ended 30 June 2013.

The schedules in respect of the activities administered by the Ministry on behalf of the Crown comprise:

  • collection of indirect tax 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 schedules and statements have been prepared in accordance with the government’s accounting policies as set out in the Financial Statements of the Government, and in accordance with the relevant Treasury instructions and Treasury circulars.

Measurement and recognition rules applied in the preparation of these non-departmental schedules and statements are consistent with New Zealand generally accepted accounting practice as appropriate for a public benefit entity.

The accounting policies set out below have been applied consistently to all years presented in these schedules and statements. The following particular accounting policies have been applied:

Significant accounting policies

Budget figures

The budget figures are consistent with the financial information in the Main Estimates. In addition, these schedules and statements also present the updated budget information from the Supplementary Estimates.

Revenue

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

Debtors and other receivables

Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate, less impairment changes.

Impairment of a receivable is established when there is objective evidence that the Crown will not be able to collect amounts due according to the original terms of the receivable. Indicators that the debtor is impaired include the significant financial difficulties of the debtor, the probability that the debtor will enter into bankruptcy, and any default in payments. 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 debtor is not collectible, it is written off against the allowance account for debtors. Overdue receivables that are renegotiated are reclassified as current (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.

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

Commitments

Future expenses and liabilities to be incurred on non-cancellable contracts that have been entered into at balance date are disclosed as commitments to the extent that they are equally unperformed obligations.

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.

Note 2: Indirect Taxation

Actual
2011/12
$000

 

Actual
2012/13
$000

Main
Estimates
2012/13
$000

Supplementary
Estimates
2012/13
$000

1,044,600

Road user charges

1,066,192

1,152,255

1,061,963

174,655

Motor vehicle registration fees

173,844

170,485

177,744

1,219,255

Sub-total

1,240,036

1,322,740

1,239,707

(35,093)

Fuel excise duty refunds

(36,251)

(38,626)

(37,545)

1,184,162

Total indirect taxation

1,203,785

1,284,114

1,202,162

 Note 3: Other 'Sovereign Power' revenue

Actual
2011/12
$000

 

Actual
2012/13
$000

Main
Estimates
2012/13
$000

Supplementary
Estimates
2012/13
$000

2,182

Infringement fees – tolls and other

1,626

1,100

1,800

2,182

Total other ‘sovereign power’ revenue

1,626

1,100

1,800

Note 4: Other operational revenue

Actual
2011/12
$000

 

Actual
2012/13
$000

Main
Estimates
2012/13
$000

Supplementary
Estimates
2012/13
$000

14,401

Road user charges administration fees

11,009

14,825

11,510

6,415

Toll revenue – Northern Gateway toll road (note 10)

7,116

6,800

7,500

-

Other revenue

2,066

-

-

6,467

Motor vehicle registration recoveries

-

3,603

-

47,002

Motor vehicle registration administration fees

-

-

-

74,285

Total other operational revenue

20,191

25,228

19,010

Motor vehicle registration recoveries and administration fees are third party revenue of the NZ Transport Agency from 2012/13, rather than revenues of the Crown and so are not reported above. This change resulted from a review of the motor vehicle registry system, and is offset by the disestablishment of the corresponding non-departmental output expense appropriation: Motor vehicle registry.

Note 5: Non-departmental output classes

Actual
2011/12
$000

 

Actual
2012/13
$000

Main
Estimates
2012/13
$000

Supplementary
Estimates
2012/13
$000

1,889,348

This expense item is equal to the appropriations for non-departmental output classes listed in the statement of non-departmental expenditure and appropriations.

1,907,641

1,830,174

1,938,893

1,889,348

Total non-departmental output classes

1,907,641

1,830,174

1,938,893

 Note 6: Purchase or development of capital assets

Actual
2011/12
$000

 

Actual
2012/13
$000

Main
Estimates
2012/13
$000

Supplementary
Estimates
2012/13
$000

625,661

This expenditure is for the construction of, and improvement to, the State highway network including pavement rehabilitation and seal widening.

607,265

804,529

607,265

625,661

Total purchase or development of capital assets

607,265

804,529

607,265

 Note 7: Other expenses to be incurred by the Crown

Actual
2011/12
$000

 

Actual
2012/13
$000

Main
Estimates
2012/13
$000

Supplementary
Estimates
2012/13|
$000

132,498

Auckland rail development

142,963

152,106

159,108

685

Membership of international organisations

611

743

743

112,027

Rail – metro rail rolling stock and infrastructure (Wellington)

5,415

-

5,415

3,270

Rail – public policy projects

3,270

3,270

3,270

500

Rail – railway safety

500

500

500

21,339

SuperGold card – public transport concessions for cardholders

22,755

21,605

22,755

32,179

Tauranga maritime incident response

2,318

-

3,361

43,454

Loan for Auckland metro rail electric multiple unit package fair value write-down

-

-

-

10,147

Rail network and rolling stock upgrade MYA

-

-

-

356,099

Total other expenses to be incurred by the Crown

177,832

178,224

195,152

Note 8: Receivables and advances

Actual
2011/12
$000

 

Actual
2012/13
$000

Main
Estimates
2012/13
$000

Supplementary
Estimates
2012/13
$000

53,597

Motor vehicle registration fees

46,609

43,685

45,657

-

Prepayments

-

12,106

-

9,201

Road user charge revenue

10,210

12,687

9,201

1,639

Toll revenue

1,691

1,910

1,765

674

Infringement fee revenue

394

100

548

65,111

Sub-total

58,904

70,488

57,171

(7,939)

Provision for doubtful debts

(10,051)

(7,171)

-

57,172

Total receivables and advances

48,853

63,317

57,171

The carrying value of receivables and advances approximates their fair value. No debtor is past due, and the Ministry has assessed that no provision for impairment is required at 30 June 2013 (2012: $nil).

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

Note 9: Investment in joint venture airports

Actual
2011/12
$000

 

Actual
2012/13
$000

11,726

New Plymouth

11,676

3,726

Taupö

3,681

5,135

Wanganui

5,086

716

Westport

922

584

Whakatane

538

2,471

Whangarei

2,476

24,358

Total investment in joint venture airports

24,379

The Crown has a 50% interest in each airport. The value of the investment at 30 June 2013 is based on the annual financial statements of each airport for the year ended 30 June 2012 (2012: 30 June 2011), plus capital contributions from the Crown during the year ended 30 June 2013.

The investment was reduced by $376,000 for losses incurred by the airports during the year ended 30 June 2012 (2012: $500,000 reduction) and increased for capital payments made during 2012/13 of $397,000 (2012: $130,000).

The net result is a $21,000 increase in the Crown’s equity position for the year ended 2013 (2012: $370,000 reduction).

Note 10: Investment in the northern gateway toll road

The Northern Gateway toll road project was completed during 2008/09 with a contribution from the Crown of $158 million. The charging of a toll for using the road began in February 2009. The Crown issued infrastructure bonds to fund the project and the toll revenue is intended to cover the costs of the bonds. The bonds are shown within the financial statements of the Treasury and the tolling revenue is recorded as other operational revenue (note 4).

A notional account is kept of the ‘cost’ of the project using an estimated interest rate charged on the balance advanced. The interest charge is calculated daily, based on the outstanding balance of money advanced, plus interest, less tolling revenue received. The interest rate used is 6.45% which is the average rate for the infrastructure bonds issued to fund the contribution, plus 15 basis points. The project was modelled using an estimated rate of 6.4 %. The two tables below show the project since the start and then for the current year. Further information is available at www.tollroad.govt.nz.

Since commencement of project

Actual
2011/12
$000

 

Actual
2012/13
$000

158,000

Funding provided for construction

158,000

50,750

Interest charged since funding first drawn

63,131

(20,937)

Tolling revenue since February 2009

(28,053)

187,813

Balance at the year end

193,078

Current year

Actual
2011/12
$000

 

Actual
2012/13
$000

182,198

Balance brought forward

187,813

12,030

Interest cost for the year

12,381

(6,415)

Tolling revenue for the year

(7,116)

187,813

Balance at the year end

193,078

 Note 11: Payables

Actual
2011/12
$000

 

Actual
2012/13
$000

Main
Estimates
2012/13
$000

Supplementary
Estimates
2012/13
$000

279,514

National Land Transport Fund revenue payable to the NZ Transport Agency

352,223

200,000

250,000

753

Output funding payable to Maritime NZ

470

-

-

18,727

Output funding payable to New Zealand Railways Corporation

1,638

13,414

12,000

1,741

Output funding payable to Meteorological Service

-

1,741

-

14,585

GST payable

13,848

14,352

14,585

32,055

Motor vehicle registration third party collections

30,443

28,445

32,054

1,208

Road user charges refunds

20

1,232

1,208

348,583

Total payables

398,642

259,184

309,847

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

Note 12: Financial instruments

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

Actual
2011/12
$000

 

Actual
2012/13
$000

 

Loans and receivables

 

20,119

Cash and cash equivalents

31,400

57,172

Receivables and advances

48,853

77,291

Total loans and receivables

80,253

 

Financial liabilities measured at amortised cost

 

348,583

Payables

398,642

Credit risk

Credit risk is the risk that 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 Bank, there are no significant concentrations of credit risk.

Note 13: Major budget changes

Changes were made to the non-departmental budgets in the 2012/13 Supplementary Estimates. Explanations for significant variances only are provided below.

Revenue and receipts

 

Main Estimates
$000

Supplementary Estimates
$000

Cumulative Vote
$000

Indirect taxation

     

Motor vehicle registration

170,485

7,259

177,744

Road user charges

1,152,255

(90,292)

1,061,963

Fuel excise duty refunds

(38,626)

1,081

(37,545)

 

1,284,114

(81,952)

1,202,162

Other ‘sovereign power’ revenue

     

Infringement fees – tolls and other

1,100

700

1,800

Other operational revenue

     

Road user charges administration fees

14,825

(3,315)

11,510

Motor vehicle registration recoveries

3,603

(3,603)

-

Toll revenue

6,800

700

7,500

 

25,228

(6,218)

19,010

Tax revenue and related fees

The National Land Transport Fund Revenue Forecasting Group meets on a six-monthly basis to reforecast the tax revenue that is expected for the National Land Transport Fund, based on the current economic forecasts. The changes reflect the result of this process. The administration revenue is also forecast as part of this.

Infringement fees – tolls and other

The level of toll infringements is uncertain at this time as enforcement activity has only been undertaken for a short time.

Non-departmental expenditure and capital appropriations

 

Main
Estimates
$000

Supplementary
Estimates
$000

Cumulative
Vote
$000

Appropriations for non-departmental output expenses

     

Construction of passing opportunities on State Highway 2 between Napier and Gisborne

-

500

500

Licensing activities

3,561

(316)

3,245

National Land Transport Programme PLA

1,767,000

51,900

1,818,900

Policy advice and related outputs – Maritime MCOA

6,510

135

6,645

Reinstatement of local roads in Canterbury

-

57,000

57,000

Road user charges collection

13,273

(500)

12,773

Non-departmental other expenses

     

Auckland rail development MYA

152,106

7,002

159,108

Bad debt provision – motor vehicle registration/licences and road user charges

6,000

1,000

7,000

Rail – metro rail rolling stock and infrastructure (Wellington)

-

5,415

5,415

SuperGold card – public transport concessions for cardholders

21,605

1,150

22,755

Tauranga maritime incident response

-

3,361

3,361

Capital expenditure

     

Aviation Security Service

-

200

200

Joint venture airports – Crown contribution

500

447

947

KiwiRail equity injection

-

322,500

322,500

Maritime NZ capital expenditure PLA

-

745

745

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

804,529

(197,264)

607,265

National War Memorial Park: Buckle Street undergrounding project

-

15,000

15,000

Rail – loan for Auckland metro rail electric multiple unit package

100,000

18,000

118,000

Rail – New Zealand Railways Corporation loans

-

107,500

107,500

Tauranga Eastern Link loan

20,000

(20,000)

-

Wellington metro rail network upgrade

13,897

(3,027)

10,870

Explanations for the major changes were outlined in the 2012/13 Supplementary Estimates (pages 738 onwards). They were:

Construction of passing opportunities on State Highway 2 between Napier and Gisborne
The appropriation was created during 2012/13 with funding of $500,000 for the year.

Licensing activities
Two elements of this appropriation were adjusted.

  • driver licence stop orders – a net decrease of $486,000 from moving funding between years

  • drug and alcohol assessments – $170,000 was reprioritised to here from elsewhere in Vote Transport to fund an increase in the forecast number of assessments.

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 Funding. Road tax revenue is allocated to the fund by legislation and is appropriated in these two appropriations.

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

  • road tax revenue is forecast every six months. The State highway capital appropriation is adjusted as required as revenue increases or decreases

  • funding is moved between the two appropriations to reflect the planned levels of operating and capital expenditure for the year.

Policy advice and related outputs – maritime MCOA
Reinstatement of local roads in Canterbury
Rail – metro rail rolling stock and infrastructure (Wellington)
Aviation Security Service
Joint venture airports – Crown contribution
These appropriations increased due to transfers of unspent funding from 2011/12.

Road user charges collection
This appropriation reduced due to an expense transfer to 2013/14.

Auckland rail development
Wellington metro rail network upgrade
These appropriations were adjusted to match the timing of planned expenditure over their lives.

Bad debt provision – motor vehicle registration/licences and road user charges
This appropriation was increased to reflect the estimated forecast expense in the year.

SuperGold Card – public transport concessions for cardholders
The appropriation increased due to an expense transfer from 2011/12 and a reprioritisation of funding from within Vote Transport to match the appropriation to the forecast expense.

Tauranga maritime incident response
This appropriation increased due to an expense transfer from 2011/12 and a successful funding request to carry on the incident response.

KiwiRail equity injection
This appropriation was created to convert existing loans from the Crown into equity.

Maritime NZ capital expenditure PLA
The funding was appropriated to reimburse Maritime NZ for high search and rescue costs in 2010/11 and 2011/12.

National War Memorial Park: Buckle Street undergrounding project
The appropriation was created during 2012/13 with funding of $15 million for the year.

Rail – Loan for Auckland metro rail electric multiple unit package
There was a net increase to 2012/13 from moving funding between years.

Rail – NZ Railways Corporation loans
The appropriation reflects the decision by Cabinet to roll over existing loans to KiwiRail.

Tauranga Eastern Link loan
The appropriation reduced to nil in 2012/13 due to an expense transfer to 2013/14.

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 $2.2 million higher than forecast due to the following:

  • actual indirect taxation was $1.6 million higher than forecast. These revenues are forecast on a six-monthly basis

  • other operational revenue was $1.2 million higher than forecast. This revenue covers toll revenue and administration fees paid with motor vehicle registration charges and road user charges

  • other ‘sovereign power’ revenue was $0.2 million lower, largely relating to tolling infringement fees

  • the Crown’s share of joint venture airports losses was $0.4 million, nothing was forecast.

Schedule of non-departmental expenses

Total expenses were $50 million less than appropriated in Supplementary Estimates. The significant variances relate to the following appropriations:

Reinstatement of local roads in Canterbury: costs were incurred more slowly than expected and unspent funds will be carried forward to 2013/14 – an underspend of $30.8 million.

Auckland rail development: work that was expected to be completed this year will now occur in 2013/14 which is expected to be the last year of the appropriation – an underspend of $16.1 million.

Bad debt provision – motor vehicle registration/licences and road user charges: the NZ Transport Agency changed the application of its revenue policy so that revenue that is unlikely to be collected is not recognised, which means less revenue is written off as bad debts. This generated a lower expense by $4.0 million.

Schedule of non-departmental assets

Non-departmental assets were $22.2 million higher than forecast due to the following:

  • cash and bank balances are higher than forecast by $31.4 million, as the NZ Transport Agency accrued more expenditure than anticipated (less was paid in cash)

  • the provision for doubtful debt was $10.1 million, nothing was forecast.

Schedule of non-departmental liabilities

Payables were $89 million higher than forecast. These non-departmental payables relate to timing of payments to Crown agencies under Vote Transport. The agencies generally request sufficient cash to cover their expenditure for the month and this can vary and so is difficult to forecast accurately.

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