The Beehive, New Zealand's Parliament building, at twilight.
The Beehive, New Zealand's Parliament building, at twilight.
Underneath the stack of Budget day press releases and Treasury forecasts is a little-known section of the Budget that details what the Government is most worried about.
It's a chapter called Specific Fiscal Risks – or, in other words, the things that could happen that would cost the Government orthe economy a lot of money.
And it's an extensive list. From defence to health, foreign affairs to internal affairs - there are 72 specific fiscal risks that the Government has identified.
Listing these risks is a legal requirement. Things are included if their likely impact is expected to be more than $100 million over five years and if the likelihood of the risks occurring is 20-50 per cent.
Of the 72 risks identified, 47 are unchanged from last year; 13 have been changed and 12 are new.
For example, fiscal risk relating to the Government's response to cattle disease Mycoplasma Bovis remains unchanged, but risk expectations for the redevelopment of Scott Base in Antarctica have changed.
This year's Budget provided almost $20 million for Antarctica New Zealand to investigate how much full redevelopment would cost.
It is estimated the full amount could be between $200 million to $290 million over eight-years – hence it is a fiscal risk.
A new risk is the Government's response to the Tomorrow's Schools Review.
"Progressing this work, and implementing decisions made as a consequence of it, will likely involve material costs," according to Budget documents.
Here are a few more risks the Government has identified:
Delivery of the Government's public media objectives – a new risk Because the media is coming under increasing pressure as platforms for consumption are changing, Treasury says significant additional investment may be needed to deliver on the Government's public media objectives.
Disposal of New Zealand Defence Force assets – risk unchanged from last Budget The Government is considering whether to sell some of the New Zealand Defence Force's assets. Market conditions, timing and sale price received, could have either a positive or negative impact on the Government's overall financial position.
The Government is looking at selling some Defence Force assets. Photo / Stuart Munro
Firearms buyback scheme – new risk The new gun ban provides for an amnesty period for the surrender of all newly prohibited guns and for regulations to establish a scheme to paycompensation for prohibited items.
There is significant uncertainty over the number of firearms, parts and magazines covered by the prohibitions.
Depending on the level of compensation and how many guns are surrendered, additional costs, above what has already been provided in the fiscal forecasts, may be incurred.
Policy responses to the March 15 terror attacks – new risk The Government has made a number of immediate responses to the attacks and moremay be needed, including policy and legislative amendments. Responding to the Royal Commission of Inquiry into the attack may also bring more costs, which cannot yetbe quantified. Reform of Vocational Education (RoVE) – new risk Recently, institutes of technology and polytechnics (ITPs) have experienced significant declines in demand, and have lost a lot of money.
The Government is considering proposals to significantly reform the vocational education sector, which will be announced in mid-2019.
Funding has been set aside to manage some of the costs, but more money may be needed to manage the full costs of implementing the reform.
Tobacco excise proposed change – new risk The Tax Working Group recommended the Government consider an additional tobacco tax, which is expected to raise $295 million over four years. Depending on the Government's decisions, there may be fiscal impacts relating to this.
An additional tobacco tax, is expected to raise $295 million over four years.
Dunedin Hospital – risk profile changed since last year Money has been set aside in the Budget for the ongoing redevelopment of Dunedin Hospital, and the Government will consider the options once a detailed business case is completed. Archives New Zealand storage capacity – risk profile changed since last year The Budget provides money to complete the design work and shift activities associated with the proposed upgrade and expansion of storage for New Zealand's documentary heritage. Further funding will be sought at Budget 2020 to complete this project.
Learning Support –risk profile changed since last year The Disability and Learning Support Action Plan proposes a number of new Learning Support initiatives that build on the $430 million spend in Budget 2019 to establish learning support coordinators and relieve learning support cost pressures and pay for system improvements.
However, cost pressures will continue for learning support services because of population growth and increased eligibility due to better reporting of neurodevelopmental and other conditions. To the extent that these pressures cannot be managed within existing funding, additional funding is likely to be required.
