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Non-departmental statements and schedules for the year ended 30 June 2010

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

Statement of Non-Departmental Expenditure and Capital Expenditure against Appropriations for the Year Ended 30 June 2010

Actual
2009
$000
  Actual
2010
$000
Appropriation
2010
$000 13
  Vote Environment    
  Appropriations for non-departmental output expenses    
5,444 Contaminated Sites Remediation Fund 2,535 5,775
3,314 Sustainable Management Fund 3,835 4,311
10,012 Hazardous Substances and New Organisms Assessment and Management 10,170 10,170
400 Promotion of sustainable land management 400 400
19,170 Subtotal 16,940 20,656
  Appropriations for non-departmental other expenses    
1,377 Legal and environment centre grants 1,335 1,378
350 United Nations Environment Programme 274 393
110 International subscriptions 106 117
1,096 Warm Homes grants and assistance 1,100 1,100
7,300 Rotorua Lakes Restoration Programme 6,675 6,675
6,500 Waikato River Co-management 78,425 35,500
0 Scoping Study for Clean-up Fund 399 785
0 Waikato River Clean-up Fund 111,596 14,000
10,000 Waikato River Initiatives Fund 40,000 40,000
0 Contestable Waste Minimisation Fund 0 12,740
0 Waste disposal levy disbursement to TLA 12,487 15,000
0 Waikato and Waipa River transitional co-governance 469 919
1,500 Clean-up of former Patea Freezing Works 0 0
509 Recycling in Public Places 0 0
28,742 Subtotal 252,866 128,607
47,912 Total for Vote Environment 269,806 149,263
       
  Vote Climate Change    
  Appropriations for non-departmental other expenses    
227 Framework Convention on Climate Change 123 227
40,943 Movement in price of Kyoto units held 24,663 0
295 Contribution to Climate Change Development Fund 300 300
16,277 Allocation of New Zealand Units 90,009 139,648
144 Issue of NZ AAU’s to PFSI Participants 1,752 4,296
57,886 Subtotal 116,847 144,471
  Non-departmental capital expenditure    
140 Purchase of PRE units 500 2,269
140 Subtotal 500 2,269
58,026 Total for Vote Climate Change 117,347 146,740

The notes form an integral part of, and should be read in conjunction with, these financial statements.

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.

The movement in the price of Kyoto units held reflects a re-measurement in the provision for the Crown’s liability under the Kyoto Protocol. The re-measurement in the provision takes account of the revision in the price for Kyoto-compliant emission units, the re-estimation of the net emission position, and movements in the EURO/NZ exchange rate.

In accordance with Section 4(2)(a) of Part One of the Public Finance Amendment Act 2004, changes in assets and liabilities due to re-measurements do not require appropriations.

The notes form an integral part of, and should be read in conjunction with, these financial statements.

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.

Statement of Non-Departmental Expenditure and Capital Expenditure against Appropriations for the Year Ended 30 June 2010 (continued)

Details of multi-year appropriations

The Ministry has a multi-year appropriation for Non-Departmental output expenses for the provision of grants to assist regional councils and unitary authorities in aquaculture planning. This appropriation began on 1 July 2006 and expires on 30 June 2011. From 1 July 2010, this appropriation is transferred to the Ministry of Fisheries to align with the changes in responsibilities.

  2010
$000
2009
$000
2008
$000
2007
$000
Vote Environment        
Appropriation: Contestable Aquaculture Planning Fund        
Original appropriations 2,000 2,000 2,000 2,000
Cumulative adjustments 0 0 0 0
Total appropriations 2,000 2,000 2,000 2,000
Opening cumulative actual 886 388 0 0
Current year supplementary estimates 35 500 500 0
Current year spend 0 498 388 0
Closing cumulative actual 886 886 388 0
Unspent 1,114 1,114 1,612 2,000

Details of indemnity payments

The Ministry has a liability on behalf of the Crown for the indemnity payments in relation to the Projects to Reduce Emissions and this is authorised under section 65ZG of the Public Finance Act 1989.

Actual
2009
$000
  Actual
2010
$000
Appropriation
2010
$000
  Vote Climate Change    
  Appropriations for non-departmental output expenses    
294 Indemnity payments 1,233 N/A
294 Total for indemnity payments 1,233 N/A

The notes form an integral part of, and should be read in conjunction with, these financial statements.

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.

Statement of Non-Departmental Unappropriated Expenditure and Capital Expenditure
for the Year Ended 30 June 2010

Unappropriated expenditure
2009
$000
  Expenditure after remeasurements
2010
$000
AppropriationVoted
2010
$000
Unappropriated expenditure2010
$000
  Vote Environment      
  Appropriations for non-departmental other expenses      
0 Waikato River Co-management Fund 78,425 35,500 42,925
0 Waikato River Clean-up Fund 111,596 14,000 97,596
0 Total appropriations for non-departmental other expenses:
Vote Environment
190,021 49,500 140,521
  Vote Climate Change      
  Appropriations for non-departmental other expenses      
0 Allocation of New Zealand Units 90,009 139,648 18,341
25 Framework Convention on Climate Change 123 227 0
25 Total appropriations for non-departmental other expenses:
Vote Climate Change
90,132 139,875 18,341

Breach of appropriations

There were breaches of appropriations in Vote Environment, Waikato River Co-management Fund of $42.925 million and the Waikato River Clean-up Fund of $97.596 million. These breaches occurred due to changes in accounting treatment of expenditure incurred under the settlement deeds with Waikato Tainui and other iwi concerning the Waikato River. Expenditure is now recognised on the date the deeds of settlement are signed rather than the previous treatment of recognising expenditure based on the timing of the settlement payments specified in the deeds.

The notes form an integral part of, and should be read in conjunction with, these financial statements.

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.

A breach of appropriation occurred in Vote Climate Change, Allocation of New Zealand Units of $18.341 million in March 2010 due to an unexpected increase in the number of post-1989 forest landowners voluntarily joining the New Zealand Emission Trading Scheme. Appropriation changes were made in the Supplementary Estimates. (2009: $25,000 in Framework Convention on Climate Change).

These expenditure breaches will be validated under Section 26C of the Public Finance Act 1989 and explanations for the breach tabled in Parliament.

All other expenses in relation to the activities of, or appropriations administered by, the Ministry during 2009/10 were within appropriation.

The notes form an integral part of, and should be read in conjunction with, these financial statements.

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.

Schedule of Non-Departmental Income for the Year Ended 30 June 2010

Actual
2009
$000
  Actual
2010
$000
Main
estimates
2010
$000
Supplementary estimates
2010
$000
  Income      
578

0
Royalties

Levies
533

24,973
400

30,000
400

30,000
0 Emissions trading 0 320,865 6,578
809,798 Change in estimate of Kyoto units held 64,015 0 39,482
810,376 Total non-departmental income 89,521 351,265 76,460

Explanations of significant variances against budget are detailed in note 10.

Schedule of Non-Departmental Capital Receipts for the Year Ended 30 June 2010

The Ministry on behalf of the Crown has no Capital Receipts (2009: Nil).

Schedule of Non-Departmental Expenses for the Year Ended 30 June 2010

Actual
2009
$000
  Actual
2010
$000
Main
estimates
2010
$000
Supplementary estimates
2010
$000
  Expenditure      
36,531 Grants and settlements 245,501 95,707 121,479
400 Promotions 400 400 400
982 Subscriptions and contributions to international forums 803 1,037 1,037
10,012 Crown entity funding 10,170 10,170 10,170
40,943 Net changes in carbon price including foreign exchange movements 24,663 0 0
0 Levy Disbursement 12,487 15,000 15,000
144 Issue of NZ AAU’s to PFSI Participants 1,752 3,221 4,296
16,277 Allocations of New Zealand Units 90,009 471,240 139,648
3,984 GST input expense 6,075 3,477 7,198
2,330 Other 1,808 812 1,739
111,603 Total non-departmental expenditure 393,668 601,064 300,967

Explanations of significant variances against budget are detailed in note 10.

The notes form an integral part of, and should be read in conjunction with, these financial statements.

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.

Schedule of Non-Departmental Assets as at 30 June 2010

Actual
2009
$000
  Notes Actual
2010
$000
Main estimates
2010
$000
Supplementary estimates
2010
$000
  Assets        
  Current assets        
6,265 Cash and cash equivalents   12,063 17,309 8,763
1,378 Debtors and other receivables 2 6,575 0 0
7,643 Total current assets   18,638 17,309 8,763
  Non-current assets        
5,784 Crown land holdings 3 0 6,813 0
206,683 Kyoto Protocol units 7 211,927 224,116 231,161
140 PRE units   617 7,000 2,409
212,607 Total non-current assets   212,544 237,929 233,570
220,250 Total non-departmental assets   231,182 255,238 242,333

In addition, the Ministry monitors the Environmental Risk Management Authority which is a Crown entity. The investment in this entity is recorded within the Financial Statements of the Government on a line-by-line basis. No disclosure is made in this schedule.

Schedule of Non-Departmental Liabilities as at 30 June 2010

The notes form an integral part of, and should be read in conjunction with, these financial statements.

Actual
2009
$000
  Notes Actual
2010
$000
Main estimates
2010
$000
Supplementary estimates
2010
$000
  Liabilities        
  Current liabilities        
5,159 Creditors and other payables 4 10,329 8,200 8,200
504 Provisions 8 67,224 N/A N/A
5,663 Total current liabilities   77,553 8,200 8,200
  Non-current liabilities        
16,421 Provisions 8 211,503 173,219 115,355
16,421 Total non-current liabilities   211,503 173,219 115,355
22,084 Total non-departmental liabilities   286,056 181,419

123,555

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.

Schedule of Non-Departmental Commitments as at 30 June 2010

The schedule sets out the level of commitments made against out-year appropriations and funding baseline for non-departmental expenditure. The Ministry has entered into non-cancellable deeds of funding that it administers on behalf of the Crown.

  2010
$000
2009
$000
Non-cancellable commitments    
Not later than one year 13,633 15,154
Later than one year but not later than five years 27,052 50,600
Later than five years 24,300 7,000
Total non-cancellable commitments 64,985 72,754

Schedule of Non-Departmental Contingencies as at 30 June 2010

Guarantees and indemnities

Guarantees and indemnities are disclosed in accordance with NZ IAS 37: Provisions, Contingent Liabilities and Contingent Assets. In addition, guarantees given under Section 65ZD of the Public Finance Act 1989 are disclosed in accordance with Section 26Q(3)(b)(i)(B) of the same Act.

Other quantifiable contingent liabilities

Kyoto Protocol

The Ministry has a liability on behalf of the Crown relating to the 84.0 million forestry credits. During the first commitment period, the Ministry of Agriculture and Forestry estimate that 89.1 million tonnes of credits will be generated by carbon removals via forests
(2009: 92.3 million tonnes). Of this amount, 5.1 million tonnes has been allocated to foresters through the Emissions Trading Scheme as at 30 June 2010. To the extent that these forests are harvested (in subsequent commitment periods) and a future international agreement is negotiated, there will be an associated liability generated that will need to be repaid. As the forestry credits have been incorporated when calculating the current position for the first commitment period, the associated obligation of the Crown in respect of future commitment periods has been reported as a separate contingent liability. Using the carbon price as at 30 June 2010, this contingent liability can be measured at $NZ1,590 million (ie, 84 million x $NZ18.94) (2009: $1,995 million).

The notes form an integral part of, and should be read in conjunction with, these financial statements.

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.

Unquantifiable contingent liabilities and contingent assets

Environmental liabilities

Under common law and various statutes, the Crown may have responsibility to remedy adverse effects on the environment arising from Crown activities.

Departments managing significant Crown properties have implemented systems to identify, monitor and assess potential contaminated sites.

In accordance with NZ IAS 37: Provisions, Contingent Liabilities and Contingent Assets any contaminated sites for which the Crown has accepted liability and for which costs can be reliably measured have been included in the Schedule of Non-Departmental Liabilities.

Emissions Trading Scheme

Post-1989 forest land

Owners of post-1989 forest land (or those with a registered interest in the forest on the land) may voluntarily become participants in the Emissions Trading Scheme (ETS), and in so doing are entitled to receive New Zealand Units (NZUs) for the increase in carbon stock in their forests from 1 January 2008.

Landowners have until the end of 2012 (the end of the first commitment period under the Kyoto Protocol) to decide whether to register post-1989 forest land and receive NZUs for that period. If they do, they can claim NZUs for all the carbon stored in their forest from 1 January 2008 to 31 December 2012.

Participants also have various legal obligations including the surrender of units if the carbon stocks in their registered forest areas fall below a previously reported level (for example, due to harvesting or fire). However, the surrender liability is capped at the amount of units previously received by the participant for that area of forest land (if any).

Assets and liabilities relating to the post-1989 forestry sector have only been recognised in these Non-Departmental financial statements and schedules to the extent that the participants have registered in the scheme and complete applications and valid returns have been received by the relevant agency on behalf of the Crown.

Pre-1990 forest land

Pre-1990 forest land is an area that was forest land on 31 December 1989, and that on
31 December 2007 is still forest land and is covered by predominantly exotic forest species. 

Subject to various exemptions, if an area of more than two hectares of pre-1990 forest land is deforested in any five year period from 1 January 2008, the landowner becomes a mandatory participant in the ETS.  The landowner must submit an emissions return and either surrender units or, for liabilities incurred up to the end of 2012, pay cash at a rate of $25 per NZU for emissions resulting from deforestation. 

At 30 June 2010, no asset relating to pre-1990 forest land has been recognised as the areas of deforestation and number of units to be returned is yet to be quantified.

The Ministry on behalf of the Crown has no other contingent liability or assets (2009: Nil).

The notes form an integral part of, and should be read in conjunction with, these financial statements.

For a full understanding of the Crown’s financial position and the results of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2010.


13  This includes adjustments made in the Supplementary Estimates and transfers under the Public Finance Act 1989.