MFEM sticking by budget report

Wednesday November 04, 2015 Written by Published in Economy

Financial Secretary Richard Neves has issued a press release to explain the government’s additional spending during the last financial year.


In the release Neves said the Preliminary Outcome report for 2014/15 released on October 1, 2015 detailed the provisional budgetary outcome for the year ending June 30, 2015. 

The report is an extension of the normal quarterly reports provided during the year. 

These reports which are not required legislatively, aim to provide all stakeholders with information which otherwise would be unavailable for some time due to the delays in compiling and auditing the financial accounts of the Crown. 

The unaudited consolidated accounts for 2011/12 are available on the MFEM website.  

The accounts for 2014/15 are unlikely to be ready within the next 18 months. Audited accounts are only published once they are tabled in Parliament.

Within the Preliminary Outcome report is a section on additional operating expenditures which were authorised through a number of Executive Council Orders during the 2014/15 year.

This was the first time that information on the use of the Constitutional provision had been provided in a timely manner, said Neves.

These amounts increased the government’s authority to spend beyond the $224.383 million provided in the original appropriation passed by Parliament. 

The amounts outlined in Table 5 of the Preliminary Outcome 2014/15 did not specify actually paid amounts against those authorities, but only detailed what had been issued.

In many cases the Executive Council Order, whilst aimed at achieving a specific objective, activity or action, simply increased the net appropriation for an agency, Neves said.

These decisions had been made on the assumption that an agency would have had insufficient resources to undertake actions requested by the Government.

In cases where agencies have provisional savings in their net appropriation, then the additional authority issued through the Executive Council had not been required and therefore remained unpaid, he said.  

“For example, at the time of providing the Ministry of Foreign Affairs and Trade with an additional $0.030 million for the purposes of hosting functions to celebrate the 50th celebration in New Zealand it was assumed that the Ministry would fully utilise its net appropriation of $1.780 million. 

Final provisional expenditure for the Ministry was $1.726 million, a saving of $0.054 million which was then returned to the Treasury.

“The gross additional operating expenditure issued and paid was $3.171 million (including non-expenditure on the Ministry of Culture POBOC for the Te Maeva Nui), and the net amount (which excludes the underwrite savings) issued and paid was $1.571 million.  One and a half per cent of the total appropriation is equivalent to $3.366 million.

“Of the amount issued and paid, ($3.171 million) $0.223 million was provided to the Cook Islands Investment Corporation (CIIC) for the purchase of various items such as bedding to assist with the hosting of various Cook Islands’ tere parties who came to Rarotonga to enjoy the 50th celebrations. 

“Of this amount, $0.089 million was recovered through sales in 2015/16. 

“These amounts are not recognised as an offset to that amount in 2014/15. The proceeds of these will appear as revenue on behalf of the Crown in 2015/16.

“In terms of capital expenditure the overall appropriation for the output was for a total of $21.781 million, the provisional amount paid, including expenditure accruals, totalled $17.354 million. 

“This amount includes $0.6 million for a fleet of 20 vehicles purchased for the constitutional celebrations,” Neves said. 

“Of this fleet 15 have been sold for a total of $0.455 million, however these sales and any future ones will not be recognised as an offset in 2014/15. 

“The proceeds of these will appear as a movement in the Crown’s fixed assets during 2015/16.

“These figures are provisional and subject to change and will only be verified once the consolidated accounts for 2014/15 are fully audited.” 

The Ministry of Finance in conjunction with the International Monetary Fund has recommended a series of amendments to the MFEM Act with a view to modernising the Act and improving clarity on many issues including the use of the Constitutional provision

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