Non-departmental schedules and statements

The following non-departmental schedules and statements record the income, expenses, assets, liabilities, commitments, contingent liabilities and contingent assets that the Department manages on behalf of the Crown.

SCHEDULE OF NON-DEPARTMENTAL REVENUE AND RECEIPTS

for the year ended 30 June 2009

			Note	Actual 2009 $ 000	Main Estimates 2009 $ 000	Supplementary Estimates 2009 $ 000
151,764		Interest on Housing New Zealand Corporation loans		108,725	126,601	126,601
12,999		Dividend from Housing New Zealand Corporation		1,661	1,661	1,661
-		Services to support homeownership		-	608	608
164,763		Total non-departmental revenue and receipts	2	110,386	128,870	128,870

Statement of Non-Departmental Expenditure and Capital Expenditure Against Appropriations

Actual 2008 $ 000			Note	Actual 2009 $ 000	Main Estimates 2009 $ 000	Supplementary Estimates 2009 $ 000
		Non-departmental output expenses
11,029		Contracted Housing Support Services		2,375	3,446	2,641
10,472		HNZC Housing Support Services		7,371	11,194	7,713
2,416		Housing Policy Advice		2,554	2,376	2,554
-		HNZC State House Upgrades		22,000	-	22,000
69		Management of Crown Properties - Housing Act 1955		1,468	9,672	1,468
23,986		Total non-departmental output expenses		35,768	26,688	36,376
		Benefits and other unrequited expenses
8,943		Housing Assistance		8,736	11,118	9,291
465,165		Income Related Rental Subsidy		503,656	496,038	504,442
474,108		Total benefits and other unrequited expenses		512,392	507,156	513,733
		Other expenses to be incurred by the Crown
4,000		Community Housing Rent Relief Programme		3,829	5,000	4,500
1,767		Increase in debt provision		1,366	2,251	2,251
-		Wellington City Council Social Housing Assistance		7,500	-	7,500
5,767		Total other expenses to be incurred by the Crown		12,695	7,251	14,251
		Capital expenditure
89,048		Capital injections to Housing New Zealand Corporation for housing activities		-	-	-
40,000		Housing New Zealand Corporation (HNZC) - Loans to refinance Crown debt		-	-	-
10,561		Acquisition and development of properties under the Housing Act 1955		3,308	7,764	8,948
-		Acquisition and improvement of Housing New Zealand Corporation state houses		82,431	84,390	87,241
-		Loans to support homeownership		7,170	19,969	9,563
-		Loans to support social housing		11,979	12,000	12,000
181,187		Refinancing of Housing New Zealand Corporation and Housing New Zealand Limited debt		170,970	170,970	170,970
320,796		Total capital expenditure		275,858	295,093	288,722
824,657		Total non-departmental expenditure and capital expenditure against appropriations	3	836,713	836,188	853,082

Schedule of Non-Departmental Assets

as at 30 June 2009

Actual 2008 $ 000			Note	Actual 2009 $ 000	Main Estimates 2009 $ 000	Supplementary Estimates 2009 $ 000
		Current assets
3,996		Cash and cash equivalents		31,433	8,999	5,184
12,396		Receivables and prepayments	4	12,750	9,540	10,012
34		Assets held for sale	5	34	-	-
16,426		Total current assets		44,217	18,539	15,196
		Non-current assets
98,631		Physical assets	5	100,363	108,764	107,579
98,631		Total non-current assets		100,363	108,764	107,579
115,057		Total assets	6	144,580	127,303	122,775

Schedule of Non-Departmental Liabilities

as at 30 June 2009

Actual 2008 $ 000			Note	Actual 2009 $ 000	Main Estimates 2009 $ 000	Supplementary Estimates 2009 $ 000
		Current liabilities
12,012		Payables	7	37,475	93,067	11,000
12,012		Total current liabilities		37,475	93,067	11,000
12,012		Total liabilities		37,475	93,067	11,000

STATEMENT OF COMMITMENTS

as at 30 June 2009

The Department reports nil non-departmental commitments as at 30 June 2009 (2008: nil).

STATEMENT OF CONTINGENT LIABILITIES

as at 30 June 2009

2008 Actual $ 000						2009 Actual $ 000
					900
Properties underwritten for Home Equity Scheme				-	900
Total contingent liabilities				-

 

Unquantifiable contingent liabilities

Guarantees and indemnities

The Crown has provided a warranty in respect of title to the assets transferred to Housing New Zealand Limited (HNZL) (HNZL was incorporated into the HNZC group as a subsidiary in 2001 as part of a legislated consolidation of government housing functions) and has indemnified HNZL against any breach of this warranty. In addition, the Crown has indemnified HNZL against any third-party claims that are a result of acts or omissions prior to 1 November 1992. It has also indemnified the directors and officers of HNZL against any liability consequent upon the assets not complying with statutory requirements, provided it is taking steps to rectify any non-compliance.

Contingent assets

The Department on behalf of the Crown has no contingent assets (2008: nil).

NOTES TO THE NON-DEPARTMENTAL SCHEDULES AND STATEMENTS

for the year ended 30 June 2009

Note 1: Statement of accounting policies for the year ended 30 June 2009

Reporting entity

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

The schedules of non-departmental assets and liabilities incorporate the financial transactions of the Crown activities administered by the Department and also the Housing Agency Account assets and liabilities administered by HNZC.

These non-departmental balances are consolidated into the Financial Statements of the Government. For a full understanding of the Crown's financial position, results of operations and cash flows for the year, reference should be made to the Financial Statements of the Government.

Accounting policies

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 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 public benefit entities.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

The following particular accounting policies have been applied.

The budget figures are consistent with the financial information in the Main Estimates. In addition, these financial statements also present the updated budget information from the Supplementary Estimates.
Revenue and expenditure are recognised when earned or incurred respectively and are reported in the financial period to which they relate.

Receivables are recorded at estimated realisable value after providing, where necessary, for doubtful and uncollectable debts.

Future expenses and liabilities to be incurred on contracts that have been entered into at balance date are disclosed as commitments (at the point a contractual obligation arises) to the extent that they are equally unperformed obligations. Commitments relating to employment contracts are not disclosed.

Contingent liabilities and assets are disclosed at the point at which the contingency is evident.Goods and Services Tax (GST)

The Statement of Non-Departmental Expenditure and Capital Expenditure against Appropriations is exclusive of GST (where applicable). The Schedules of Assets and Liabilities are exclusive of GST, except for payables and receivables, which are GST inclusive. All other figures are GST exclusive (where applicable).

Any payments made for GST input tax are made under the authority of section 6 of the Public Finance Act 1989.

These non-departmental balances are consolidated into the Crown Financial Statements and therefore readers of these statements and schedules should also refer to the Crown Financial Statements for the year ended 30 June 2009.

In preparing these financial statements the Department has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the note 4.

The Crown Retail Deposit Guarantee Scheme for deposits held with banks that have opted into the scheme provides a guarantee of $1 million per depositor per guaranteed institution. Deposits beyond this level are not covered by this scheme.

Note 2: Non-Departmental Revenue and Receipts

The schedule of revenue and receipts summarises non-departmental revenue that the Department collects on behalf of the Crown.

Note 3: Non-Departmental Expenditure and Capital Expenditure against Appropriations

This statement details expenditure incurred against each appropriation administered by the Department on behalf of the Crown.

Note 4: Receivables and Prepayments

Actual 2008 $ 000						Actual 2009 $ 000
	13,228		Income related rent debt
15,950	(6,278)		Less: provision for doubtful debts
(7,644)	6,950		Net realisable value
8,306	5,382		Prepayment of income related rental subsidy
3,739	64		Receivable - Housing New Zealand Corporation
705	12,396		Total receivables and prepayments
12,750

The carrying value of receivables and prepayments approximates their fair value.

As at 30 June 2009 and 2008, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below:

	2008			2009
	Gross $ 000	Impairment $ 000	Net $ 000	Gross $ 000	Impairment $ 000	Net $ 000
	Not past due	11,034	-	11,034	4,594	-
4,594	Past due 31-60 days	-	-	-	1,110	-
1,110	Past due 61-90 days	-	-	-	1,186	-
1,186	Past due > 91 days	7,640	(6,278)	1,362	13,504	(7,644)
5,860	Total	18,674	(6,278)	12,396	20,394	(7,644)
12,750

The provision for impairment has been based on the non-departmental appropriation for doubtful debts.

Actual 2008 $ 000						Actual 2009 $ 000
	(4,511)		Balance at 1 July
(6,278)	(1,767)		Additional provisions made during the year
(1,366)	(6,278)		Balance at 30 June
(7,644)

Note 5: Physical Assets

 

	Land $ 000	Buildings $ 000	Total $ 000
	Cost
	Balance at 1 July 2007	89,031	6,814
95,845	Additions	368	1,987
2,355	Revaluation	465	-
465	Disposals	-	-
-	Balance at 30 June 2008	89,864	8,801
98,665
	Balance at 1 July 2008	89,864	8,801
98,665	Additions	1,892	305
2,197	Revaluation	(465)	-
(465)	Disposals	-	-
-	Balance at 30 June 2009	91,291	9,106
100,397
	Accumulated depreciation and impairment losses
	Balance at 1 July 2007		-
-	Depreciation expense		74
74	Revaluation		(74)
(74)	Disposals		-
-	Balance at 30 June 2008		-
-
	Balance at 1 July 2008		-
-	Depreciation expense		305
305	Revaluation		(305)
(305)	Disposals		-
-	Balance at 30 June 2009		-
-
	Carrying amounts
	At 1 July 2007	89,031	6,814
95,845	At 30 June and 1 July 2008	89,864	8,801
98,665	At 30 June 2009	91,291	9,106
100,397

Note 6: Non-Departmental Assets and Liabilities

Non-departmental assets and liabilities are administered by the Department of Building and Housing on behalf of the Crown. As these assets and liabilities are neither controlled by the Department of Building and Housing nor used in the production of the Department's outputs, they are not reported in the Department's Statement of Financial Position.

Note 7: Payables

Actual 2008 $ 000						Actual 2009 $ 000
			Current
			Payable to Housing New Zealand Corporation
	3,724		- Output expenses
12,556	123		- Housing Assistance
106	6,651		- Capital injection
15,961	10,498		Total payable to Housing New Zealand Corporation
28,623	1,514		Total payable to Housing Agency Account
2,147	-		Income in advance
6,186	-		Other payables
519	12,012		Total current
37,475	12,012		Total payables
37,475

Note 8: Explanation of Major Budget Variances

Non-tax revenue

Interest on Housing New Zealand Corporation (HNZC) loans was $17.876 million lower than the Supplementary Estimates, primarily due to lower interest rates driven by a significant reduction in the Official Cash Rate (OCR). When refinancing term loans, HNZC received lower interest rates which contributed to reduced cost of borrowings.

Non-departmental output expenses

The Contracted Housing Support Services output decreased between the Main and Supplementary Estimates due to value for money savings. The final output expenses were lower by $0.266 million compared to the Supplementary Estimates due to a lower than forecast spend on the homeownership education programme.

The HNZC Housing Support Services output decreased between the Main and Supplementary Estimates due to value for money savings. The final output expenses were lower compared to the Supplementary Estimates by $0.342 million. The variance was due to lower spend on Housing Innovation Fund (HIF) capacity grants and Welcome Home Loans.

The HNZC State House Upgrades output was established during the year as part of the Fiscal Stimulus package.

The Management of Crown Properties - Housing Act 1955 output reduced in the Supplementary Estimates as the capital charge was removed from these properties.

The Housing Assistance output decreased between the Main and Supplementary Estimates due to value for money savings. The final subsidy payable to HNZC was $0.555 million lower than the Supplementary Estimates due to lower than forecast expenditure on interest subsidies.The Income Related Rental (IRR) Subsidy funds the Corporation the difference between the income related rent received from tenants and the market rent. The demand for the subsidy fluctuates depending on tenants' circumstances, and the size of the state housing portfolio. The appropriation is reforecast during the year, with these changes being reflected in the Supplementary Estimates.

The Wellington City Council Social Housing Assistance other expense was established as part of the Supplementary Estimates process.

Capital expenditure

The acquisitions and improvement of properties under the Housing Act 1955 reported an underspend of $5.640 million due to delays in obtaining resource consents for the Hobsonville development.

Loans to support homeownership decreased between the Main and Supplementary Estimates due to value for money savings. The final outturn was $2.393 million lower than the Supplementary Estimates due to reduced demand for Shared Equity loans under the two-year pilot programme (2008-2010).

Schedule of Non-Departmental Assets and Liabilities

Cash balances are higher than forecast due to the high payables balance. This represents the year end claims from Housing New Zealand Corporation and the Housing Agency Account.
Payables was updated between the Main and Supplementary Estimates to better reflect the forecast balances.