Department of Labour Annual Report 2006

Financial statements

Statement of financial performance for the year ended 30 June 2006

Revenue

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
146,360	Crown		156,945	147,981	156,945
1,817	Department	1	2,344	2,829	3,009
77,611	Other	2	85,940	85,373	88,627
71	Interest		110	11	11
225,859	Total operating revenue		245,339	236,194	248,592

Expenditure

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
105,266	Personnel costs		123,635	105,580	120,830
104,080	Operating costs	3	113,006	123,102	118,931
9,803	Depreciation	4	10,696	11,174	9,867
2,532	Capital charge	5	3,468	3,776	3,468
221,681	Total expenses		250,805	243,632	253,096

Totals

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
4,178	Net surplus/(deficit)		(5,466)	(7,438)	(4,504)

The accompanying accounting policies and notes form part of these financial statements.

For information on major variances against budget refer to Note 18.

Statement of movement in taxpayers’ funds for the year ended 30 June 2006

Taxpayers' funds

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
32,126	Taxpayers' funds as at 1 July		48,091	48,095	48,091
4,178	Net surplus / (deficit)		(5,466)	(7,438)	(4,504)
4,178	Total recognised revenues and expenses for the year		(5,466)	(7,438)	(4,504)
17,968	Capital contribution		13,810	11,015	13,810
(1,934)	Capital repayment		(2,042)	-	-
(69)	Transfers between Departments	6	-	-	-
(4,178)	Repayment of surplus to the Crown		-	-	-
48,091	Taxpayers' Funds as at 30 June		54,393	51,672	57,397

The accompanying accounting policies and notes form part of these financial statements.

For information on major variances against budget refer to Note 18.

Statement of financial position as at 30 June 2006

Taxpayers' funds

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
43,733	General funds	13	50,035	47,314	53,039
4,358	Revaluation reserve	13	4,358	4,358	4,358
48,091	Total taxpayers' funds		54,393	51,672	57,397

Represented by:

Current Assets

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
56,258	Cash and bank balances		59,212	43,536	49,733
2,315	Prepayments		1,368	1,000	1,000
1,988	Debtors and receivables		1,466	960	960
60,561	Total current assets		62,046	45,496	51,693

Non-Current Assets

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
37,421	Fixed assets	7	41,309	39,631	41,433
37,421	Total non-current assets		41,309	39,631	41,433
97,982	Total assets		103,355	85,127	93,126

Current Liabilities

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
35,340	Creditors and payables	8	36,016	23,043	26,935
4,178	Provision for repayment of surplus to the Crown	9	224	-	-
4,902	Provision for employee entitlements	10	7,176	3,972	5,000
443	Other provisions	11	2,535	374	374
1,303	Finance leases	12	290	-	-
46,166	Total current liabilities		46,241	27,389	32,309

Non-Current Liabilities

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
3,400	Provision for employee entitlements	10	2,688	3,226	3,400
325	Finance leases	12	33	2,840	20
3,725	Total non-current liabilities		2,721	6,066	3,420

Total liabilities

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
49,891	Total liabilities		48,962	33,455	35,729
48,091	Net assets		54,393	51,672	57,397

The accompanying accounting policies and notes form part of these financial statements.

For information on major variances against budget refer to Note 18.

Statement of cash flows for the year ended 30 June 2006

Cash Flows - Operating Activities

Actual 30 June 2005 $000	Cash was provided from:	Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
146,134	Supply of outputs to Crown		156,945	147,981	156,945
1,499	Supply of outputs to Departments		2,344	2,829	3,009
78,384	Supply of outputs to Others		85,401	82,283	88,627
71	Interest		110	11	11
	Cash was disbursed for:
(203,188)	Cost of producing outputs		(231,783)	(230,422)	(247,643)
(2,532)	Capital charge		(3,468)	(3,776)	(3,468)
20,368	Net cash inflow/(outflow) from operating activities	14	9,549	(1,094)	(2,519)

Cash Flows - Investing Activities

Actual 30 June 2005 $000	Cash was provided from:	Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
774	Sale of fixed assets		455	483	230
	Cash was disbursed for:
(14,660)	Purchase of fixed assets		(15,155)	(8,288)	(14,093)
(13,886)	Net cash outflow from investing activities		(14,700)	(7,805)	(13,863)

Cash Flows - Financing Activities

Actual 30 June 2005 $000	Cash was provided from:	Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
17,968	Capital contributions		13,810	11,015	13,810
	Cash was disbursed for:
(3,572)	Repayment of surplus to Crown		(3,953)	(1,830)	(3,953)
(1,934)	Capital repayments		(2,042)	-	-
12,462	Net cash inflow from financing activities		7,815	9,185	9,857

Cash balance

Actual 30 June 2005 $000		Note	Actual 30 June 2006 $000	Main Estimates 30 June 2006 $000	Supp. Estimates 30 June 2006 $000
18,944	Net increase/(decrease) in cash held		2,664	286	(6,525)
37,461	Add: opening cash brought forward		56,258	43,354	56,258
(147)	Add: effect of unrealized exchange rate changes on foreign currency balances		290	(104)	-
56,258	Closing Cash Balance		59,212	43,536	49,733
	Closing Cash Balance consists of:
56,258	Cash and bank balances		59,212	43,536	49,733

The accompanying accounting policies and notes form part of these financial statements.

For information on major variances against budget refer to Note 18.

Statement of commitments as at 30 June 2006

The Department has long-term leases on premises, which are subject to regular reviews. The amounts disclosed below as future commitments are based on the current rental rates. The majority of the commitments relate to non-cancellable accommodation leases (56%) and non-cancellable contracts for the supply of goods and services (34%).

Operating lease commitments

Actual 30 June 2005 $000		Actual 30 June 2006 $000
27,403	Within one year of balance date	31,543
17,359	One to two years	7,055
12,809	Two to five years	8,855
1,402	Over five years	1,523
58,973	Total operating lease commitments	48,976
4,988	Capital commitments	2,782
63,961	Total commitments	51,578

The accompanying accounting policies and notes form part of these financial statements.

Statement of contingent liabilities and assets as at 30 June 2006

Contingent liabilities

Contingent liabilities

Actual 30 June 2005 $000		Actual 30 June 2006 $000
9,527	Outstanding legal proceedings	1,607

The Department’s contingent liabilities can be broken down as follows:

• Six claims based on allegations of negligence of other tortious cause of actions totalling $1,140,000.
• Two employment-related claims against the Department, totalling $62,000.
• Three claims that, at this stage, either do not include a request for a financial settlement or any possible financial settlement has not been quantified.

Further information usually required by Financial Reporting Standard 15: Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it can be expected to seriously prejudice the outcome of the litigation.

No provision has been made in the financial statements in respect of these legal claims against the Department, as in the opinion of the Department, no material expense is expected to be incurred.

The Department has not given any guarantees under section 65ZD of the Public Finance Act 1989 as at 30 June 2006 (2005: nil).

Contingent assets

Contingent assets

Actual 30 June 2005 $000		Actual 30 June 2006 $000
55	Property Rental Receivable	-

The accompanying accounting policies and notes form part of these financial statements.

Statement of unappropriated expenditure for the year ended 30 June 2006

The Department did not incur any unappropriated expenditure during the year (2005: $17.802 million.)

Vote Labour

Other Expenses to be Incurred by the Crown

	Actual 30 June 2006 $000	Appropriation 30 June 2006 $000	Unappropriated Expenditure 30 June 2006 $000
Bad Debt Expense	2	15	-

Vote Immigration

Departmental Output Expense

	Actual 30 June 2006 $000	Appropriation 30 June 2006 $000	Unappropriated Expenditure 30 June 2006 $000
Services to increase the capacity of New Zealand through immigration	149,060	147,973	1,087

Vote Labour

Expenditure incurred prior to authorisation ($2,000)

This appropriation was required due to a change in the Public Finance Act 1989. A technical adjustment creating this appropriation of $15,000 was approved in the 2005 October Baseline Update. In September 2005, expenditure of $2,000 was incurred prior to authorisation. This is to cover the expected cost of writing off hearing fees for hearings of longer than a day in length at the Employment Court (hearings pre 1 December 2004) and the Employment Relations Authority where the applicant is granted hardship or where debt recovery is unsuccessful after three months.

Vote Immigration

Expenditure in excess of appropriation ($1.087 million)

The overspend was caused by an adjustment to the treatment of foreign exchange gains of $1.208 million. This adjustment was required to comply with the new re-measurement requirements in the Public Finance Act 1989.

The accompanying accounting policies and notes form part of these financial statements.

Statement of departmental expenditure and appropriations for the year ended 30 June 2006

Appropriations for classes of outputs (Mode B Gross)

Vote: Labour

	Expenditure Actual 30 June 2006 $000	Appropriation Voted* 30 June 2006 $000
Policy Advice - Labour	14,069	14,563
International Services	621	899
Services to Promote and Support Fair and Productive Employment Relationships	22,155	22,262
Services to Promote and Support Safe and Healthy People and Workplaces	28,073	28,520
Services to Promote and Support the Safe Management of Hazardous Substances in the Workplace and Amusement Devices	3,743	3,756
	68,661	70,000

Vote: ACC

	Expenditure Actual 30 June 2006 $000	Appropriation Voted* 30 June 2006 $000
Policy and Monitoring	1,824	2,646
Regulatory Services	14	130
	1,838	2,776

Vote: Immigration

	Expenditure Actual 30 June 2006 $000	Appropriation Voted* 30 June 2006 $000
Services to Increase the Capacity of New Zealand Through Immigration	149,060	147,973
Services to Position New Zealand as an International Citizen with Immigration-Related Interests and Obligations	18,206	18,825
	167,266	166,798

Vote: Employment

	Expenditure Actual 30 June 2006 $000	Appropriation Voted* 30 June 2006 $000
Labour Market Information	8,699	9,133
Policy, Research and Evaluation	4,341	4,389
	13,040	13,522

Total Departmental Output Expenditure

	Expenditure Actual 30 June 2006 $000	Appropriation Voted* 30 June 2006 $000
Total Departmental Output Expenditure	250,805	253,096

*This includes adjustments made in the Supplementary Estimates.

The accompanying accounting policies and notes form part of these financial statements.

Statement of trust monies for the year ended 30 June 2006

The Department operates trust accounts as the agent under section 66 of the Public Finance Act 1989. The transactions through these accounts and their balances at 30 June 2006 are not included in the Department’s own financial statements.

Movements in these accounts during the year ended 30 June 2006 were as follows:

Account	As at 1 July 2005 $000	Contribution $000	Distribution $000	Revenue $000	Expense $000	As at 30 June 2006 $000
Employment Relations Service Trust	16	253	224	-	-	45
Employment Relations Act Security of Costs Trust	11	-	11	-	-	-
NZ Immigration Trust	5,282	5,809	4,086	245	35	7,215
Total	5,309	6,062	4,321	245	35	7,260

The Employment Relations Service Trust (previously called the Industrial Relations Trust) was established in September 1988 and handles trust monies received by Labour Inspectors on behalf of workers.

The Employment Relations Act Security of Costs Trust (previously called the Employment Court Trust) was established in February 1990 and handles monies held at the direction of the Employment Relations Authority.

The NZ Immigration Trust was established in 1999 to hold bonds required to be paid by visitors with a higher risk profile. The distribution figure includes $135,000 net forfeited to the Crown during the year due to clients either not meeting the conditions of their bond or not having applied for refund within the 12 months allowed.

The accompanying accounting policies and notes form part of these financial statements.

Memorandum account – visa and permits for the year ended 30 June 2006

	As at 1 July 2005 $000	Revenue $000	Expense $000	Less Capital Injection $000	Add Capital Repayment $000	As at 30 June 2006 $000
Sales of visa and permits	12,190	81,832	89,493	796	-	3,733

This memorandum account summarises financial information relating to the accumulated financial surplus and deficits incurred in the sale of visas and permits by the Department of Labour.

Memorandum accounts are notional accounts that are not formal assets or liabilities of the Crown. The accounts record the accumulated balance of surpluses and deficits incurred in the provision of certain outputs on a full cost recovery basis.

The surplus/deficit levels are dependent upon the business conditions and Government’s policy settings prevailing during that period. The expectation is that with fluctuations in the immigration market, possible changes to immigration policy and the potential need for future capital contributions for expansion and improvement of visa and permit services, the balance of this account will over time, reduce.

This memorandum account has been operating since 1 July 1999, and reflects forecasts based on the current strong demand for visa and permit services. Changes to these demand levels during or between years may mean actual out-turns differ from forecast.

In 2005/06, expenditure was higher than revenue, due to the continuation of the subsidy on visitor visas.

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