Statement of unappropriated expenditure 

as at 30 June 2006

	2006 Actual $000	2006 Main Estimates $000	2006 Supplementary Estimates $000	2006 Unappropriated Expenditure $000
Vote Housing
Benefits and other unrequited expenses -
Income-related rental subsidy	395,491	391,172	395,233	258

The Income-Related Rental (IRR) subsidy is provided to Housing New Zealand Corporation to compensate for differences between income-related and market rentals. The IRR subsidy is reforecast at 6-monthly intervals on a mid-point basis, as such a slight variance between the actual and forecast is to be expected. Actual expenditure is sensitive to marginal changes in some key underlying variables, most notably the number of Housing New Zealand Corporation tenants receiving an IRR subsidy and the average subsidy rate. Changes in these variables are outside the control of the Department.

This unappropriated expenditure has been approved by the Minister of Finance in terms of section 26B of the Public Finance Act 1989.

There was no unappropriated expenditure for the year ended 30 June 2005.

Retrospective validation of unappropriated expenditure

In 2005/06 The Treasury identified the need to establish non-departmental appropriations for the refinancing of Crown debt by Housing New Zealand Corporation and Housing New Zealand Limited and to obtain retrospective approval of eight loans (totalling $300 million) refinanced from 2002/03 to 2005/06. Five of the eight loans fall within Vote Housing. The five loans were for $131.350 million and $11.778 million to Housing New Zealand Limited and Housing New Zealand Corporation respectively. Retrospective validation from Parliament will be sought for this unappriopriated expenditure in the Appropriation (Financial Review) Bill under section 26C of the Public Finance Act 1989.

Breach of net asset balance for Department

The Department's net asset holding at 30 June was $10.390 million. This is $0.909 million more than the most recent projected balance of net assets for the Department at 30 June 2006, as set out in the Appropriation (Supplementary Estimates 2005/06) Act 2006. This constitutes a breach of section 22(3) of the Public Finance Act 1989. This breach resulted from two factors.

• The negative balance in the Occupational Licensing - Building Practitioners memorandum account was $0.309 million better than projected, which constitutes a technical breach.
• Due to administration error, the $0.600 million of capital transferred from the Department of Internal Affairs to the Department of Building and Housing when the Weathertight Homes Resolution Service was transferred on 1 July 2005 was not included in an Appropriation Bill for confirmation by Parliament.

Approval for this breach will be sought in the Appropriation (Financial Review) Bill.

 

These financial statements are to be read in conjunction with the accompanying accounting policies and notes to the financial statements.