Financial Statements
Non-departmental Statements and Schedules
Introduction/Overview
The following non-departmental statements and schedules record the expenses, revenue, capital receipts, assets and liabilities the Ministry manages on behalf of the Crown. As these assets and liabilities are neither controlled by the department nor used in the production of the department’s outputs, they are not recorded in the Ministry’s financial statements.
The Ministry administered $107.101 million of expenses, $103.049 million of revenue, $1.945 million of capital receipts, $279.546 million of assets and $19.819 million of liabilities on behalf of the Crown for the year ending 30 June 2007. Further details of the Ministry’s management of these Crown assets and liabilities are provided in the Output Performance sections of this report.
The financial information reported in these statements and schedules is 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 2007.
STATEMENT OF ACCOUNTING POLICIES
For the year ended 30 June 2007.
Measurement System
Measurement and recognition rules applied in the preparation of these non-departmental financial statements and schedules are consistent with generally accepted accounting practice and Crown accounting policies.
Accounting Policies
The following particular accounting policies which materially affect the measurement of financial results and financial position have been applied.
Budget Figures
The budget figures are those amended by the 2006/07 Supplementary Estimates.
Revenue
The Ministry collects revenue on behalf of the Crown from the sale of forest produce and the collection of biosecurity infringement fines. Such revenue is recognised when earned and is reported in the financial period to which it relates.
Receivables and advances
Receivables and advances are recorded at estimable realisable value, after providing for doubtful and uncollectable debts.
Creditors and Payables
Creditors and payables are recorded at the estimated obligation to pay.
Goods and Services Tax (GST)
The Schedule of Non-Departmental Assets and Schedule of Non-Departmental Liabilities are exclusive of GST, except for Receivables and Advances and Payables and Provisions, which are GST inclusive. All other statements and schedules are GST exclusive.
Property, Plant and Equipment
Land and buildings are stated at fair value as determined by an independent registered valuer. Fair value is determined using market-based evidence. Land and buildings are revalued at least every five years. Additions between revaluations are recorded at cost.
The results of revaluing land and buildings are credited or debited to an asset revaluation reserve for that class of asset. Where a revaluation results in a debit balance in the revaluation reserve, the debit balance will be expensed in the Statement of Financial Performance.
Commercial forests are valued at the net present value of future cash flows after tax, with any realised and unrealised gains or losses reported in the Statement of Financial Performance.
All other property, plant and equipment, or groups of assets forming part of a network which are material in aggregate, costing more than $5,000 are capitalised and recorded at cost. Any write-down of an item to its recoverable amount is recognised in the Statement of Financial Performance.
Depreciation
Depreciation is provided on a straight line basis on all fixed assets, other than freehold land at a rate which will write off the cost (or valuation) of the assets to their estimated residual value over their useful lives.
Commitments
Future expenses and liabilities to be incurred on contracts entered into at balance date are disclosed as commitments to the extent there are equally unperformed obligations.
Contingent Liabilities
Contingent liabilities are disclosed at the point at which the contingency is evident.
Changes in Accounting Policies
There have been no changes in accounting policies since the date of the last audited financial statements.
All policies have been applied on a basis consistent with the prior year.
Schedule of Non-departmental Expenses
For the year ended 30 June 2007
The Schedule of Expenses summarises expenses the Ministry administers on behalf of the Crown. Details of non-departmental expenditure and appropriations are provided in the Statement of Non-Departmental Expenditure and Appropriations on page 86.
| Actual June 2006 $(000) |
Main Estimates June 2007 $(000) |
Supp Estimates June 2007 $(000) |
Actual June 2007 $(000) | |
|---|---|---|---|---|
| VOTE AGRICULTURE AND FORESTRY | ||||
| 59,407 | Non-departmental output expenses | 69,717 | 65,110 | 64,020 |
| 22,486 | Other expenses to be incurred by the Crown | 18,354 | 21,556 | 13,848 |
| 9,436 | Loss on revaluation of commercial forest | - | - | - |
| 91,329 | Total non-departmental expenses: Vote Agriculture and Forestry | 88,071 | 86,666 | 77,868 |
| VOTE BIOSECURITY | ||||
| 34,222 | Non-departmental output expenses | 30,456 | 30,456 | 29,116 |
| 80 | Other expenses to be incurred by the Crown | 95 | 130 | 117 |
| 34,302 | Total non-departmental expenses: Vote Biosecurity | 30,551 | 30,586 | 29,233 |
| 125,631 | Total non-departmental expenses: All Votes | 118,622 | 117,252 | 107,101 |
The accompanying accounting policies and notes form part of these financial statements. For a full understanding of the Crown’s financial position and results for the period, reference should be made to the Consolidated Crown Financial Statements for the year ended 30 June 2007.
Statement of Non-departmental Expenditure and Capital Expenditure
For the year ended 30 June 2007
The Statement of Expenditure and Appropriations details expenditure and capital payments incurred against appropriations. The Ministry administers these appropriations on behalf of the Crown.
| Actual June 2006 $(000) |
Notes | Main Estimates June 2007 $(000) |
Supp Estimates June 2007 $(000) |
Actual June 2007 $(000) | |
|---|---|---|---|---|---|
| VOTE AGRICULTURE AND FORESTRY | |||||
| Non-departmental output expenses | |||||
| 59,407 | Management of Crown forestry assets | 1 | 69,717 | 65,110 | 64,020 |
| Other expenses to be incurred by the Crown | |||||
| - | Adverse climatic events | 2 | 356 | 356 | 181 |
| 13 | Community irrigation schemes | 17 | 17 | 15 | |
| 2,050 | East Coast afforestation grants | 3 | 5,644 | 3,011 | 1,710 |
| - | Organic initiatives | 4 | 500 | 500 | 500 |
| - | South Island snow event | - | 5,870 | 316 | |
| 1,811 | Subscriptions to international organisations | 5 | 2,193 | 2,158 | 1,541 |
| 10,713 | Sustainable farming fund | 6 | 9,644 | 9,644 | 9,585 |
| 1,517 | Bay of Plenty flood 2004 | - | - | - | |
| 6,000 | Lower North Island flood 2004 | - | - | - | |
| 382 | SILNA goodwill payments | - | - | - | |
| 22,486 | Total other expenses to be incurred by the Crown | 18,354 | 21,556 | 13,848 | |
| Capital contributions | |||||
| - | Forestry encouragement loans | 20 | 20 | - | |
| 81,893 | Total non-departmental expenditure: Vote Agriculture and Forestry | 88,091 | 86,686 | 77,868 | |
| VOTE BIOSECURITY | |||||
| Non-departmental output expenses | |||||
| 34,222 | Control of Tb vectors | 7 | 30,456 | 30,456 | 29,116 |
| Other expenses to be incurred by the Crown | |||||
| 80 | Subscriptions to international organisations | 5 | 95 | 130 | 117 |
| 34,302 | Total non-departmental expenditure: Vote Biosecurity | 30,551 | 30,586 | 29,233 | |
| 116,195 | Total non-departmental expenditure: All Votes | 118,642 | 117,272 | 107,101 |
The accompanying accounting policies and notes form part of these financial statements. For a full understanding of the Crown’s financial position and results for the period, reference should be made to the Consolidated Crown Financial Statements for the year ended 30 June 2007.
Schedule of Non-departmental Revenue
For the year ended 30 June 2007
The Schedule of Revenue details revenue collected by the Ministry on behalf of the Crown.
| Actual June 2006 $(000) |
Notes | Main Estimates June 2007 $(000) |
Supp Estimates June 2007 $(000) |
Actual June 2007 $(000) | |
|---|---|---|---|---|---|
| VOTE AGRICULTURE AND FORESTRY | |||||
| 124 | Levy charged under the Dairy Industry Restructuring Act | - | 319 | 638 | |
| 81,425 | Management of Crown forestry assets | 1 | 89,258 | 86,205 | 87,541 |
| 1,480 | Forestry encouragement loan interest | 1,500 | 1,500 | 1,494 | |
| 1 | Irrigation suspensory loan refunds | - | 12 | 14 | |
| - | Gain on revaluation of commercial forests | - | - | 12,496 | |
| 83,030 | Total non-departmental revenue: | 90,758 | 88,036 | 102,183 | |
| Vote Agriculture and Forestry | |||||
| VOTE BIOSECURITY | |||||
| 1,236 | Biosecurity Act 1993 fines | 8 | 1,600 | 1,300 | 866 |
| 1,236 | Total non-departmental revenue: Vote Biosecurity | 1,600 | 1,300 | 866 | |
| 84,266 | Total non-departmental revenue: All Votes | 92,358 | 89,336 | 103,049 |
Schedule of Non-departmental Capital Receipts
For the year ended 30 June 2007
The Schedule of Capital Receipts details capital receipts collected by the Ministry on behalf of the Crown.
| Actual June 2006 $(000) |
Notes | Main Estimates June 2007 $(000) |
Supp Estimates June 2007 $(000) |
Actual June 2007 $(000) | |
|---|---|---|---|---|---|
| VOTE AGRICULTURE AND FORESTRY | |||||
| 2,004 | Forestry encouragement loan repayments | 9 | 2,140 | 1,516 | 1,761 |
| - | Sale of irrigation assets | - | 182
|
184
| |
| 10 | Crown forestry asset sales | - | - | - | |
| 2,014 | Total non-departmental capital receipts: | 2,140 | 1,698 | 1,945 | |
| Vote Agriculture and Forestry |
The accompanying accounting policies and notes form part of these financial statements. For a full understanding of the Crown’s financial position and results for the period, reference should be made to the Consolidated Crown Financial Statements for the year ended 30 June 2007.
Schedule of Non-departmental Assets
As At 30 June 2007
The Schedule of Assets details the assets that the Ministry administers on behalf of the Crown.
| Actual June 2006 $(000) |
Notes | Main Estimates June 2007 $(000) |
Supp Estimates June 2007 $(000) |
Actual June 2007 $(000) | |
|---|---|---|---|---|---|
| Current assets | |||||
| 9,041 | Cash | - | - | 12,266 | |
| 6,886 | Debtors and receivables | 10 | 8,000 | 8,000 | 8,669 |
| 773 | Prepayments | 11 | 950 | 700 | 791 |
| 16,700 | Total current assets | 8,950 | 8,700 | 21,726 | |
| Non-current assets | |||||
| 24,113 | Forestry encouragement loans | 9 | 23,417 | 24,117 | 23,846 |
| 27,611 | Land | 12 | 27,621 | 27,447 | 34,321 |
| 97 | Buildings | 97 | 85 | 150 | |
| 183,354 | Commercial forest | 13 | 192,959 | 183,354 | 195,850 |
| 3,982 | Roads, bridges and fencing | 3,400 | 3,651 | 3,653 | |
| 8 | Plant and equipment | 5 | 3 | - | |
| 239,165 | Total non-current assets | 247,499 | 238,657 | 257,820 | |
| 255,865 | Total non-departmental assets | 256,449 | 247,357 | 279,546 |
Schedule of Non-departmental Liabilities
As at 30 June 2007
The Schedule of Liabilities summarises the liabilities the Ministry administers on behalf of the Crown.
| Actual June 2006 $(000) |
Main Estimates June 2007 $(000) |
Supp Estimates June 2007 $(000) |
Actual June 2007 $(000) | |
|---|---|---|---|---|
| Current liabilities | ||||
| 17,265 | Creditors and payables | 23,000 | 17,000 | 19,819 |
| 17,265 | Total current liabilities | 23,000 | 17,000 | 19,819 |
| 17,265 | Total non-departmental liabilities | 23,000 | 17,000 | 19,819 |
The accompanying accounting policies and notes form part of these financial statements. For a full understanding of the Crown’s financial position and results for the period, reference should be made to the Consolidated Crown Financial Statements for the year ended 30 June 2007.
Statement of Non-departmental Cash Flows
For the year ended 30 June 2007
| Actual June 2006 $(000) |
Main Estimates June 2007 $(000) |
Supp Estimates June 2007 $(000) |
Actual June 2007 $(000) | |
|---|---|---|---|---|
| OPERATING ACTIVITIES | ||||
| Cash was provided from: | ||||
| 1,360 | Fees, fines and levies | 1,600 | 1,619 | 1,504 |
| 82,362 | Sale of goods and services | 89,258 | 85,103 | 85,764 |
| Cash was applied to: | ||||
| (106,149) | Outputs | (112,271) | (107,318) | (103,113) |
| (43,714) | Grants | (18,074) | (21,801) | (12,937) |
| (1,858) | Other operating expenditure | (2,366) | (2,324) | (1,531) |
| (67,999) | Net cash inflow/(outflow) from operating activities | (41,853) | (44,721) | (30,313) |
| INVESTING ACTIVITIES | ||||
| Cash was provided from: | ||||
| 2,004 | Repayment of loans | 2,140 | 1,516 | 1,761 |
| 10 | Sale property, plant and equipment | - | 182 | 184 |
| Cash was disbursed for: | ||||
| - | Loan advances | (20) | (20) | - |
| 2,014 | Net cash inflow/(outflow) from investing activities | 2,120 | 1,678 | 1,945 |
| FINANCING ACTIVITIES | ||||
| Cash was provided from: | ||||
| 157,849 | The Crown | 132,731 | 131,463 | 125,463 |
| 8,755 | GST on receipts | 9,000 | 9,000 | 8,381 |
| Cash was disbursed to: | ||||
| (99,935) | The Crown | (92,998) | (88,420) | (88,172) |
| (8,696) | IRD for GST | (9,000) | (9,000) | (7,972) |
| - | Prior year balance returned to Crown | - | (9,041) | (6,107) |
| 57,973 | Net cash inflow/(outflow) from financing activities | 39,733 | 34,002 | 31,593 |
| (8,012) | Net increase (decrease) in cash held | - | (9,041) | 3,225 |
| 17,053 | Add opening cash | - | 9,041 | 9,041 |
| 9,041 | Closing cash | - | - | 12,266 |
The accompanying accounting policies and notes form part of these financial statements. For a full understanding of the Crown’s financial position and results for the period, reference should be made to the Consolidated Crown Financial Statements for the year ended 30 June 2007.
Schedule of Non-departmental Contingent Liabilities
As at 30 June 2007
The Schedule of Contingent Liabilities summarises the contingent liabilities relating to activities the Ministry administers on behalf of the Crown.
| Actual June 2006 $(000) |
Actual June 2007 $(000) | |
|---|---|---|
| 13,736 | Legal proceedings and disputes | 9,600 |
| 248 | Other contingent liabilities | 318 |
| 13,984 | Total non-departmental contingent liabilities | 9,918 |
The contingent liabilities relate to Central Otago irrigation schemes and forestry encouragement loans.
Schedule of Non-departmental Commitments
As at 30 June 2007
The Schedule of Commitments summarises commitments the Ministry administers on behalf of the Crown.
| Actual June 2006 $(000) |
Actual June 2007 $(000) | |
|---|---|---|
| Operating commitments | ||
| 956,155 | Crown lease forests | 887,046 |
| 11,623 | East Coast afforestation grants | 13,778 |
| 9,192 | Sustainable Farming Fund grants | 15,192 |
| 976,970 | Total non-departmental commitments | 916,016 |
| Term classification of commitments | ||
| 64,466 | Not later than one year | 78,773 |
| 67,734 | Later than one year and not later than two years | 69,248 |
| 179,660 | Later than two years and not later than five years | 181,517 |
| 665,110 | Later than five years | 586,478 |
| 976,970 | Total non-departmental commitments | 916,016 |
The Crown lease forest commitment relates to forests established on leased Māori land (see note 1). The lease agreements commit the Crown to this expenditure over the remaining term of the leases.
The accompanying accounting policies and notes form part of these financial statements. For a full understanding of the Crown’s financial position and results for the period, reference should be made to the Consolidated Crown Financial Statements for the year ended 30 June 2007.
Notes to the Financial Statements
For the year ended 30 June 2007
Note 1: Management of Crown Forestry Assets
Management of the Crown’s interest in 25 commercial forests spread throughout the North Island and 13 afforestation leases where Crown land has been leased to other parties for forestry purposes. The total planted area of these forests is over 37,000 hectares with harvesting activity producing an annual cut of about 1,196,000 cubic metres. 16 of the 25 commercial forests are planted on land leased from Māori landowners.
Day to day operational management of the forest estate is contracted to forest management companies. Expenditure includes pruning, thinning, fertilizing, protection from fire and disease, harvesting of forest produce, replanting of harvested areas and stumpage payments. Revenue is earned from the sale of logs, standing forest and rent.
Note 2: Adverse Climatic Events
Support to the agricultural sector in the aftermath of adverse climatic events, such as flooding, drought, etc.
Expenditure in 2006/07 was mainly related to the snow event in the South Island during July/August 2006.
Note 3: East Coast Afforestation Grants
The East Coast Forestry Project (ECFP) was introduced in 1991 to control present and potential erosion on target land in the Gisborne District. The Project does this in various ways, including planting with radiata pine or other species, gully planting and actively managing the reversion of pastoral land to indigenous scrub/forest. The ECFP provides grants to landholders to enable them to carry out these kinds of activities on sites identified as target land. Rates of grants are not fixed. They are determined by applicants who bid for grants in a competitive tender process.
Note 4: Organic Initiatives
Funding for the Organic Sector Advisory Programme which aims to increase certified organic production to help achieve the Organic Sector Strategy’s goal of $1 billion in total sector sales by 2013. The funds are administered by MAF and the programme design and delivery is provided by Organics Aotearoa New Zealand.
Note 5: Subscriptions to International Organisations
Membership of various international organisations such as the Food and Agriculture Organisation of the United Nations, International Tropical Timber Organisation and the World Organisation for Animal Health.
Note 6: Sustainable Farming Fund
The Sustainable Farming Fund (SFF) supports projects that contribute to improving the financial and environmental performance of the land-based productive sectors. The SFF aims to help the land-based sectors solve problems and take opportunities to overcome barriers to economic, social and environmental viability. The fund provides grants for projects with programmes lasting from one to three years. Projects must seek to address a need that is identified by a community interest.
Note 7: Control of Tb Vectors
Crown’s contribution to the Bovine Tuberculosis National Pest Management Strategy. The objective of the strategy is to reduce the number of bovine tuberculosis (Tb)-infected cattle and deer herds to 0.2% annual period prevalence by 2013. The Strategy is funded both by the Crown and industry (under voluntary agreements and by way of regulatory levies).
The Animal Health Board (AHB) is appointed under the Biosecurity (Bovine Tuberculosis National Pest Management Strategy) Order 1998 as the pest management agency for the Strategy. The two main components of the Strategy are disease control, which is fully industry-funded, and vector control which is funded by the Crown (as an exacerbator), local government, some rural land occupiers and industry.
Specifically the Crown contributes to the purchase of services for the control of wild animal populations infected with Tb (called Tb vectors) of which possums and ferrets are the major source of infection for cattle and deer. The Crown funding is managed through a Vector Funding Agreement with the AHB. Vector control measures and monitoring are undertaken on the Crown estate and adjoining land for this purpose. The AHB contracts vector management services from regional councils and other pest control agencies.
Note 8: Biosecurity Act 1993 Fines
Infringement fines imposed on persons entering New Zealand at ports of entry with undeclared goods.
Note 9: Forestry Encouragement Loans
Loans to local authorities to encourage afforestation issued under the Forestry Encouragement Loan Regulations (1967). Loans become repayable when either 30 years has passed from the first loan advance or clear felling in the loan forest commences.
Note 10: Debtors and Receivables
Debtors and receivables relate principally to the sale of forest produce from Crown forests.
Note 11: Prepayments
Prepayments relate to New Zealand’s contribution to the Food and Agriculture Organisation of the United Nations and forestry land rental payments.
Note 12: Land
Land leased to other parties for forestry purposes and land associated with Crown-owned irrigation schemes.
Note 13: Commercial Forest
The Crown’s interest in forests established on both Crown-owned and leased Māori land. The forests are valued annually at the present value of future cash flows after tax. The valuation at 30 June 2007 was carried out by Allan Bell and Associates, registered forestry consultants.
Note 14: Major Budget Variances
The following significant movements between the initial Budget Day Estimates and the actual results for 2006/07 are explained below.
Adverse climatic events is a contingency fund not all of which was required in 2006/07.
East Coast afforestation grant expenditure was considerably less than budget due to many new forestry planting programmes not being carried out by applicants following the low forestry planting trend nationally.
Subscriptions to international organisations expenditure was below budget due to the high value of the New Zealand dollar.
Biosecurity Act 1993 fines were lower than forecast due to reduced offending and a change of focus to breaches where there was an element of wilfulness as opposed to infringement offences which are usually due to carelessness or negligence.
Cash balance was higher than expected due to under spending on East Coast afforestation grants, South Island snow event and subscriptions to international organisations.
Land was $6.7 million above the original budget due to the five yearly valuation carried out in March 2007.
Creditors and payables were lower than budgeted due to under spending on grants detailed above.
| Main Estimates June 2007 $(000) |
Actual June 2007 $(000) |
Variance $(000) | |
|---|---|---|---|
| Expenditure | |||
| Adverse climatic events | 356 | 181 | (175) |
| East Coast afforestation grants | 5,644 | 1,710 | (3,934) |
| Subscriptions to international organisations | 2,193 | 1,541 | (652) |
| Receipts | |||
| Biosecurity Act 1993 fines | 1,600 | 866 | (734) |
| Assets | |||
| Cash | - | 12,266 | 12,266 |
| Land | 27,621 | 34,321 | 6,700 |
| Current liabilities | |||
| Payables and provisions | 23,000 | 19,819 | (3,181) |
Contact for Enquiries
Strategy and Performance Group
Ministry of Agriculture and Forestry
Pastoral House
25 The Terrace
PO Box 2526, Wellington
Tel: +64 4 894 0100
Fax: +64 4 894 0738
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