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Estimates of appropriations

Vote Defence - External Sector - Estimates 2019/20

Vote Defence

APPROPRIATION MINISTER(S): Minister of Defence (M22)

APPROPRIATION ADMINISTRATOR: Ministry of Defence

RESPONSIBLE MINISTER FOR MINISTRY OF DEFENCE: Minister of Defence

Overview of the Vote

The Minister of Defence is responsible for appropriations in the Vote for the 2019/20 financial year covering the following:

  • a total of $2.378 million for audits and assessments of the New Zealand Defence Force and Ministry of Defence
  • a total of $9.658 million for managing procurement or refurbishment, on behalf of the Crown, of defence capabilities for the New Zealand Defence Force
  • a total of $9.285 million for policy advice, management of international defence relations and services to the Minister
  • a total of $350,000 for the purchase or development of assets for use by the Ministry, and
  • a total of $744.376 million for the procurement of major military capabilities for the New Zealand Defence Force.

Details of these appropriations are set out in Parts 2-4.

Details of Appropriations and Capital Injections

Annual Appropriations and Forecast Permanent Appropriations

  2018/19 2019/20
Titles and Scopes of Appropriations by Appropriation Type Final
Budgeted
$000
Estimated
Actual
$000
Budget
$000

Departmental Output Expenses

     

Audit & Assessment (M22)

This appropriation is limited to audits and assessments of the New Zealand Defence Force and the Ministry of Defence.
2,247 2,247 2,378

Management of Defence Capabilities (M22)

This appropriation is limited to the management of procurement, refurbishment and delivery of defence capabilities, on behalf of the Crown, for the New Zealand Defence Force.
11,857 11,857 9,658

Total Departmental Output Expenses

14,104 14,104 12,036

Departmental Capital Expenditure

     

Ministry of Defence - Capital Expenditure PLA (M22)

This appropriation is limited to the purchase or development of assets by and for the use of the Ministry of Defence, as authorised by section 24(1) of the Public Finance Act 1989.
350 350 350

Total Departmental Capital Expenditure

350 350 350

Non-Departmental Capital Expenditure

     

Defence Capabilities (M22)

This appropriation is limited to the purchase, modification or refurbishment of defence capabilities for the New Zealand Defence Force.
445,792 422,420 744,376

Total Non-Departmental Capital Expenditure

445,792 422,420 744,376

Multi-Category Expenses and Capital Expenditure

     

Policy Advice and Related Outputs MCA (M22)

The single overarching purpose of this appropriation is to provide policy advice, other support to Ministers in discharging their policy decision-making and other portfolio responsibilities.
9,734 9,734 9,285

Departmental Output Expenses

     

Ministerial Services

This category is limited to the provision of services to Ministers to enable them to discharge their portfolio (other than policy decision-making) responsibilities.
1,138 1,138 1,115

Policy Advice

This category is limited to the provision of advice (including second opinion advice and contributions to policy advice led by other agencies) to support decision-making by Ministers on government policy matters relating to defence and national security.
5,710 5,710 5,590

Policy Support

This category is limited to the provision of services (other than defence policy) that support the development and procurement of military capability, and the conduct of international defence relations.
2,886 2,886 2,580

Total Multi-Category Expenses and Capital Expenditure

9,734 9,734 9,285

Total Annual Appropriations and Forecast Permanent Appropriations

469,980 446,608 766,047

Capital Injection Authorisations

  2018/19 2019/20
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Ministry of Defence - Capital Injection (M22) - - -

Supporting Information

Part 1 - Vote as a Whole

1.1 - New Policy Initiatives

Policy Initiative Appropriation 2018/19
Final Budgeted
$000
2019/20
Budget
$000
2020/21
Estimated
$000
2021/22
Estimated
$000
2022/23
Estimated
$000
Dive and Hydrographic Vessel

Defence Capabilities

Non-Departmental Capital Expenditure
87,185 10,531 700 - -
Fixed High Frequency Radio Refresh

Management of Defence Capabilities

Departmental Output Expense
445 - - - -
 

Defence Capabilities

Non-Departmental Capital Expenditure
230 245 - - -
Future Air Surveillance Capability

Defence Capabilities

Non-Departmental Capital Expenditure
107,963 453,034 753,191 643,232 111,094
NH90 Simulator

Defence Capabilities

Non-Departmental Capital Expenditure
33,370 8,850 - - -
Operational and Regulatory Aviation Compliance Sustainment

Defence Capabilities

Non-Departmental Capital Expenditure
5,814 19,284 20,711 9,169 1,854
Protected Mobility Capability

Defence Capabilities

Non-Departmental Capital Expenditure
462 7,470 5,300 5,360 -
Operating Cost Pressures

Audit & Assessment

Departmental Output Expense
- 200 270 276 285
 

Management of Defence Capabilities

Departmental Output Expense
- 380 511 523 541
 

Policy Advice and Related Outputs MCA

Multi-Category Expenses and Capital Expenditure
- 1,048 1,413 1,444 1,495
Total Initiatives   235,469 501,042 782,096 660,004 115,269

1.2 - Trends in the Vote

Summary of Financial Activity
  2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
  Actual
$000
Actual
$000
Actual
$000
Actual
$000
Final Budgeted
$000
Estimated
Actual
$000
Departmental
Transactions
Budget
$000
Non-
Departmental
Transactions
Budget
$000
Total
Budget
$000
Estimated
$000
Estimated
$000
Estimated
$000

Appropriations

                       
Output Expenses 5,882 8,293 10,675 12,639 14,104 14,104 12,036 - 12,036 12,237 12,255 12,282
Benefits or Related Expenses - - - - - - N/A - - - - -
Borrowing Expenses - - - - - - - - - - - -
Other Expenses - - 1,063 - - - - - - - - -
Capital Expenditure 387,413 212,713 281,031 233,021 446,142 422,770 350 744,376 744,726 852,361 704,072 296,094
Intelligence and Security Department Expenses and Capital Expenditure - - - - - - - N/A - - - -
Multi-Category Expenses and Capital Expenditure (MCA)                        
Output Expenses 5,941 6,480 6,837 7,949 9,734 9,734 9,285 - 9,285 9,650 9,681 9,732
Other Expenses - - - - - - - - - - - -
Capital Expenditure - - - - - - N/A - - - - -

Total Appropriations

399,236 227,486 299,606 253,609 469,980 446,608 21,671 744,376 766,047 874,248 726,008 318,108

Crown Revenue and Capital Receipts

                       
Tax Revenue - - - - - - N/A - - - - -
Non-Tax Revenue 495 225 843 1,782 - 1,673 N/A - - - - -
Capital Receipts 386,929 212,412 280,658 232,898 445,792 422,420 N/A 744,376 744,376 852,011 703,722 92,873

Total Crown Revenue and Capital Receipts

387,424 212,637 281,501 234,680 445,792 424,093 N/A 744,376 744,376 852,011 703,722 92,873

Note - where restructuring of the vote has occurred then, to the extent practicable, prior years information has been restated as if the restructuring had occurred before the beginning of the period covered. In this instance Total Appropriations for the Budgeted and Estimated Actual year may not equal Total Annual Appropriations and Forecast Permanent Appropriations and Multi-Year Appropriations in the Details of Appropriations and Capital Injections.

Adjustments to the Summary of Financial Activity Table Due to Vote Restructuring

There have been no restructuring adjustments to prior year information in the Summary of Financial Activity table.

1.3 - Analysis of Significant Trends

The departmental appropriations in Vote Defence, which are detailed in the Summary of Financial Activity table in Part 1.2 above, show the significant changes discussed below.

Departmental Output Expense Appropriations

Increasing costs from 2015/16 onwards are the result of additional funding for the Enhancements to Defence Capability Development and Acquisition initiative. This funding allowed the Ministry of Defence to grow its capability workforce and make one-off investments in systems to successfully deliver on the Crown's anticipated capital spend in Defence.

Annual expenditure will vary from the above trend primarily due to the fluctuating costs of pre-acquisition activities undertaken by the Ministry and project management costs relating to the Protector Remediation project.

Departmental Other Expenses Appropriations

The 2016/17 Other Expenses arises from the value of assets written-off or impaired due to the November 2016 Kaikoura earthquake.

Multi-Category Expense Appropriation

Higher costs from 2015/16 onwards are the result of additional funding for the Enhancements to Defence Capability Development and Acquisition initiative.

Departmental Capital Expenditure

The majority of the capital expenditure over the years relates to the maintenance of the Ministry of Defence's asset base, primarily IT software and equipment required by the Ministry to deliver its stated outcomes and outputs. The higher departmental capital expenditure in 2016/17 is due to replacement of assets damaged or destroyed due to the November 2016 earthquake.

Non-Departmental Capital Expenditure

The movements in non-departmental capital expenditure relates to the volume of capital projects underway in each financial year and changes in the forecast timing in achieving the project milestones and associated changes in the timing of supplier payments for those milestones.

Capital Receipts

The Ministry of Defence purchases and develops items of major military capability for the New Zealand Defence Force. The Ministry's capital receipts fluctuates in line with non-departmental capital expenditure due to the purchase of developed capabilities by the New Zealand Defence Force.

1.4 - Reconciliation of Changes in Appropriation Structure

    Old Structure New Structure
2018/19 Appropriations
in the 2018/19 Structure
2018/19
(Current)
$000
Appropriations to which
Expenses (or Capital
Expenditure) have been Moved from or to
Amount
Moved
$000
2018/19 Appropriations
in the 2019/20 Structure
2018/19
(Restated)
$000
2019/20
$000
Management of Equipment Procurement 11,857 Renamed - Management of Defence Capabilities 11,857 9,658
Defence Equipment 422,420 Renamed - Defence Capabilities 422,420 744,376

Explanations of the reasons for changing the appropriation structure are noted in the details of each appropriation in Parts 2-4.

Part 2 - Details of Departmental Appropriations

2.1 - Departmental Output Expenses

Audit & Assessment (M22)
Scope of Appropriation
This appropriation is limited to audits and assessments of the New Zealand Defence Force and the Ministry of Defence.
Expenses and Revenue
  2018/19 2019/20
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 2,247 2,247 2,378
Revenue from the Crown 2,153 2,153 2,378
Revenue from Others 94 94 -
What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the completion of an approved schedule of audits and assessments as required by the Minister of Defence.

How Performance will be Assessed and End of Year Reporting Requirements
  2018/19 2019/20
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Timeliness: Assessed by the percentage of reports that are submitted by the timeframe set in the approved terms of reference.

new measure in 2019/20 n/a >= 75%

Ministerial satisfaction: Minister's satisfaction with the quality of reports, as assessed by survey.

new measure in 2019/20 n/a >= 70%

Quality - process: All audits and assessments meet the Ministry's pre-determined quality criteria.

100% 100% 100%

Quality - external review: All major audits and assessments completed by the Ministry are externally quality assured (see Note 1).

100% 100% 100%

Note 1 - Small, simple reviews may be peer reviewed by qualified Ministry of Defence staff from outside the Division. All major reviews are reviewed by qualified persons external to the Ministry.

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Defence in its Annual Report.

Current and Past Policy Initiatives
Policy Initiative Year of
First
Impact
2018/19
Final Budgeted
$000
2019/20
Budget
$000
2020/21
Estimated
$000
2021/22
Estimated
$000
2022/23
Estimated
$000

Current Government

           
Operating cost pressures 2019/20 - 200 270 276 285
Reasons for Change in Appropriation

The increase of $131,000 in this appropriation for 2019/20 is primarily due to $200,000 additional funding from the Operating cost pressures initiative which will allow the Ministry of Defence to meet increased rental and operating accommodation costs.

This is offset by $69,000 changes in the 2018/19 Supplementary Estimates that are not being carried forward to 2019/20:

  • a $94,000 increase due to additional costs incurred due to the November 2016 Kaikoura earthquake, funded by Revenue from Others, and
  • a $25,000 decrease due to transfer of funding to other Ministry outputs to align resourcing with demand and activities in 2018/19, funded by Revenue from the Crown.
Conditions on Use of Appropriation
Reference Conditions
Authority The audit or assessment will be undertaken as and when required by the Minister of Defence or in accordance with a work plan approved by the Minister.
Management of Defence Capabilities (M22)
Scope of Appropriation
This appropriation is limited to the management of procurement, refurbishment and delivery of defence capabilities, on behalf of the Crown, for the New Zealand Defence Force.
Expenses and Revenue
  2018/19 2019/20
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 11,857 11,857 9,658
Revenue from the Crown 8,858 8,858 9,658
Revenue from Others 2,999 2,999 -
What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the management of procurement of major military capabilities for the New Zealand Defence Force in a transparent and fair way, and in accordance with government procurement policies.

How Performance will be Assessed and End of Year Reporting Requirements
  2018/19 2019/20
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Quality of deliverable: Options to be presented to the Minister for each refurbishment or procurement project up to the preferred tenderer stage will meet the high-level user requirements and will be affordable within the Defence Capital Plan.

100% 100% 100%

Schedule: Each refurbishment or procurement project up to the identification of the preferred tenderer will be managed to the agreed schedule, except when there are circumstances beyond the control of the Ministry.

100% 100% 100%
End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Defence in its Annual Report.

Current and Past Policy Initiatives
Policy Initiative Year of
First
Impact
2018/19
Final Budgeted
$000
2019/20
Budget
$000
2020/21
Estimated
$000
2021/22
Estimated
$000
2022/23
Estimated
$000

Current Government

           
Operating cost pressures 2019/20 - 380 511 523 541
Reasons for Change in Appropriation

This appropriation decreases by $2.199 million to $9.658 million for 2019/20 due to the following factors.

Additional funding from the Operating cost pressures initiative increases the appropriation by $380,000 which will allow the Ministry of Defence to meet increased rental and accommodation costs.

This is offset by $2.579 million changes in the 2018/19 Supplementary Estimates that are not being carried forward to 2019/20:

  • a $2.845 million increase in costs arising from definition-phase and pre-acquisition-stage Defence capability project costs, funded by Revenue from Others
  • a $820,000 decrease due to transfer of funding to other Ministry outputs to align resourcing with demand and activities in 2018/19, funded by Revenue from the Crown
  • a $400,000 increase due to transfer of costs from 2017/18 to 2018/19, funded by Revenue from the Crown, and
  • a $154,000 increase due to costs incurred due to the November 2016 Kaikoura earthquake, funded by Revenue from Others.

2.3 - Departmental Capital Expenditure and Capital Injections

Ministry of Defence - Capital Expenditure PLA (M22)
Scope of Appropriation
This appropriation is limited to the purchase or development of assets by and for the use of the Ministry of Defence, as authorised by section 24(1) of the Public Finance Act 1989.
Capital Expenditure
  2018/19 2019/20
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Forests/Agricultural - - -
Land - - -
Property, Plant and Equipment 250 250 250
Intangibles 100 100 100
Other - - -

Total Appropriation

350 350 350
What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the purchase and development of assets by and for the use of the Ministry of Defence in its day-to-day operations.

How Performance will be Assessed and End of Year Reporting Requirements
  2018/19 2019/20
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Capital expenditure is within Capital Plan.

Within Capital Plan Within Capital Plan Within Capital Plan
End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Defence in its Annual Report.

Capital Injections and Movements in Departmental Net Assets
Ministry of Defence
Details of Net Asset Schedule 2018/19
Estimated Actual
$000
2019/20
Projected
$000
Explanation of Projected Movements in 2019/20
Opening Balance 2,353 2,353  
Capital Injections - -  
Capital Withdrawals - -  
Surplus to be Retained (Deficit Incurred) - -  
Other Movements - -  

Closing Balance

2,353 2,353  

Part 3 - Details of Non-Departmental Appropriations

3.5 - Non-Departmental Capital Expenditure

Defence Capabilities (M22)
Scope of Appropriation
This appropriation is limited to the purchase, modification or refurbishment of defence capabilities for the New Zealand Defence Force.
Capital Expenditure
  2018/19 2019/20
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000
Total Appropriation 445,792 422,420 744,376
What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the procurement of major military capabilities for the New Zealand Defence Force in a transparent and fair way, and in accordance with government procurement policies.

How Performance will be Assessed and End of Year Reporting Requirements
  2018/19 2019/20
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Cost: Each procurement or refurbishment project will be managed within its approved budget, inclusive of approved variations to the contract price and project budget (see Note 1).

100% 100% 100%

Quality of deliverable: Each procurement or refurbishment project will achieve on delivery the agreed/contracted specifications that are critical to acceptance (see Note 2).

100% 100% 100%

Schedule: Each procurement or refurbishment project will be managed to schedule, without avoidable schedule over-run (see Note 3).

85% 85% 85%

Benefits realisation: The aggregate percentage of planned benefits expected to have been realised by quarter, as set out in approved project benefits realisation plans.

New measure in 2019/20 N/A >= 80%

Cost forecasting: The aggregate actual capital expenditure on procurement or refurbishment projects compared to the forecast capital expenditure.

New measure in 2019/20 N/A Within +/-10% of forecast

Note 1 - Measured by the percentage of all projects that have project-related capital expenditure incurred in the year within the approved project expenditure budget.

Note 2 - Measured by the percentage of all projects in the delivery phase that meet all specifications that are critical to acceptance.

Note 3 - Measured by the percentage of all projects in the delivery phase progressed within agreed schedule.

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Minister of Defence and appended to the Ministry of Defence Annual Report.

Current and Past Policy Initiatives
Policy Initiative Year of
First
Impact
2018/19
Final Budgeted
$000
2019/20
Budget
$000
2020/21
Estimated
$000
2021/22
Estimated
$000
2022/23
Estimated
$000

Current Government

           
Dive and Hydrographic Vessel 2018/19 87,185 10,531 700 - -
Fixed High Frequency Radio Refresh 2018/19 230 245 - - -
Future Air Surveillance Capability 2018/19 107,963 453,034 753,191 643,232 111,094
NH90 Simulator 2018/19 33,370 8,850 - - -
Operational and Regulatory Aviation Compliance Sustainment 2018/19 5,814 19,284 20,711 9,169 1,854
Protected Mobility Capability 2018/19 462 7,470 5,300 5,360 -
Frigate Systems Upgrade 2017/18 63,358 71,964 2,469 - -

Previous Government

           
Maritime Sustainment Capability 2015/16 168,422 82,668 6,200 - -
Underwater Intelligence, Surveillance and Reconnaissance Capability 2015/16 5,831 - - - -
Reasons for Change in Appropriation

The appropriation increase in 2019/20 is primarily due to the Future Air Surveillance Capability project entering the main production phase of the project, offset by reduced costs for the Dive and Hydrographic Vessel project as the project nears completion.

Part 4 - Details of Multi-Category Expenses and Capital Expenditure

Multi-Category Expenses and Capital Expenditure

Policy Advice and Related Outputs (M22)
Overarching Purpose Statement
The single overarching purpose of this appropriation is to provide policy advice, other support to Ministers in discharging their policy decision-making and other portfolio responsibilities.
Scope of Appropriation
Departmental Output Expenses
Ministerial Services
This category is limited to the provision of services to Ministers to enable them to discharge their portfolio (other than policy decision-making) responsibilities.
Policy Advice
This category is limited to the provision of advice (including second opinion advice and contributions to policy advice led by other agencies) to support decision-making by Ministers on government policy matters relating to defence and national security.
Policy Support
This category is limited to the provision of services (other than defence policy) that support the development and procurement of military capability, and the conduct of international defence relations.
Expenses, Revenue and Capital Expenditure
  2018/19 2019/20
  Final Budgeted
$000
Estimated Actual
$000
Budget
$000

Total Appropriation

9,734 9,734 9,285

Departmental Output Expenses

     
Ministerial Services 1,138 1,138 1,115
Policy Advice 5,710 5,710 5,590
Policy Support 2,886 2,886 2,580

Funding for Departmental Output Expenses

     

Revenue from the Crown

9,082 9,082 9,285
Ministerial Services 1,090 1,090 1,115
Policy Advice 5,468 5,468 5,590
Policy Support 2,524 2,524 2,580

Revenue from Others

652 652 -
Ministerial Services 48 48 -
Policy Advice 242 242 -
Policy Support 362 362 -
What is Intended to be Achieved with this Appropriation

This appropriation is intended to achieve the provision of civilian advice on defence policy matters and the development of international defence relations.

How Performance will be Assessed for this Appropriation
  2018/19 2019/20
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

The performance of the MCA as a whole will be assessed by the average performance success of the below measures. Measured by the average difference between actual results and the budget standard of all percentage-based measures within the MCA categories.

>0% Measured at end of period >0%
What is Intended to be Achieved with each Category and How Performance will be Assessed
  2018/19 2019/20
Assessment of Performance Final Budgeted
Standard
Estimated
Actual
Budget
Standard

Departmental Output Expenses

     

Ministerial Services

     

This category is intended to achieve the provision of quality and timely Ministerial support to the Minister.

     

Quality, as assessed by the percentage of first draft of all correspondence accepted by the Minister.

>= 90% Measured at end of period >= 95%

Timeliness, as assessed by the percentage of papers that were submitted by the timeframe set in legislation, or otherwise agreed with the Minister.

>=95% Measured at end of period >=95%

Policy Advice

     

This category is intended to achieve the provision of accurate, timely and responsive policy advice.

     

Technical quality of policy advice, as assessed by independent review of a sample of policy papers.

Mean >= 70% Measured at end of period Under review (see Note 1)

Minister's satisfaction with the quality of policy advice, as assessed by survey.

>= 70% Measured at end of period Under review (see Note 2)

Policy Support

     

This category is intended to achieve the provision of quality and timely policy support to the Minister.

     

Minister's satisfaction with the quality of policy support, as assessed by survey.

>= 70% Measured at end of period >= 70%

Note 1 - Standard will be identified based on the refreshed Policy Quarterly Framework and updated in the Supplementary Estimates.

Note 2 - Standard will be identified based on the revised Ministerial Satisfaction Survey and updated in the Supplementary Estimates.

End of Year Performance Reporting

Performance information for this appropriation will be reported by the Ministry of Defence in its Annual Report.

Current and Past Policy Initiatives
Policy Initiative Year of
First
Impact
2018/19
Final Budgeted
$000
2019/20
Budget
$000
2020/21
Estimated
$000
2021/22
Estimated
$000
2022/23
Estimated
$000

Current Government

           
Operating cost pressures 2019/20 - 1,048 1,413 1,444 1,495
Reasons for Change in Appropriation

The appropriation decreases by $449,000 to $9.285 million for 2019/20 due to the following factors.

Additional funding from the Operating cost pressures initiative increases the appropriation by $1.048 million which will allow the Ministry of Defence to meet increased rental and accommodation costs.

This is offset by $1.497 million changes in the 2018/19 Supplementary Estimates that are not being carried forward to 2019/20:

  • a $845,000 increase due to transfer of funding from other Ministry outputs to align resourcing with demand and activities in 2018/19, funded by Revenue from the Crown
  • a $250,000 increase due to the Ministry incurring costs that are funded by another department, funded by Revenue from Others, and
  • a $402,000 increase due to costs incurred due to the November 2016 Kaikoura earthquake, funded by Revenue from Others.

 

Last updated: 
Thursday, 30 May 2019