NOTE 1: Statement of accounting policies
<<Previous | Contents | Next>>
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 2014.
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
jointventure airports.
The schedules and statements have been prepared pursuantto 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 and tolling revenue are recognised on an accrual basis. Revenues from infringement fees are recognised on a cash 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 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 there 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.
Back to top
NOTE 2: Indirect taxation
Actual
2012/13
$000
Actual
2013/14
$000
Main Estimates
2013/14
$000
Supplementary Estimates
2013/14
$000
173,844
Motor vehicle registration fees
187,112
186,707
185,665
1,066,192
Road user charges
1,204,502
1,163,642
1,162,446
1,240,036
Sub-total
1,391,614
1,350,349
1,348,111
(36,251)
Fuel excise duty refunds
(42,324)
(37,357)
(38,481)
1,203,785
Total indirect taxation
1,349,290
1,312,992
1,309,630
Back to top
NOTE 3: Other ‘Sovereign Power’ revenue
Actual
2012/13
$000
Actual
2013/14
$000
Main Estimates
2013/14
$000
Supplementary Estimates
2013/14
$000
1,626
Infringement fees –tolls and other
1,525
1,400
1,400
1,626
Total other ‘sovereign power’ revenue
1,525
1,400
1,400
NOTE 4: Other operational revenue
Actual
2012/13
$000
Actual
2013/14
$000
Main Estimates
2013/14
$000
Supplementary Estimates
2013/14
$000
11,009
Road user charges administration fees
11,080
13,204
11,401
2,066
Other revenue
28,206
-
28,170
7,116
Tolling revenue (note 10)
7,648
7,200
7,200
20,191
Total other operational revenue
46,934
20,404
46,771
The increase in other revenue is due to the payment to the Crown of the settlement proceeds paid by the insurer of the MV Rena.
Back to top
NOTE 5: Non-departmental output classes
Actual
2012/13
$000
Actual
2013/14
$000
Main Estimates
2013/14
$000
Supplementary Estimates
2013/14
$000
1,907,641
This expense item is equal to the appropriations for non-departmental output classes listed in the statement of non-departmental expenditure and appropriations
1,981,513
1,937,948
1,981,817
1,907,641
Total non-departmental output classes
1,981,513
1,937,948
1,981,817
Back to top
NOTE 6: Purchase or development of captial assets
Actual
2012/13
$000
Actual
2013/14
$000
Main Estimates
2013/14
$000
Supplementary Estimates
2013/14
$000
607,265
This expenditure is for the construction of, and improvement to the State highway network including pavement rehabilitation and seal widening
776,227
761,010
776,227
607,265
Total purchase or development of capital assets
776,227
761,010
776,227
Back to top
NOTE 7: Other expenses to be incurred by the Crown
Actual
2012/13
$000
Actual
2013/14
$000
Main Estimates
2013/14
$000
Supplementary Estimates
2013/14
$000
142,963
Auckland rail development MYA
53,100
21,833
63,978
-
Auckland Transport package –fair value write-down of loan
113,885
-
122,000
611
Membership of international organisations
569
743
573
3,270
Rail – public policy projects
3,270
3,270
3,270
500
Rail – railway safety
500
500
500
22,755
SuperGold Card – public transport concessions for cardholders
23,905
23,905
23,905
2,318
Tauranga maritime incident response
537
940
1,683
5,415
Rail – metro rail rolling stock and infrastructure (Wellington)
-
-
-
177,832
Total other expenses to be incurred by the Crown
195,766
51,191
215,909
Back to top
NOTE 8: Receivables and advances
Actual
2012/13
$000
Actual
2013/14
$000
Main Estimates
2013/14
$000
Supplementary Estimates
2013/14
$000
46,609
Motor vehicle registration fees
39,017
42,171
39,869
10,210
Road user charge revenue
29,370
12,687
9,201
1,691
Tolling revenue
1,882
2,213
1,537
394
Infringement revenue
471
100
548
-
Ministry of Transport
118
-
-
58,904
Sub-total
70,858
57,171
51,155
(10,051)
Provision for doubtful debts
(6,705)
-
-
48,853
Total receivables and advances
64,153
57,171
51,155
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 2014 (30 June 2013: $nil).
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 NZ Transport Agency which collects this revenue has amended the application of its revenue recognition policy and only fees that are likely to be collected are recognised as revenue. This has reduced the provision for doubtful debt.
Back to top
NOTE 9: Investment in joint venture airports
Actual
2012/13
$000
Actual
2013/14
$000
11,676
New Plymouth
11,910
3,681
Taupo
3,634
5,086
Wanganui
5,027
922
Westport
854
538
Whakatane
519
2,476
Whangarei
2,458
24,379
Total investment in joint venture airports
24,402
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 2014 is based on the annual financial statements of each airport for the year ended 30 June 2013 (2013: 30 June 2012), plus capital contributions from the Crown during the year ended 30 June 2014.
The investment was reduced by $93,000 for losses incurred by the airports during the year ended 30 June 2013 (2012:
$376,000 reduction) and increased for capital payments made during 2013/14 of $116,000 (2012: $397,000).
The net result is a $23,000 increase in the Crown’s equity position for the year ended 2014 (2013: $21,000 increase).
Back to top
NOTE 10: Investment in the Northern Gateway toll road
The Northern Gateway toll road project was completed with a contribution from the Crown of $158 million. The Crown issued infrastructure bonds to fund the project and the bonds are shown within the financial statements of the Treasury. The toll revenue from the road is intended to cover the costs of the bonds. The charging of a toll began in February 2009 and the tolling revenue is recorded as other operational revenue in Vote Transport (note 4).
It was agreed that a notional account would be kept of the ‘cost’ of the project using an estimated interest rate charged on the $158 million 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 percent 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 percent. The two tables below show the project since the start and then for the current year. Further information is available www.tollroad.govt.nz.
Since the commencement of the project
Actual
2012/13
$000
Actual
2013/14
$000
158,000
Funding provided for construction
158,000
63,131
Interest charged since funding first drawn
75,784
(28,053)
Tolling revenue since February 2009
(35,701)
193,078
Balance at 30 June
198,083
Current year
Actual
2012/13
$000
Actual
2013/14
$000
187,813
Balance at 1 July
193,078
12,381
Interest charge for the year
12,653
(7,116)
Tolling revenue for the year
(7,648)
193,078
Balance at 30 June
198,083
Back to top
NOTE 11: Payables
Actual
2012/13
$000
Actual
2013/14
$000
Main Estimates
2013/14
$000
Supplementary Estimates
2013/14
$000
352,223
National Land Transport Fund revenue payable to the New Zealand Transport Agency
329,662
250,000
300,000
13,848
GST payable
16,334
14,585
13,848
30,443
Motor vehicle registration third party collections
16,069
32,030
31,557
1,638
Output funding payable to the New Zealand Railways Corporation
4,262
10,259
1,638
20
Road user charges refunds
1,971
1,232
1,208
470
Output funding payable to Maritime New Zealand
110
-
-
-
Output funding payable to Meteorological Service
-
1,741
-
398,642
Total payables
368,408
309,847
348,251
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 assets and financial liabilities in each of the NZ IAS 39 categories are as follows:
Actual
2012/13
$000
Actual
2013/14
$000
Loans and receivables
31,400
Cash and cash equivalents
19,584
48,853
Receivables and advances
64,153
80,253
Total loans and receivables
83,737
Financial liabilities measured at amortised cost
398,642
Payables
368,408
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.
Back to top
NOTE 13: Major budget changes
Changes were made to the non-departmental budgets in the 2013/14 Supplementary Estimates. Explanations for significant variances only are provided below.
Revenue and receipts
Main Estimates
$000
Supplementary Estimates
$000
Cumulative Vote
$000
Tax revenue
Motor vehicle registration
186,707
(1,042)
185,665
Road user charges
1,163,642
(1,196)
1,162,446
Fuel excise duty refunds
(37,357)
(1,124)
(38,481)
1,312,992
(3,362)
1,309,630
Other operational revenue
Road user charges administration fees
13,204
(1,803)
11,401
Recovery relating to the Rena
-
28,170
28,170
Tolling fees
7,200
-
7,200
20,404
26,367
46,771
Back to top
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.
Recovery relating to the Rena
This amount was not included in the Estimates as it was not certain. It was recognised once the position became clear.
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
3,000
350
3,350
Licensing activities
3,483
62
3,545
National Land Transport Programme PLA
1,867,600
12,147
1,879,747
Policy advice and related outputs – maritime MCOA
6,510
1,077
7,587
Reinstatement of local roads in Canterbury
-
30,800
30,800
Road user charges collection
13,773
288
14,061
Road user charges investigation and enforcement
6,279
(855)
5,424
Non-departmental other expenses
Auckland rail development MYA
21,833
42,145
63,978
Auckland Transport Package -fair value write-down of loan
-
122,000
122,000
Bad debt provision – motor vehicle registration/ licenses and road user charges
6,000
(2,000)
4,000
Membership of international organisations
743
(170)
573
Tauranga maritime incident response
940
743
1,683
Capital expenditure
Aviation Security Service
-
200
200
Joint venture airports - Crown contribution MYA
500
550
1,050
KiwiRail equity injection
-
25,000
25,000
Maritime NZ capital expenditure PLA
-
381
381
Maritime NZ – oil response
-
100
100
National Land Transport Programme – new infrastructure for and renewal of State highways PLA
761,010
15,217
776,227
Rail – Loan for Auckland metro rail electric multiple unit package
130,000
8,000
138,000
Roading - reinstatement of earthquake damaged roads in Christchurch - Loan
-
20,000
20,000
Tauranga Eastern Link loan
120,000
(120,000)
-
Back to top
Explanations for the major changes were outlined in the 2013/14 Supplementary Estimates (pages 757 onwards). They were:
Construction of passing opportunities on State highway 2 between Napier and Gisborne
This appropriation was increased due to an expense transfer from 2012/13.
Licensing activities
Two elements of this appropriation were adjusted.
Driver licence stop order implementation was completed during 2013/14 below expected cost, and the balance of
$108,000 was reprioritised to drug and alcohol assessments to cover the expected costs.
Drug and alcohol assessments are a demand driven activity and the cost has been increasing in recent years due to new legislation. To cover these costs in 2013/14 and 2014/15:
$108,000 was reprioritised from within the appropriation as noted above (increase),
$100,000 was an expense transfer from 2012/13 (increase),
$170,000 was reprioritisedto here from elsewhere inVoteTransport (increase), and then
$208,000 was an expense transfer to 2014/15 (decrease).
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 – 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 oneto fund it for planned activity in a year.
Road tax revenue isforecast every six months. The State highway capital appropriation is adjusted as required as revenue increases or decreases.
Unspent funding from the previous year may be appropriated.
Any shortfall in funding that will be coveredby 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 increase in the capital appropriation of $15.217 million is due to:
$30 million for surplus funds in the National Land Transport Fund from previous years (increase)
$1.403 million from changes in the road tax revenue forecasts (increase)
$12.147 million transferred to the operating appropriation as above (decrease)
$4.039 million (net) appropriated to other outputs that are funded from road tax revenue (decrease).
Policy advice and related outputs - maritime MCOA
The Maritime Incident Response output class was created during 2013/14 with funding of $1.077 million for 2013/14. This is to fund the building of capability to deal with maritime incidents involving oil and other pollutants, in conjunction with the new Maritime NZ - oil response capital appropriation.
Back to top
Maritime NZ – oil response
$100,000 was appropriated to provide capital for oil pollution prevention and control, in conjunction with the new Maritime Incident Response output class above.
Reinstatement of local roads in Canterbury
The appropriation increased due to an expense transfer from 2012/13.
Road user charges collection
The appropriation increased during the year by $288,000. The increase is the net of:
$584,000 was reprioritised from elsewhere in Vote Transport for agreed costs (increase)
$296,000 was an expense transfer to 2014/15 (decrease).
Road User Charges investigation and enforcement
The appropriation decreased during the year by $855,000 because of reprioritisation to related appropriations within Vote Transport to meet forecast costs.
Auckland rail development MYA
The appropriation increased during the year by $42.145 million. This is the total of:
$26 million new funding to meet increased costs for the Auckland Rail Electrification Project
$16.145 million unspent funding transferred from 2012/13.
Auckland Transport Package - fair value write-down of loan
This appropriation was created during 2013/14 to reflect the interest free loan to the NZ Transport Agency for the delivery of the Auckland Transport Package. The write-down is a book entry in accordance with generally accepted accounting practice, and the expense was recognised once the loan paperwork was finalised. No cash will be paid.
Bad debt provision – Motor vehicle registration/ licences and Road user charges
The appropriation decreased by $2 million because the NZ Transport Agency has changed the application of its revenue recognition policy. Revenue unlikely to be received will not be recognised, which will result in a reduction in the bad debt write-off.
Back to top
Membership of international organisations
The appropriation decreased by $170,000 as funding was reprioritised to other appropriations in Vote Transport.
Tauranga maritime incident response
The appropriation increased by $743,000 as the net of an expense transfer of $1.043 million from 2012/13 to 2013/14 (increase), and an expense transfer of $300,000 from 2013/14 to 2014/15 (decrease) to match planned expenditure.
Aviation Security Service
This appropriation increased due to an expense transfer from 2012/13.
Joint venture airports - Crown contribution MYA
This appropriation increased due to an expense transfer from 2012/13.
KiwiRail equity injection
$25 million was appropriated as an equity injection to meet cash flow requirements.
Maritime New Zealand capital expenditure PLA
$381,000 was appropriated to reimburse Maritime NZ for high search and rescue costs in 2012/13.
Rail – loan for Auckland metro rail electrical multiple unit package
The appropriation increased due to an expense transfer from 2012/13.
Roading - reinstatement of earthquake damaged roads in Christchurch - Loan
$183.42 million was appropriated over 2013/14 to 2015/16 to fund this work by way of a loan.
Tauranga Eastern Link loan
The appropriation was reduced to zero in 2013/14 by:
an expense transfer of $90 million to 2014/15; and
a reduction of $30 million, as the NZ Transport Agency does not require the full loan.
Back to top
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 $39.9 million higher than forecast with the main variance in actual indirect taxation - $39.7 million higher than forecast. These revenues are demand driven and so difficult to forecast.
Schedule of non-departmental expenses
Total expenses were $22 million less than appropriated in the Supplementary Estimates. The significant variances relate to following appropriations:
Auckland rail development MYA: work that was expected to be completed this year will now occur in 2014/15.
Auckland Transport Package - fair value write down: the budget was based on assumptions about when loan amounts would be drawn and repaid, and those assumptions changed - an underspend of $8.1 million.
Schedule of non-departmental assets
Non-departmental assets were $11.6 million higher than forecast. Receivables and advances are higher then forecast by $13 million. These vary depending on demand and are difficult to forecast.
Schedule of non-departmental liabilities
Payables were $20.1 million higher than forecast. 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.
<<Previous | Contents | Next>>