Defence Portfolio
Briefing to the Incoming Government 2005
Votes: Defence and Defence Force
Output Plans
The Secretary of Defence and the Chief of Defence Force each negotiate an Output Plan annually with the Minister of Defence. Estimates of Appropriations and Statements of Intent are also provided. The Output Plans are similar to that entered into between other chief executives and ministers.
The fifteen NZDF Output Expenses purchased by the Minister of Defence are detailed in the NZDF Output Plan and NZDF Statement of Intent. Both the Secretary and the Chief of Defence Force provide quarterly reports and an annual report to the Minister on output performance and progress on key priorities.
The Output Plans specify the accountabilities of the Secretary of Defence and the Chief of Defence Force. The Secretary of Defence and the Chief of Defence Force are accountable to the Minister of Defence for the delivery of the specified outputs to the quality, quantity and cost specified, and are accountable for the delivery of any part of an output expense that has been sub-contracted to a third party. The plan provides guidance for each organisation's Statement of Intent and the Annual Report, and also provides guidance, in particular, for the Ministry's internal activities (policy and planning, acquisitions, evaluation and so on). It also provides information for the annual performance measurement exercise conducted by the State Services Commission.
Vote: Defence
The following table summarises the 2005/06 appropriations for the Ministry of Defence.
| Vote Defence Output Expense | $(000) |
|---|---|
| Policy advice | 3,807 |
| Audit & assessment of performance | 1,774 |
| Management of equipment procurement | 3,574 |
| Total appropriations for departmental output expenses | 9,155 |
| Purchase or development of capital assets by the Crown | |
| Defence equipment | 443,117 |
| Total appropriations for capital expenditure | 443,117 |
| Total appropriations | 452,272 |
Departmental Expenditure
In 2005/06 the departmental appropriation of $9.155 million will be spent on
| Vote Defence | $(000) | % of total Vote |
|---|---|---|
| Personnel costs | 5,272 | 58 |
| Operating costs | 3,759 | 41 |
| Capital charge | 124 | 1 |
| Total | 9,155 | 100 |
The Crown will fund $9.075 million of this expenditure and $0.080 million will be received from other departments.
Non-Departmental Expenditure
The Ministry of Defence manages a Crown appropriation for Capital Expenditure to acquire military equipment. The Main Estimates appropriation is for approved capital equipment projects only. New projects, that may receive approval during the financial year, are included in appropriations at the time of Supplementary Estimates. The 2005/06 Main estimates appropriation is for the following:
| $(000) | |
|---|---|
| Project Protector - new naval vessels | 117,040 |
| B-757 modifications | 10,666 |
| Light operational vehicles | 11,707 |
| Medium range anti-armour weapons | 6,747 |
| Air defence system | 2,728 |
| P-3 Orion systems upgrade | 120,436 |
| C-130 life extension | 113,793 |
| Total | 443,117 |
Vote: Defence Force
The Minister purchases from the NZDF:
- military policy advice; and
- the operational capabilities of the Navy, Army and Air Force.
The NZDF has approximately 13,000 employees, assets of about $4 billion, and an annual operating budget of about $1.6 billion (GST exclusive). By New Zealand standards it is a big business with a number of characteristics that have a bearing on defence funding and financial management.
Operating Statement
The following is a simplified statement of the actual financial performance for the year ending 30 June 2005 and the forecast financial performance for the 2005/2006 financial year. It highlights the personnel intensive nature of NZDF activity with personnel costs totaling over one third of all Output expenditure.
Statement of Financial Performance (GST exclusive)
| Actual FY 2004/05 $000 |
Forecast FY 2005/06 $000 |
|
|---|---|---|
| Revenue | ||
| Crown | 1,528,415 | 1,604,523 |
| Department | 8,931 | 9,074 |
| Other | 7,194 | 7,820 |
| Interest | 70 | 50 |
| Profit of sale of assets | 40,762 | - |
| Total operating revenue | 1,585,372 | 1,621,467 |
| Expenditure | ||
| Personnel costs | 571,363 | 607,682 |
| Operating costs | 440,236 | 481,085 |
| Depreciation | 232,345 | 232,641 |
| Capital charge | 281,770 | 300,009 |
| Total output expenses | 1,525,714 | 1,621,417 |
| Other Expenses | (3,266) | 0 |
| Total expenses | 1,522,448 | 1,621,417 |
| Net surplus/(deficit) | 62,924 | 50 |
Defence Outputs - This funding purchases the Output Expenses provided to the Government by the NZDF. The following table is taken from the 2005 Statement of Intent.
Forecast Expenditure in Outputs for 2005/06
Statement of Appropriations
| Appropriations | 2005/06
Vote |
Description of 2005/06 Appropriations | |
|---|---|---|---|
| NZDF Output Expense | Revenue Crown $000 |
Revenue Dept/Other $000 | |
| Military Policy Development, Coordination and Advice | 9,363 | 49 | Provision of advice to the Minister of Defence on military contributions to New Zealand's foreign policy and military responses to contingencies. This output expense also includes military intelligence, responses to ministerial correspondence, select committee and parliamentary questions, Official Information Act inquiries, and Ombudsmen correspondence. |
| Naval Combat Forces | 526,824 | 3,283 | Provision of the capabilities of HMNZ Ships TE KAHA and TE MANA and associated Seasprite helicopters prepared to conduct maritime operations and to contribute support services to the community. |
| Naval Support Forces | 31,294 | 216 | Provision of the capabilities of the Fleet Replenishment Ship, HMNZS ENDEAVOUR, prepared to conduct operational and maritime logistic support for deployed military forces, and to contribute some support services to the community. This output expense will also include the capabilities of the new multi-role vessel (MRV) once commissioned into service; until then the NZDF's military sea-lift capability will be by charter. |
| Mine Countermeasures (MCM) and MCM Diving Forces | 32,139 | 254 | Provision of the capabilities of the Mine Countermeasures (MCM) Forces, HMNZS MANAWANUI with HMNZS KAHU as backup, prepared to conduct route surveys and conditioning of selected New Zealand ports. The MCM Diving Forces, the Operational Diving Team, are prepared to support MCM operations and to conduct independent diving tasks. This output expense also includes some support services to the community. |
| Naval Patrol Forces | 3,374 | - | This is a new output expense. Provision of the capabilities of vessels (OPVs, IPVs and IPCs) for the conduct of maritime operations in support of Multi-Agency Operations and Tasks (MAO&T) and for the security and protection of New Zealand's economic border and EEZ. Until the commissioning into service of the OPVs and IPVs, the IPCs will undertake these roles to the limit of their capability. The IPCs will also be used in the training role. |
| Military Hydrography, and Hydrographic Data Collection and Processing for LINZ | 303 | 6,229 | Provision of the capabilities of the hydrographic and oceanographic survey vessel, HMNZS RESOLUTION, specialist personnel and support infrastructure to conduct military hydrography, and hydrographic data collection and processing that meets contractual commitments to LINZ. This output expense is supported by the Hydrographic Business Unit. |
| Land Combat Forces | 260,936 | 425 | Provision of the capabilities of the Land Combat Forces (command, control and intelligence, and infantry and reconnaissance force elements) prepared to conduct land operations, and to contribute support services to the community. |
| Land Combat Support Forces | 142,095 | 290 | Provision of the capabilities of the Land Combat Support Forces (artillery, engineers and communications force elements) prepared to conduct land operations, and to contribute support services to the community. |
| Land Combat Service Support Forces | 119,244 | 258 | Provision of the capabilities of the Land Combat Service Support Forces (transport and movements, medical, supply, repair and military police) prepared to conduct land operations, and to contribute support services to the community. |
| Specialised Forces | 42,217 | 86 | Provision of the capabilities of the Specialised Forces prepared to conduct special forces operations in support of land operations, counter-terrorist operations, and the disposal of explosive devices and neutralisation of chemical and biological devices that threaten public safety or national interests. |
| Maritime Patrol Forces | 138,509 | 1,003 | Provision of the capabilities of No 5 Squadron (P-3K Orion aircraft) prepared to conduct, in priority, maritime surveillance of New Zealand's EEZ, the Pacific region and the Southern Ocean, to conduct search and rescue missions, and to conduct maritime air operations. This output expense also includes some support services to the community. |
| Fixed Wing Transport Forces | 169,454 | 2,035 | Provision of the capabilities of No 40 Squadron (Boeing 757-200 and C-130 Hercules aircraft) prepared to conduct strategic and tactical air transport operations, including aeromedical evacuation, and to contribute support services to the community. |
| Rotary Wing Transport Forces | 98,687 | 528 | Provision of the capabilities of No 3 Squadron (Iroquois helicopters) prepared to conduct tactical air transport, including aeromedical evacuation, and counter-terrorist operations, and to contribute support services to the community. |
| Miscellaneous Support Activities | 5,925 | 1,367 | Provision of the NZDF training infrastructure and planned support to regional defence forces and the New Zealand community. It includes support provided under the auspices of the Mutual Assistance Programme, support to the New Zealand Cadet Forces and training of Limited Service Volunteers. |
| Operationally Deployed Forces | 21,867 | 466 | Provision of deployed force elements on military tasks, including the commitments agreed by Government under which the NZDF contributes to peace support and other operations conducted in support of the United Nations and other international agencies. It includes the provision of individuals, observers, advisers, instructors, headquarters staff, and complete force elements and contingents. This output expense is now the subject of a Multi-Year Appropriation (MYA). However, for accounting purposes, the indicative annual cost needs to be recorded as shown here. |
| Total Appropriations for Departmental Output Expenses (General) | 1,602,231 | 16,489 | |
