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2014 Annual Report

Report of the

Parliamentary Counsel Office
Te Tari Tohutohu Pāremata

for the year ended 30 June 2014

Presented to the House of Representatives under section 44(1) of the Public Finance Act 1989

October 2014
Wellington, New Zealand

ISSN 1177-6625

PDF version (1,440KB)

Creative Commons License
Crown copyright ©. The 2014 Parliamentary Counsel Office Annual Report is licensed under a Creative Commons Attribution 3.0 New Zealand Licence. In essence, you are free to copy, distribute, and adapt the work, as long as you attribute the work to the Parliamentary Counsel Office and abide by the other licence terms. Please note that neither the Parliamentary Counsel Office logo nor the New Zealand Government logo may be used in any way that infringes any provision of the Flags, Emblems, and Names Protection Act 1981 or would infringe such provision if the relevant use occurred within New Zealand. Attribution to the Parliamentary Counsel Office should be in written form and not by reproduction of the Parliamentary Counsel Office logo or the New Zealand Government logo.

CONTENTS

Chief Parliamentary Counsel’s Overview

Highlights of 2013/14

Strategic Objectives

Strategic Objective 1—High Quality Legislative Drafting Services
Strategic Objective 2—Ready Access to New Zealand Legislation
Organisational health and capability

Financial Statements

Introduction to the Financial Statements
Statement of Responsibility
Statement of Comprehensive Income
Statement of Changes in Taxpayers’ Funds
Statement of Financial Position
Statement of Cash Flows
Reconciliation of Net Surplus to Net Cash Flows from Operating Activities
Statement of Commitments
Statement of Contingent Assets and Liabilities
Statement of Unappropriated Expenses and Capital Expenditure
Statement of Departmental Expenses and Capital Expenditure against Appropriations
Notes to the Financial Statements
Statement of Service Performance
Independent Auditor’s Report

Appendices

Legislative framework
Governance arrangements and structure in the PCO

The Attorney-General

I am pleased to present to you the Report of the Parliamentary Counsel Office for the year ended 30 June 2014.

David Noble
Chief Parliamentary Counsel
30 September 2014

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CHIEF PARLIAMENTARY COUNSEL’S OVERVIEW

This is the Annual Report of the Parliamentary Counsel Office (PCO) for the 2013/14 year. In preparing the report, the PCO has followed the guidance provided by the Treasury.1 This report, together with the PCO’s Statement of Intent2 and Information Supporting the Estimates,3 form the components of the Managing for Outcomes framework.

The mission of the PCO is to provide impartial high quality legislative drafting services and advice and to enable easy and free access to the laws of New Zealand.

The Statement of Intent for 2013–18 specified that the goal of the PCO:

“is to contribute to parliamentary democracy under the rule of law by supporting Parliament and the executive in their law-making roles and contributing to the Government’s objectives by ensuring that:

  • legislation that is necessary to change the law to implement Government policies is effective, clear, and consistent with other legislation, the general law, and international law
  • legislation, including Bills and Supplementary Order papers (SOPs), is accessible to the public in both printed and electronic forms, and printed copies of Bills and SOPs are provided to the House
  • Acts and Legislative Instruments are published with official, authoritative status.”4

This is achieved by the PCO drafting legislation for the executive branch of government that reflects fundamental concepts, inherent in the rule of law, that the law is clear, effective, and based on sound legal principle, and that it is accessible to the New Zealand and wider public.5

In the last financial year, a considerable amount of drafting resources has been devoted to delivering Treaty settlement Bills (11 were drafted). By their nature, these Bills can be both complex and lengthy. The current legislative environment continues to require Bills to be drafted quickly and the compressed timetables for drafting to meet introduction dates has had a measurable impact upon the ability of the PCO to meet its minimum peer review and proofreading standards (see the Statement of Service Performance for Output Class—Law Drafting Services).

In the access to legislation area, the key focus has been the operation of new arrangements for the hosting, on-going support, and development of the New Zealand Legislation (NZL) system: a core asset for the PCO.

Highlights of 2013/14

This year has been one of significant achievement and delivery for the PCO. The substantive outcomes and the high quality work involved in delivering them are a tribute to the creativity and dedication of all in the PCO.

The PCO drafted 62 Government Bills and 499 Legislative Instruments in the 2013 calendar year, including the Judicature Modernisation Bill (introduced 27 November 2013) which alone comprised 1182 pages of legislative drafting.

  • The first draft statute revision programme has been prepared ready for public consultation.
  • The PCO’s Pacific Island desk provided legislative drafting assistance to the Cook Islands, Niue and, with the United Nations Development Programme, Fiji in preparation for the restoration of parliamentary democracy there.
  • The PCO drafted further substantial amendments and redrafts of the District and High Court Rules in response to instructions from the (Judicial) Rules Committee and its sub-committees.6
  • Use of the NZL website (www.legislation.govt.nz) as a source of New Zealand’s legislation has continued to increase over the year.
  • The database of legislation in the NZL system and accessible to all, free of charge via the legislation website, was declared an official source of legislation.7
  • A communication and education programme was successfully run for the legal profession and the judiciary to inform them of the consequences of the legislation in the NZL system becoming an official source of New Zealand’s legislation.8

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STRATEGIC OBJECTIVES

Strategic Objective 1—High Quality Legislative Drafting Services

The goal of this strategic objective is to provide high quality legislative drafting services and advice in a professional, impartial, and responsive manner in delivering the Government’s legislation programme and the wider range of drafting work that PCO now delivers.

Drafting of Government Bills

It has been the practice of successive governments to adopt a legislation programme for the drafting of Bills in each calendar year (although no formal programme exists for the drafting of Legislative Instruments). Bills are assigned categories on the legislation programme according to their legal and policy importance. The programme changes throughout the year as Bills are added to, or taken off, the programme, and delays in making policy decisions can delay the drafting of Bills.

The categories in the annual legislative programme are:

CategoryDescription
1 Bills that must be passed or introduced as a matter of law in the 2013 calendar year
2 Bills that must be passed in the 2013 calendar year
3 Bills to be passed if possible in the 2013 calendar year
4 Bills to be passed under extended sitting hours
5 Bills to proceed to a select committee in the 2013 calendar year
6 Bills for which instructions are to be provided to the PCO in the 2013 calendar year

Details of the numbers of category 1 and 2 Bills drafted are included in the Statement of Service Performance (see note 1 to the table of quantity).

Drafting amendments for select committees and committee of the whole House

Legislation is scrutinised extensively in parliamentary select committees. With the exception of Appropriation, Imprest Supply, and Bills introduced and passed through all stages under urgency, all Bills are referred to a particular select committee for consideration. The process of select committee scrutiny of Bills usually involves the following features:

  • select committees are briefed by departmental advisers about each Bill for which public submissions are called
  • witnesses appear and give evidence at hearings that are open to the public
  • submissions are analysed and reports recommending changes to a Bill are prepared and considered
  • some committees engage independent advisers
  • amendments to a Bill required by the committee are drafted by Parliamentary Counsel in consultation with departmental advisers and considered by the committee
  • a commentary on the committee’s consideration of the Bill is prepared by the committee’s advisers and accompanies the Bill when it is reported back to the House.

Select committee consideration of Bills can occupy many months. The Bills may be extensively amended to take account of changes recommended by select committees following from the public submission process and the select committees’ overall consideration. Parliamentary Counsel attend meetings of select committees when departmental reports are considered and when the amendments to a Bill are decided upon. They will sometimes attend meetings to hear evidence from key witnesses. The drafting work involved can be considerable, intellectually challenging, and time consuming.

Parliamentary Counsel also draft all amendments to Bills required by Ministers at the committee of the whole House stage. Considerable change is possible at this stage of the legislative process to give effect to policy changes or technical refinements that are necessary or desirable.

Law Commission

The PCO continues to maintain a very constructive relationship with the Law Commission and is currently assisting the Law Commission with a rewrite of the Crown Proceedings Act.

Legislation Advisory Committee

The Chief, and Deputy Chief, Parliamentary Counsel are members of the Legislation Advisory Committee (LAC), established by the Minister of Justice in 1986 and now the responsibility of the Attorney-General. The LAC advises the Government on good legislative practice and scrutinises the legislative work of the Government, making submissions to select committees where appropriate. The PCO has been heavily involved in assisting the LAC to achieve its outcomes this year, including providing the LAC with a senior lawyer to assist with the revision of the LAC Guidelines (2001 edition).

Drafting of Legislative Instruments

In the 2013 calendar year, 499 Legislative Instruments were drafted. In general, Acts of Parliament contain the main policy components of a legislative regime while Legislative Instruments contain much of the essential detail and administrative mechanisms to make the Act work. It is often through such delegated legislation that a legislative regime has its greatest impact. All proposed Legislative Instruments that are to be made by the Governor-General in Council are considered by the Cabinet Legislation Committee and by Cabinet before they are submitted to the Governor-General in Executive Council. The drafting of Legislative Instruments can give rise to complex legal questions about whether there is power to make the instrument under the relevant Act. Parliamentary Counsel are required to certify whether proposed Legislative Instruments are in order for submission to Cabinet, that is, whether there is any question about the power to make them and whether there is any ground on which they may be challenged under the Standing Orders of the House or disallowed under the Legislation Act 2012.

Drafting for the (Judicial) Rules Committee

The PCO assists the Rules Committee, established under section 51B of the Judicature Act 1908. Rules of practice and procedure for the Supreme Court, Court of Appeal, High Court, and District Courts are made by the Governor-General by Order in Council with the concurrence of the Rules Committee. In the period under review, the PCO provided advice and legislative drafting services to the Rules Committee, including amendments made to the Supreme Court, Court of Appeal, High Court, and Family Court Rules.

Treaty Bills

The PCO continues to work closely with the Office of Treaty Settlements (OTS) to progress the Bills required to implement Treaty settlements. The PCO manager of the team responsible for OTS legislation is a member of the OTS Governance Board, which focuses on the overall delivery of the Treaty settlement work programme. In order to further facilitate the progress of these Bills, a senior OTS staff member is located from time to time at the PCO to assist with the drafting of various Bills. The development and use of standard clauses to cover those matters common to most Treaty settlement legislation has also enabled these Bills to be progressed in a timely manner.

Revision Bill programme

Part 2 of the Legislation Act 2012 added a new function to the PCO’s set of responsibilities, which requires the PCO to revise selected New Zealand statutes to make them more accessible. The Attorney-General is responsible for preparing, and consulting publicly on, a three-yearly statute revision programme for each new Parliament. The PCO started work in the reporting year on the first of the revision programmes, which entails preparing a draft revision programme for approval from the Attorney-General, working on the appointment of a retired High Court Judge as the chairperson of a committee of Bill certifiers, and making submissions and providing advice to the Standing Orders Committee about streamlining the Parliamentary procedure for considering revision Bills.

Clear drafting

The PCO’s goal for clear drafting is continuous improvement. It has established a clear drafting group comprising drafters, staff from the PCO’s other business units, and a representative from the Inland Revenue Department drafting unit. The function of the group is to consider and make recommendations about clear drafting and related matters referred to it by the Chief Parliamentary Counsel.

Assistance to departments and the Government Legal Network

The PCO’s Guide to Working with the Parliamentary Counsel Office, a regular newsletter, and a dedicated section of the PCO website are designed to assist departments in working effectively with the PCO, particularly when giving instructions and responding to drafts. Parliamentary Counsel have presented seminars on the subject to departmental officials and wider audiences this year.

Parliamentary Counsel provide advice to departments:

  • in the course of the development of policy for legislation
  • in the pre-instruction phase
  • during the drafting phase
  • at other times when required.

The PCO, having been actively and financially engaged in the formation of the Government Legal Network, has continued to contribute to its development and delivery.

Contributing internationally

The PCO has an established Pacific Island “desk” to provide legislative drafting assistance to Pacific Island nations. The desk has operated from 2011/12 to 2013/14 with the assistance of funding from the New Zealand Aid Programme, managed by the Ministry of Foreign Affairs. This period of funding has now been extended until March 2015. Alternative funding options are currently being explored with the Ministry of Foreign Affairs, as the assistance provided by the Pacific desk does not fit well within the requirements of the new contested funding model since the assistance provided by the PCO is likely to be ongoing.

The assistance is focused on the Cook Islands, Niue, and Tokelau, these being the three nations within the Realm of New Zealand. Assistance has been extended to other Pacific Island nations where resources permit (in particular to Fiji, via the United Nations Development Programme project, to provide legislation and standing orders for the post-election parliament).

The assistance being provided includes drafting legislation for nations in order to increase their drafting capacity, preparing a Guide to Preparing Instructions for the Drafting of Legislation, preparing a set of Legislative Drafting Directives, creating an electronic drafting template for Bills and for regulations, and training and mentoring on-island officials.

The PCO has also been pro-actively engaging with other legislative drafting assistance providers around the world, and forums and agencies across the Pacific, in order to co-ordinate the work that is being done in the Pacific. These include the Pacific Islands Forum Secretariat, the Pacific Islands Law Officers’ Network, the Commonwealth Secretariat, and the United Nations Development Programme.

The Chief Parliamentary Counsel has participated in the Australasian Parliamentary Counsel’s Committee with regard to issues relating to trans-Tasman legislation, access to legislation, and information systems to support legislative drafting and publishing.

The PCO has strengthened its involvement with the Commonwealth Association of Legislative Counsel (CALC). Fiona Leonard, Deputy Chief Parliamentary Counsel, is the CALC Secretary.

Quantity of legislation

The following graphs compare the numbers of Government Bills drafted and published and Legislative Instruments made and published, plus the numbers of Supplementary Order Papers (SOPs) drafted and published, in the financial year ending 30 June 2010, and the calendar years from 2010 to 2013.

Graph showing numbers of Bills drafted and published for the past five years.

Graph showing numbers of Statutory Regulations made, published for past 5 years.

Graph showing number of Bills SOPs Regs drafted and published in past 5 years.

Significant Bills

In the financial year under review, the following significant Bills were introduced. This PCO-drafted legislation can be viewed on the NZL website (www.legislation.govt.nz).

Accounting Infrastructure Reform Bill
Building (Earthquake-prone Buildings) Amendment Bill
Crimes (Match-fixing) Amendment Bill
Customs and Excise (Border Processing—Trade Single Window and Duties) Amendment Bill
Electoral Amendment Bill
Environmental Reporting Bill
Food Bill (recommitted to the Primary Production Select Committee)
Health and Safety Reform Bill
Industry Training and Apprenticeships Amendment Bill
Judicature Modernisation Bill
Kaikōura (Te Tai-o-Marokura) Marine Management Bill
Legislation Amendment Bill
New Zealand International Convention Centre Bill
Ngā Mana Whenua o Tāmaki Makaurau Collective Redress Bill
Ngāti Hauā Claims Settlement Bill
Ngāti Koroki Kahukura Claims Settlement Bill
Parliamentary Privilege Bill
Parole (Extended Supervision Orders) Amendment Bill
Psychoactive Substances Amendment Bill
Smoke-free Environments (Tobacco Plain Packaging) Amendment Bill
Te Hiku Claims Settlement Bill
Te Kawerau ā Maki Claims Settlement Bill
Te Urewera-Tūhoe Bill
Veterans’ Support Bill
Vulnerable Children Bill
West Coast Wind-blown Timber (Conservation Lands) Bill.

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Strategic Objective 2—Ready Access to New Zealand Legislation

The specific outcome of this objective is to ensure that New Zealand legislation (including Bills) is easily accessible at no cost to the public in a timely manner and in an accurate and authoritative form.

New Zealand Legislation system

The NZL system is a complete drafting and publishing system. The system provides public access to up-to-date official legislation on the NZL website at www.legislation.govt.nz.

Over the last year the PCO has worked to embed and mature the capability for operation and development of the NZL system. The operations group has worked to incorporate all-of-government providers within operational processes and to improve the efficiency of all operational processes. The development panel has been widely used for improvements to the NZL system and work is underway to identify and retire technical debt.

The NZL website

Public use of the NZL website continues to increase strongly following a redesign in April 2012. The graph below shows the average monthly number of unique visitors to the NZL website in each of the past five years.

The PCO released a set of further improvements to the NZL website in early 2014, which built on changes released in the previous financial year.

Improvements included:

  • the ability to order online commercial prints of specific versions of documents
  • implementation of the change of name from Statutory Regulations to Legislative Instruments and from Deemed Regulations to Other Instruments.

Average monthly unique visitors to the NZL website for the past 5 years.

NZL Website User Group

PCO established an external user group, called the NZL Website User Group. The group is made up of volunteers who represent a wide cross-section of PCO’s user community. The PCO has engaged the group on the draft Access to Legislation Strategy and intends to consult the group on proposed changes to the NZL website. Members are also encouraged to provide feedback and suggestions to the PCO if they have ideas about improvements to the NZL website.

Disclosure statement website

Disclosure statements are being published by PCO to a website, separate to the NZL website, as part of an administrative trial that is being run by the Treasury. Disclosure statements are provided on the website for all Government Bills and substantive SOPs introduced or released since 29 July 2013. The disclosure statement website can be found at disclosure.legislation.govt.nz.

Publishing

The PCO publishes:

  • new Acts
  • new Legislative Instruments
  • Bills (both new Bills introduced to the House and subsequent versions of Bills)
  • SOPs
  • reprints of Acts and Legislative Instruments (versions of Acts and Legislative Instruments that incorporate all amendments made to them as at the date of publication of the reprint).

Through the NZL system, these documents are published online in HTML and PDF formats to the NZL website. They are also available in hard copy at specified bookshops and to subscribers, and are available for purchase via the NZL website.

During the reporting period, the PCO also completed the current, and final, reprints programme. A total of 18 titles (16 Acts and two Legislative Instruments) were published in hard copy. The remaining title from the 2013/14 programme, the Companies Act 1993, will now be published in the 2014/15 financial year to include amendments effective after 30 June 2014.

The Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force as at 1 January 2014 were published in April 2014. This is the last edition of the publication to be printed, as the information it provides is available on the NZL website and is kept up to date.

The 2013 annual bound volumes of Acts and Legislative Instruments were published in March 2014. These are the last set of annual bound volumes that will be produced by the PCO, as copies of new Acts and Legislative Instruments are available on the NZL website and are also available in reprinted form as and when they are amended.

Officialisation

The officialisation programme was completed, as planned, in the 2012/13 financial year. The PCO has now reviewed the audits of those files to assess the legal effect (if any) of any errors in those files. The results provided the PCO with a high level of confidence in the officialised database and, on 6 January 2014, the Chief Parliamentary Counsel declared the database an official source of legislation under the Legislation Act 2012.

The PCO provided a number of information and training sessions in Wellington and Auckland with Judges and staff of the Supreme Court, Court of Appeal, and the High Court on how to best use the NZL website and the now official legislation database.

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Organisational health and capability

Progress towards achieving the key deliverables identified in the Statement of Intent for 1 July 2013 to 30 June 2018 was made during the 2013/14 year as follows:

Recruitment and retention of skilled and experienced staff

Staff turnover in the past four years compared with the maximum turnover rates set in the 2013/18 SOI were as follows:

 2013/14 maximum target turnover2013/14 actual (%)2013/14 actual (number)2012/13 actual2011/12 actual2010/11 actual
Parliamentary Counsel 7% 6% 2 19% 6% 0%
Technical staff 12% 24% 7 0% 3% 0%
Corporate staff 10% 0% 0 6% 12% 17%
Total staff turnover 10% 12% 9* 9% 6% 4%

* Of the nine staff who left the PCO in the 2013/14 year, two retired, one resigned to travel overseas, one chose not to return from parental leave, and others resigned to pursue other opportunities.

Training (enhanced leadership and staff capability)

All levels of management continued to develop their leadership skills by participating in management seminars and conferences. Also, third tier managers have progressively been attending the Leadership in Practice programme provided by the Leadership Development Centre.

In-house training for recruitment interviewing has been held to assist in ensuring the continuing recruitment of highly qualified specialist staff. A comprehensive training programme for Counsel continues to be enhanced.

Training and development for all PCO staff continued in accordance with individual annual training plans.

Three staff acted in senior roles and gained higher level management experience and skills. One staff member was seconded outside the PCO to gain policy experience and to develop additional skills.

Performance management

The performance management system continues with managers and staff agreeing on annual objectives at the beginning of the financial year, reviewing progress throughout the year, and summarising achievements at the end of the year.

HR processes and administrative systems

HR policies continued to be reviewed, updated where necessary, and made available to staff via the PCO intranet to ensure up-to-date policies and procedures are publicised.

The PCO’s flexible work arrangements have been utilised by staff for work/life balance, childcare responsibilities, and phased retirement purposes.

The reporting of HR statistics continues to be enhanced. Valuable information is gained as trends against previous years become available.

Equal employment opportunities

Managers continue to focus on equity issues as part of their HR responsibilities.

As at 30 June 2014, the staff gender breakdown is:

 MaleFemaleTotal
Total staff 40 45 85
Parliamentary Counsel 16 19 35
Other Drafting Services staff 5 4 9
Access to Legislation staff 16 8 24
Corporate Services staff 3 14 17

PCO managers, of whom 50% are female, are included in the staff numbers shown in the above table. The table also includes three fixed-term staff and one staff member currently on secondment to another department.

Performance Improvement Framework

The PCO completed a Performance Improvement Framework (PIF) self-review in 2013. A formal PIF review, being conducted by independent reviewers, commenced in June 2014 and should be completed early in the 2014/15 financial year. Its purpose is to review the PCO’s capability, performance, and ability to deliver on Government priorities, its core business, and a range of organisational management elements.

Organisational structure

See below for the PCO’s organisational structure.

Risk management

The PCO maintains a risk register that is reviewed throughout the year (and the major risks are also reviewed by the Audit & Risk Committee). Its purpose is to assist the management and mitigation of the PCO’s major risks and the achievement of its outputs and deliverables. The framework includes procedures and practices designed to protect and enhance resources and enable the achievement of objectives.

Audit and Risk Committee

The PCO’s Audit and Risk Committee met three times during the 2013/14 year. The committee consists of two external independent members (including the chair) and one internal member. It provides independent advice and assurance to the Chief Parliamentary Counsel on the PCO’s systems of governance and internal control, risk management and compliance, and external accountability responsibilities. During the year the PCO farewelled the external founding members of the committee, Robert Buchanan and Judith Johnston, who have provided valuable expertise and guidance during their time on the Committee. They have been replaced by Jane Meares and Sally Pulley.

Disaster recovery

The PCO has recently updated its disaster recovery plan for the NZL system, which was tested successfully early in the 2013/14 year. The PCO has moved services to the Revera All-of-Government Infrastructure-as-a-Service, which provides a disaster recovery site in Auckland.

The PCO also contributed to the development and testing of the Cabinet-approved arrangements for the emergency relocation of Parliament and Executive Government, led by Parliamentary Service but involving all other Parliamentary precinct agencies.

Business continuity

Business continuity plans continue to be updated, tested, and refined where necessary. These will be implemented in the event of a minor or major disaster, or the unavailability of a core system such as the NZL system, so the PCO will be in a position to continue working in an effective manner.

The PCO attended meetings of the Inter-Agency Business Continuity Committee. Its primary objective is to provide coordination and alignment of Parliamentary Precinct Agency Business Continuity arrangements within the overarching framework of the Parliamentary Complex Contingency Plan.

The PCO also attended meetings of the Government Sector Business Continuity Group and is an active member of the Training, Education, and Awareness subgroup.

One PCO staff member attended an Australasian Business Continuity Summit, which included a one-day scenario and simulation exercise workshop.

Government procurement reform

The PCO has signed up as a participating agency under the all-of-government contract for mobile voice and data services.

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FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF THE PARLIAMENTARY COUNSEL OFFICE
For the year ended 30 June 2014

Introduction to the Financial Statements

The Parliamentary Counsel Office (PCO) is responsible for discharging the functions set out in the Legislation Act 2012.

The PCO is funded by appropriation of money by Parliament.

The financial statements of the PCO for the year ended 30 June 2014, including the Statement of Service Performance, now follow.

STATEMENT OF RESPONSIBILITY
For the year ended 30 June 2014

In terms of the Public Finance Act 1989, I, David Noble, Chief Parliamentary Counsel, accept responsibility for the preparation of the financial statements, and statements of expenses and capital expenditure and for the judgements expressed in them.

I have the responsibility for establishing, and I have established, a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting.

I have a responsibility for ensuring that end-of-year performance information on each appropriation administered by the PCO is provided in accordance with sections 19A to 19C of the Public Finance Act 1989, whether or not that information is included in the annual report.

I have a responsibility for the accuracy of any end-of-year performance information prepared by the PCO, whether or not that information is included in the annual report.

The unaudited forecast figures in these financial statements fairly reflect the forecast financial position and operations of the PCO for the financial year to which they relate.

In my opinion, these financial statements fairly reflect the financial position and operations of the PCO for the year ended 30 June 2014.

David Noble
Chief Parliamentary Counsel
30 September 2014

Countersigned by:
Noel Lee
Corporate Services Manager
Parliamentary Counsel Office
30 September 2014

STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2014

30/06/13

Actual
$000
 


Note
30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
  Income          
20,509 Crown   19,118 20,525 19,118 20,505
226 Other 2 278 151 287 100
20,735 Total income   19,396 20,676 19,405 20,605
             
  Expenses          
8,643 Personnel 3 9,188 9,193 9,450 10,710
6,647 Operating 4 4,584 7,683 6,103 5,993
3,176 Depreciation and amortisation 5 2,312 2,593 2,645 2,695
1,207 Capital charge 6 1,207 1,207 1,207 1,207
19,673 Total expenses   17,291 20,676 19,405 20,605
             
1,062 Net surplus   2,105 0 0 0
             
0 Other comprehensive income   0 0 0 0
             
1,062 Total comprehensive income   2,105 0 0 0

Note:
The accompanying Notes to the Financial Statements form part of these financial statements. For information on major variances against budget, refer to Note 18.
*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

 

STATEMENT OF CHANGES IN TAXPAYERS’ FUNDS
For the year ended 30 June 2014

30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
15,091 Balance as at 1 July 15,091 15,091 15,091 15,091
1,062 Total comprehensive income 2,105 0 0 0
(1,062) Provision for repayment of surplus to the Crown (2,105) 0 0 0
15,091 Balance as at 30 June 15,091 15,091 15,091 15,091

Note:
The accompanying Notes to the Financial Statements form part of these financial statements. For information on major variances against budget, refer to Note 18.
*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

STATEMENT OF FINANCIAL POSITION
As at 30 June 2014

30/06/13

Actual
$000
 


Notes
30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
  Taxpayers’ funds          
15,091 Taxpayers’ funds   15,091 15,091 15,091 15,091
15,091 Total taxpayers’ funds   15,091 15,091 15,091 15,091
             
  Represented by:          
  Current assets          
5,887 Cash and cash equivalents   5,237 8,310 9,109 9,109
8 Debtors and other receivables 7 15 0 9 9
293 Prepayments   340 244 290 290
4,288 Debtor—Crown   6,972 40 0 0
10,476 Total current assets   12,564 8,594 9,408 9,408
             
  Non-current assets          
260 Property, plant, and equipment 8 125 555 260 260
7,732 Intangible assets 9 6,281 7,885 7,732 7,732
7,992 Total non-current assets   6,406 8,440 7,992 7,992
18,468 TOTAL ASSETS   18,970 17,034 17,400 17,400
             
  Current liabilities          
1,576 Creditors and other payables 10 1,098 1,090 1,570 1,570
1,062 Provision for payment of net surplus   2,105 0 0 0
626 Provision for employee entitlements 11 635 650 626 626
3,264 Total current liabilities   3,838 1,740 2,196 2,196
             
  Non-current liabilities          
113 Provision for employee entitlements 11 41 203 113 113
3,377 TOTAL LIABILITIES   3,879 1,943 2,309 2,309
15,091 Net assets   15,091 15,091 15,091 15,091

Note:
The accompanying Notes to the Financial Statements form part of these financial statements. For information on major variances against budget, refer to Note 18.
*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

STATEMENT OF CASH FLOWS
For the year ended 30 June 2014

30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
  Cash flows from operating activities        
  Cash was provided from:        
  Supply of outputs        
16,221 —Crown 16,434 20,525 23,778 20,505
226 —Departments 279 116 287 100
0 —Net GST paid 172 0 0 0
20 —Other 0 35 0 0
16,467 Subtotal 16,885 20,676 24,065 20,605
           
  Cash was disbursed to:        
  Produce outputs        
(8,453) —Personnel (9,230) (9,193) (9,387) (10,616)
(6,328) —Operating (4,967) (7,682) (8,848) (8,489)
(149) —Net GST paid 0 0 (194) (98)
0 —Other (59) 0 0 0
(1,207) —Capital charge (1,207) (1,208) (1,207) (1,207)
(16,137) Subtotal (15,463) (18,083) (19,636) (20,410)
330 Net cash flows from operating activities 1,422 2,593 4,429 195
           
  Cash flows from investing activities        
  Cash was disbursed to:        
(56) Purchase of property, plant, and equipment (4) (330) (145) (195)
(2,046) Purchase of intangible assets (1,006) (2,500) 0 0
(2,102) Net cash flows from investing activities (1,010) (2,830) (145) (195)
           
  Cash flows from financing activities        
  Cash was disbursed to:        
(1,975) Payment of net surplus to Crown (1,062) 0 (1,062) 0
(1,975) Net cash flows from financing activities (1,062) 0 (1,062) 0
           
(3,747) Net increase/(decrease) in cash held (650) (237) 3,222 0
9,634 Add opening cash brought forward 5,887 8,547 5,887 9,109
5,887 Closing cash to carry forward 5,237 8,310 9,109 9,109

Note:
The accompanying Notes to the Financial Statements form part of these financial statements. For information on major variances against budget, refer to Note 18.
*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

RECONCILIATION OF NET SURPLUS TO NET CASH FLOWS FROM OPERATING ACTIVITIES
For the year ended 30 June 2014

30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
1,062 Net surplus/(deficit) 2,105 0 0 0
  Add/(less) non-cash items        
3,175 Depreciation and amortisation 2,312 2,593 2,645 2,695
(91) Increase/(decrease) in non-current employee entitlements (72) 0 0 0
3,084 Total non-cash items 2,240 2,593 2,645 2,695
           
  Add/(less) working capital movements        
168 (Increase)/decrease in debtors and prepayments (43) 1 1,978 (2,402)
(4,288) (Increase)/decrease in Debtor—Crown (2,682) 0 0 0
328 Increase/(decrease) in creditors and payables (207) 0 (194) (98)
(24) Increase/(decrease) in current provision for employee entitlements 9 (1) 0 0
(3,816) Working capital movements—net (2,923) 0 1,784 (2,500)
           
330 Net cash flow from operating activities 1,422 2,593 4,429 195

Note:
The accompanying Notes to the Financial Statements form part of these financial statements. For information on major variances against budget, refer to Note 18.
*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

STATEMENT OF COMMITMENTS
As at 30 June 2014

30/06/13
Actual
$000
 30/06/14
Actual
$000
  Non-cancellable operating lease commitments  
678 Less than one year 678
665 One to two years 526
525 Two to five years 0
1,868 Total non-cancellable operating lease commitments 1,204

There are no capital commitments (2013: nil).

Note: The PCO has accommodation and car park leases with the Reserve Bank.

Reserve Bank office lease: This lease is for the rental of office space on floors 4, 12, and 13 plus basement storage in the Reserve Bank building. The lease has a make-good provision where the lessee can either surrender the fit-outs and alterations to the lessor or remove these and make good. The lessee’s current intention is to surrender the fit-outs. This lease is non-cancellable.

Reserve Bank car park lease: This lease is for the rental of car park spaces in the Reserve Bank building. This lease is cancellable on the anniversary date.

There are no contingent rents on the above leases; they are all fixed term. There are no restrictions imposed by the lease arrangements.

There are no escalation clauses on the office lease.

The Reserve Bank office lease has an expiry date of 14 April 2016. The car park lease has an expiry date of 14 April 2016. The car park lease is automatically renewed unless a notice to cancel is provided.

Note:
The accompanying Notes to the Financial Statements form part of these financial statements.

STATEMENT OF CONTINGENT ASSETS AND LIABILITIES
As at 30 June 2014

As at 30 June 2014, there are no contingent assets (30 June 2013: nil).

As at 30 June 2014, there are no contingent liabilities (30 June 2013: nil).

As at 30 June 2014, there are no guarantees or indemnities given under the Public Finance Act 1989 in respect of the activities of the PCO (30 June 2013: nil).

Note:
The accompanying Notes to the Financial Statements form part of these financial statements.

STATEMENT OF UNAPPROPRIATED EXPENSES AND CAPITAL EXPENDITURE
For the year ended 30 June 2014

For the year ended 30 June 2014, there are no instances of unappropriated expenses and capital expenditure (30 June 2013: nil).

Note:
The accompanying Notes to the Financial Statements form part of these financial statements.

STATEMENT OF DEPARTMENTAL EXPENSES AND CAPITAL EXPENDITURE AGAINST APPROPRIATIONS
For the year ended 30 June 2014

30/06/13
Expenditure
Actual
$000
 30/06/14
Expenditure
Actual
$000
30/06/14
Appropriation
Voted
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
  VOTE: PARLIAMENTARY COUNSEL      
  Drafting and Access to Legislation—Multi–Class Output Expense (MCOA)      
9,026 Law Drafting Services 9,422 10,074 10,674
10,647 Access to Legislation 7,869 9,331 9,931
19,673 Total MCOA expense 17,291 19,405 20,605
         
  Appropriation for capital expenditure
     
2,102 Capital appropriations to PCO—Permanent Legislative Authority 726 2,830 2,830
2,102 Total capital appropriations 726 2,830 2,830

Note:
The accompanying Notes to the Financial Statements form part of these financial statements.
*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

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NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2014

Note 1 Statement of accounting policies
Reporting entity

The PCO is a government department as defined by section 2 of the Public Finance Act 1989.

Basis of preparation

These are the financial statements of the PCO for the year ended 30 June 2014, which have been prepared pursuant to the Public Finance Act 1989 and which include the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP) and Treasury instructions. The PCO is a public benefit entity. Its primary objective is the drafting and publishing of legislation.

The financial statements have been authorised for issue on 30 September 2014 by the Chief Parliamentary Counsel and the Corporate Services Manager.

These financial statements have been prepared in accordance with, and comply with, NZ IFRS and other applicable financial reporting standards, as appropriate for public benefit entities. The unaudited financial forecast figures have been prepared in accordance with Public Benefit Entity New Zealand International Public Sector Accounting Standards (PBE IPSAS).

The measurement base applied is historical cost.

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand ($000). The New Zealand dollar is the PCO’s functional currency.

Forecast figures

These forecast financial statements have been prepared in accordance with New Zealand Public Benefit Entity (NZ PBE) International Public Sector Accounting Standards (IPSAS). While a detailed impact assessment has yet to be completed, no significant impact is expected on transition from NZ IFRS to IPSAS.

These are the first set of prospective financial statements presented by the PCO under NZ PBE IPSAS. They are compliant with PBE FRS-42 Prospective Financial Statements and are consistent with Generally Accepted Accounting Practice. The purpose of the forecast financial statements is to facilitate Parliament’s consideration of the appropriations for, and planned performance of, the PCO. Use of this information for other purposes may not be appropriate. Readers are cautioned that actual results are likely to vary from the forecast information presented and that the variations may be material.

The forecast figures reported are those for the year ending 30 June 2015 included in Budget Economic Forecast Update (BEFU) 2014. These were authorised for issue on 20 March 2014 by the Chief Parliamentary Counsel who is responsible for the forecast financial statements as presented. The preparation of these financial statements requires judgements, estimations, and assumptions that affect the application of policies and reported amounts of assets and liabilities, and income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual financial results achieved for the period covered are likely to vary from the information presented, and the variations may be material.

It is not intended that the prospective financial statements will be updated subsequent to presentation.

Changes in accounting policies

From 01 July 2013, all property, plant, and equipment costing more than $2,000 excluding GST are capitalised and recorded at historical cost, as are individual assets purchased that are less than $2,000 but greater than $500. Prior to this year, the capitalisation threshold was $1,000 excluding GST.

Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted

The Minister of Commerce has approved a new Accounting Standards Framework (incorporating a Tier Strategy) developed by the External Reporting Board (XRB). Under this Accounting Standards Framework, the PCO will be eligible to apply the reduced disclosure regime (Tier 2 reporting entity) of the public sector Public Benefit Entity Accounting Standards. The effective date for the new standards for public sector entities are for reporting periods beginning on or after 1 July 2014. Therefore, the PCO will transition to the new standards in preparing its 30 June 2015 financial statements. The PCO has not assessed the implications of the new Accounting Standards Framework at this time.

Due to the change in the Accounting Standards Framework for public benefit entities, it is expected that all new NZ IFRS and amendments to existing NZ IFRS will not be applicable to public benefit entities. Therefore, the XRB has effectively frozen the financial reporting requirements for public benefit entities up until the New Accounting Standard Framework is effective. Accordingly, no disclosure has been made about new or amended NZ IFRS that exclude public benefit entities from their scope.

Although a detailed impact assessment has yet to be completed, no significant impact is expected on transition.

The following significant accounting policies, which materially affect the measurement of financial results and financial position, have been applied consistently to all periods presented in these financial statements.

Budget and forecast figures

These financial forecasts are based on BEFU and have been prepared on the basis of assumptions as to future events that the PCO reasonably expects to occur, associated with the actions it reasonably expects to take. They have been compiled on the basis of existing government policies and Ministerial expectations at the date that the information was prepared.

These assumptions are adopted as at 23 January 2014. The main assumptions are as follows:

  • PCO activities will remain substantially the same as for the previous year. Our primary objective is the drafting of Government Bills and publishing legislation.
  • Personnel costs are based on 86 staff positions (81.3 full time equivalents).
  • Operating costs are based on historical experience. The general historical pattern is expected to continue.
  • Estimated year end information for 2013/14 is used as the opening position for the 2014/15 forecasts.

There are no significant events or changes that would have a material impact on the BEFU forecast.

Factors that could lead to material differences between the forecast financial statements and the 2014/15 actual financial statements include changes to the baseline budget through new initiatives, or technical adjustments.

Revenue

The PCO derives revenue through the provision of outputs to the Crown and for services to third parties. Such revenue is recognised when earned and is reported in the financial period to which it relates. Revenue is measured at the fair value of the consideration when received.

Cost allocation

The PCO has derived the costs of outputs using a cost allocation system outlined below.

Cost allocation policy

Direct costs are charged directly to significant activities. Indirect costs are charged to significant activities based on cost drivers and related activities/usage information. There have been no changes to the cost allocation policy from last year.

Criteria for direct and indirect costs

Direct costs are those costs directly attributed to an output.

Indirect costs are those costs that cannot be identified, in an economically feasible manner, with a specific output.

Direct costs assigned to outputs

Direct costs are charged directly to outputs. Depreciation and capital charge are charged on the basis of asset utilisation. Personnel costs are charged by actual time incurred. Property and other premises expenses, such as maintenance, are allocated on the basis of floor area occupied for the production of each output.

Basis for assigning indirect and corporate costs to outputs

Indirect costs are assigned to outputs based on a proportion of direct staff costs used for each output.

Debtors and other receivables

Receivables are recorded at fair value, after providing for impairment. A provision for impairment of receivables is established when there is objective evidence that the PCO will not be able to collect all amounts due according to the original terms of the receivables.

Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, and default in payments are considered indicators that the debtor is impaired. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the Statement of Comprehensive Income. When a debt is uncollectable, it is written off against the allowance account for debtors. Overdue receivables that are renegotiated are reclassified as current (ie not past due).

Cash and cash equivalent

Cash and cash equivalents consists of cash in the bank and cash on hand.

Operating leases

The PCO leases premises. As the lessor retains substantially all the risks and rewards of ownership, these leases are classified as operating leases. Operating lease costs are expensed in the period in which they are incurred. Lease payments under an operating lease are recognised as an expense on a straight line basis over the lease term.

Property, plant, and equipment, and intangible assets

The initial cost of property, plant, and equipment is the value of the consideration given to acquire or create the asset and any directly attributable costs of bringing the asset to working condition for its intended use, less accumulated depreciation and impairment losses.

All property, plant, and equipment costing more than $2,000 plus GST are capitalised and recorded at historical cost.

Capital work in progress

Capital work in progress is not depreciated. The total cost of this work is transferred to the relevant asset category on its completion.

Depreciation and amortisation

Depreciation of property, plant, and equipment is provided on a straight-line basis so as to allocate the cost of assets, less any estimated residual value, over their useful lives.

The estimated economic useful lives and associated depreciation rates of property, plant, and equipment are:

Furniture 3 to 10 years 10% to 33.3%
Office equipment 3 to 10 years 10% to 33.3%
Leasehold property improvements 6 years 16.67%

Leasehold property improvements

The cost of leasehold improvements is capitalised and amortised over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is shorter.

Intangible assets—software acquisition and development

Acquired computer software is capitalised on the basis of the cost incurred to acquire and bring to use the specific software.

The carrying value of an intangible asset with a finite life is amortised on a straight line basis over its useful life. The estimated useful lives and associated amortisation rates of major classes of intangible assets are:

Computer systems 3 years 33%
Intangible assets 5 to 10 years 20% to 10%

Costs associated with maintaining computer software are recognised as an expense when incurred. Costs that are directly associated with the development of software for internal use by the PCO are recognised as an intangible asset. Direct costs include the software development, employee costs, and an appropriate portion of relevant overheads.

Disposals

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposal are included in the Statement of Comprehensive Income. When revalued assets are sold, the amounts included in asset revaluation reserves in respect of those assets are transferred to taxpayers’ funds.

Impairment

Assets are tested for impairment annually.

Employee entitlements

Short-term employee entitlements

Employee benefits expected to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay.

These include salaries and wages accrued up to balance date, annual leave earned but not yet taken at balance date, retiring and long service leave entitlements expected to be settled within 12 months, and sick leave.

A liability for sick leave is recognised to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that it will be used by staff to cover those future absences.

Long-term employee entitlements

Employee benefits that are due to be settled beyond 12 months after the end of the reporting period in which the employee renders the related service, such as long service leave and retiring leave, are calculated on an actuarial basis. The calculations are based on:

  • likely future entitlements accruing to staff, based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement, and contractual entitlements information; and
  • the present value of the estimated future cash flows.

Expected future payments are discounted using market yields on Government bonds at balance date with terms to maturity that match, as closely as possible, the estimated future cash outflows for entitlements. The inflation factor is based on the expected long-term increase in remuneration for employees.

Presentation of employee entitlements

Sick leave, annual leave, vested long service leave, and non-vested long service leave and retirement gratuities expected to be settled within 12 months of balance date are classified as a current liability. All other employee entitlements are classified as non-current liabilities.

Defined benefit schemes

The PCO belongs to the Government Superannuation Fund (GSF). GSF is a defined benefit plan. It has been determined that the scheme is fully funded and as such no liability exists to be recognised by the PCO. The scheme is therefore accounted for as a defined contribution scheme.

Defined contribution schemes

Obligations for contributions to the State Sector Retirement Savings Scheme, KiwiSaver, and the Government Superannuation Fund are accounted for as defined contribution schemes and are recognised as an expense in the surplus or deficit as incurred.

Foreign currency

Foreign currency transactions are converted at the New Zealand dollar exchange rate at the date of the transaction. When a forward exchange contract has been used to establish the price of a transaction, the forward rate specified in that foreign exchange contract is used to convert the transaction to New Zealand dollars. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.

Financial instruments

Revenue and expenses in relation to all financial instruments are recognised in the Statement of Comprehensive Income. Where the PCO enters into foreign currency forward contracts to hedge foreign currency transactions, any exposure to gains or losses on these contracts is generally offset by a related loss or gain on the item being hedged.

Goods and services tax (GST)

The financial statements are exclusive of GST, except for creditors and payables, and debtors and receivables, which are GST inclusive. All other statements are GST exclusive.

The amount of GST owing to or from the Inland Revenue Department at balance date, being the difference between output GST and input GST, is included in creditors and other payables or debtors and other receivables (as appropriate).

Taxation

Government departments are exempt from the payment of income tax in terms of the Income Tax Act 2007. Accordingly, no charge for income tax has been provided for.

Commitments

Future expenses and liabilities to be incurred on contracts that have been entered into on or before balance date are disclosed as commitments to the extent that they are equally unperformed obligations. Commitments relating to employment contracts are not disclosed.

Contingent liabilities

Contingent liabilities are disclosed at the point at which the contingency is evident.

Taxpayers’ funds

This is the Crown’s net investment in the PCO. Taxpayers’ funds are measured as the difference between total assets and total liabilities.

Critical accounting estimates and assumptions

In preparing these financial statements the PCO has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experiences and other factors, including expectations or future events that are believed to be reasonable under the circumstances.

Note 2 Other income
30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
226 Other departmental income 271 151 287 100
0 Other third party income 7 0 0 0
226 Total other income 278 151 287 100

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

Note 3 Personnel expenses
30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
8,449 Salaries and wages 8,937 8,760 9,068 10,276
(115) Annual, retirement and long service and sick leave (63) 119 63 94
309 Other personnel expenses** 314 314 319 340
8,643 Total personnel expenses 9,188 9,193 9,450 10,710

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.
**Other personnel expenses include employer contribution to defined contribution plans to the State Sector retirement Savings Scheme, KiwiSaver, the Government Superannuation Fund, and the Defined Benefit Plan Contribution Scheme.

Note 4 Operating expenses
30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
465 Consultancy 256 580 580 500
34 Audit fees to auditors for audit of the financial statements 35 34 34 35
15 Other services provided by Audit New Zealand 0 0 0 0
691 Operating lease rentals 725 729 725 730
585 Printing expenses 580 871 871 568
3,272 NZL system expenses 1,290 3,687 3,687 2,200
854 Computing expenses 1,040 950 950 718
731 Other operating expenses 658 832 (744) 1,242
6,647 Total operating expenses 4,584 7,683 6,103 5,993

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

Note 5 Depreciation and amortisation
30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Supp.
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
147 Computer systems 85 214 119 160
15 Furniture 9 13 10 15
31 Leasehold property improvements 30 0 0 0
14 Office equipment 15 54 16 20
2,969 Intangible assets 2,173 2,312 2,500 2,500
3,176 Total depreciation and amortisation charges 2,312 2,593 2,645 2,695

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

Note 6 Capital charge

The PCO pays a capital charge to the Crown on its average taxpayers’ funds as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2014 was 8% (2013: 8%).

Note 7 Debtors and receivables

The PCO had not yet been reimbursed for these payments at balance date. The amounts outstanding are current (less than 30 days), and no provision for impairment has been recognised (2013: nil).

Note 8 Property, plant, and equipment
 

Furniture $000


Computers $000

Office
equipment $000
Leasehold
property
improvements $000


Total $000
Cost or valuation          
Balance at 1 July 2012 412 2,230 219 1,563 4,424
Additions 0 39 4 13 56
Balance at 30 June 2013 412 2,269 223 1,576 4,480
           
Balance at 1 July 2013 412 2,269 223 1,576 4,480
Additions 0 0 4 0 4
Balance at 30 June 2014 412 2,269 227 1,576 4,484
           
Accumulated depreciation and impairment losses      
Balance at 1 July 2012 (387) (1,996) (166) (1,464) (4,013)
Depreciation expense (15) (147) (14) (31) (207)
Balance at 30 June 2013 (402) (2,143) (180) (1,495) (4,220)
           
Balance at 1 July 2013 (402) (2,143) (180) (1,495) (4,220)
Depreciation expense (9) (85) (15) (30) (139)
Balance at 30 June 2014 (411) (2,228) (195) (1,525) (4,359)
           
Carrying amounts          
At 1 July 2012 25 234 53 99 411
At 30 June and 1 July 2013 10 126 43 81 260
At 30 June 2014 1 41 32 51 125
Assets held for sale and impairment

The PCO does not have any items of property, plant, and equipment classified as held for sale. There were no impairment losses incurred during the year.

There are no restrictions on title and no assets pledged as security for liabilities.

Note 9 Intangible assets
 Acquired intangibles $000Work in progress $000Total $000
Cost or valuation      
Balance at 1 July 2012 18,100 3,057 21,157
Additions 0 2,046 2,046
Transfers from work in progress 3,314 (3,314) 0
Balance at 30 June 2013 21,414 1,789 23,203
       
Balance at 1 July 2013 21,414 1,789 23,203
Additions 0 722 722
Transfers from work in progress 1,893 (1,893) 0
Balance at 30 June 2014 23,307 618 23,925
       
Accumulated depreciation and impairment losses  
Balance at 1 July 2012 (12,502) 0 (12,502)
Depreciation expense (2,969) 0 (2,969)
Balance at 30 June 2013 (15,471) 0 (15,471)
       
Balance at 1 July 2013 (15,471) 0 (15,471)
Depreciation expense (2,173) 0 (2,173)
Balance at 30 June 2014 (17,644) 0 (17,644)
       
Carrying amounts      
At 1 July 2012 5,598 3,057 8,655
At 30 June and 1 July 2013 5,943 1,789 7,732
At 30 June 2014 5,663 618 6,281
Intangible assets—the NZL system

The NZL system is the PCO’s integrated drafting and publishing system for New Zealand legislation.

Note 10 Creditors and other payables
30/06/13
Actual
$000
 30/06/14
Actual
$000
30/06/14
Main
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
997 Trade creditors 147 927 914
430 Accrued expenses** 630 325 325
149 GST payable (receivable) 321 (162) 331
1,576 Total creditors and other payables 1,098 1,090 1,570

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.
**Accrued expenses include restructuring provisions ($63,000) and accruals, and accrued salaries and wages.

Creditors and other payables are non-interest bearing and are normally settled on 30-day terms; therefore the carrying values of creditors and other payables approximate their fair value.

Note 11 Provision for employee entitlements
30/06/13
Actual
$000
 30/06/14
Actual
$000
30/06/14
Main
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
  Current liabilities      
174 Retirement and long service leave 220 290 266
430 Annual leave 408 350 350
22 Sick leave 7 10 10
626 Total current portion 635 650 626
         
  Non-current liabilities      
113 Retirement leave 41 203 113
113 Total non-current portion 41 203 113
739 Total provision for employee entitlements 676 853 739

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

Employee benefits

The PCO has employees who are members of the Government Superannuation Fund. This is a fully funded Government scheme and, as a result, no liability is recognised.

Treasury guidance was used to estimate the value of long service leave, retirement leave, and sick leave as at 30 June 2014. The major long-term economic assumptions adopted in the valuation process for long service and retirement leave were:

  • Salary increase rate: 3.0%–5.0% (30 June 2013: 3.0%)
  • Discount rate: 3.70%–5.50% (30 June 2013: 2.71%–5.50%).

For sick leave, the methodology was calculated according to the Treasury guidance and assumes that sick leave is a short-term compensated absence, as defined in NZ IAS 19 Employee Benefits.

Note 12 Financial instruments

The PCO is party to financial instrument arrangements as part of its everyday operations. These include instruments such as bank balances, investments, and accounts receivable, accounts payable and foreign currency forward contracts. The fair value of the PCO’s financial instruments is the same as the carrying value.

The PCO does not have any gains or losses on its financial instruments and no impairments have been recognised to date.

All financial assets and liabilities are non-derivative in form and function and are neither available for sale nor held for maturity.

Credit risk

Credit risk is the risk that a third party will default on its obligations to the PCO.

In the normal course of its business, credit risk arises from debtors.

The maximum exposure from trade debtors is the value of the non-Government debtors, ie nil. Default is considered by management to be unlikely and the probable exposure has been determined as negligible. There were no changes in receivables or payables during the year that can be attributed to credit risk.

The PCO is only permitted to deposit funds with Westpac, a registered bank, and enter into foreign exchange forward contracts with the New Zealand Debt Management Office (NZDMO).

The PCO does not require any collateral or security to support financial instruments with financial institutions that it deals with, or with the NZDMO, as these entities have high credit ratings. For its other financial instruments, the PCO does not have significant concentrations of credit risk. The PCO is not exposed to any other concentrations of credit risk.

30/06/13
Actual
$000
 30/06/14
Actual
$000
30/06/14
Main
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
  Loans and receivables      
5,887 Bank balances 5,237 8,310 9,109
8 Debtors—Government 0 0 9
4,288 Debtors—Crown 6,972 40 0

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

Credit facilities

The PCO does not have bank overdraft facilities as at 30 June 2014.

Currency risk

The PCO has no significant exposure to currency risk on its financial instruments.

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Interest rate risk

Interest rate risk is the risk that the fair value of a financial instrument will fluctuate, or the cash flows from a financial instrument will fluctuate, due to changes in market interest rates.

The PCO has no interest-bearing financial instruments and, accordingly, has no exposure to interest rate risk.

Liquidity risk

Liquidity risk is the risk that the PCO will encounter difficulty raising liquid funds to meet commitments as they fall due.

In meeting its liquidity requirements, the PCO closely monitors its forecast cash requirements with expected cash drawdowns from the NZDMO. The PCO maintains a target level of available cash to meet liquidity requirements.

The PCO considers that it does not have a significant liquidity risk as it ensures it has adequate working capital coverage at all times.

Exposure to risk

The PCO is not aware of any exposure to risk regarding financial instruments that would have a significant impact on operations.

Note 13 Capital management

The PCO’s capital is its equity (or taxpayers’ funds), which comprises general funds and revaluation reserves. Equity is represented by net assets.

The PCO manages its revenues, expenses, assets, liabilities, and general financial dealings prudently.

The PCO’s equity is largely managed as a by-product of managing income, expenses, assets, liabilities and compliance with the Government Budget processes and with Treasury instructions.

The objective of managing the PCO’s equity is to ensure the PCO effectively achieves its goals and objectives for which it has been established, whilst remaining a going concern.

Note 14 Provisions

With the exception of the provision for payment of the net surplus to the Crown, the PCO does not hold any non-employee related provisions.

Lease make-good provisions

In respect of the Reserve Bank office lease, the PCO is required at the expiry of the lease term to either surrender to the lessor the fit-out and alterations or remove the improvements and make good any damage caused to the premises.

The lessee’s current intention is to surrender the fit-outs.

Note 15 Cash flow

The GST (net) component of operating activities reflects the net GST paid to the Inland Revenue Department. The GST (net) component has been presented on a net basis, as the gross amounts do not provide meaningful information for financial statement purposes.

Note 16 Related party information

All related party transactions have been entered into on an arm’s length basis.

The PCO is a wholly-owned entity of the Crown.

Significant transactions with government-related entities

The PCO has been provided with funding from the Crown of $19.118 million (2012/13: $20.509 million) for specific purposes as set out in its founding legislation and the scope of the relevant Government appropriations.

Collectively, but not individually, significant transactions with government-related entities

In conducting its activities, the PCO is required to pay various taxes and levies (such as GST, FBT, PAYE, and ACC levies) to the Crown and entities related to the Crown. The payment of these taxes and levies is based on the standard terms and conditions that apply to all tax and levy payers.

The PCO also purchased goods and services from entities controlled, significantly influenced, or jointly controlled by the Crown. Purchases from these government-related entities for the year ended 30 June 2014 totalled $2.121 million (2012/13: $2.095 million). These purchases included the payment of a capital charge on its taxpayers’ funds to the Treasury ($1.207 million), lease payments to the Reserve Bank of New Zealand ($0.681 million), purchase of electricity from Genesis, air travel from Air New Zealand, auditing services payments to Audit New Zealand, training programmes from the Leadership Development Centre, and internet and computer network access from Parliamentary Service.

The PCO also provided goods and services to entities controlled, significantly influenced, or jointly controlled by the Crown. Revenue from these government-related entities for the year ended 30 June 2014 totalled $0.271 million (2012/13: $0.206 million). The revenue included the secondment of PCO staff to the Ministry of Business, Innovation, and Employment, and reimbursement from the Ministry of Foreign Affairs and Trade Aid Programme for legislative drafting services provided to Pacific Island nations and other revenue.

Key management personnel

No transactions were entered into during the year with key management personnel.

Key management remuneration
2013
Actual
$000
 2014
Actual
$000
930 Salaries and other short-term employee benefits 973
66 Post-employment benefits 35
86 Other long-term benefits 0
1,082 Total key management personnel compensation 1,008

There are no other employee benefits.

Key management personnel include the Chief Parliamentary Counsel and all other members of the Senior Management Team.

Apart from those transactions described above, the PCO has not entered into any related party transactions and there are no conflicts of interest recorded. The PCO has a policy on conflicts of interest and in each Senior Management Team meeting any conflicts of interest are recorded.

Note 17 Post balance date events

The PCO does not have any post balance date events for 2013/14 (2012/13: nil).

Note 18 Major budget variances—Actuals against Main Estimates
Statement of Comprehensive Income

A net surplus of $2.105 million (2013: $1.062 million) was recorded. This was owing to a number of factors. Significant factors are stated below.

There was a surplus of $2.397 million in NZL system maintenance and support costs as a code refactoring project was deferred until the 2014/15 year and $0.600 million was returned to the Crown as savings during the 2014 March Baseline Update process.

There was a surplus of $0.324 million in consultants and contractors-related expenditure as funding allocated for the Information Systems Strategic Plan was not required, not all costs for the Performance Improvement Framework reviewers were incurred in the 2013/14 year, and other contracted project work did not take place or was not required.

There was a surplus of $0.291 million (2013: $0.386 million) from printing-related expenditure as a result of lower than anticipated demand for legislative printing and a continual reduction in the number of hard copies required by users.

There was a surplus of $0.281 million (2013: $0.262 million) in depreciation-related expenditure due to lower than anticipated costs for a number of NZL system enhancements and also due to no additional computer systems assets being purchased in the 2013/14 year.

Note 19 Repayment of operating surplus
30/06/13
Actual
$000
 30/06/14
Actual
$000
30/06/14
Main
Estimates
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
1,062 Net surplus 2,105 0 0
1,062 Total repayment of surplus 2,105 0 0

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

The net surplus is required to be paid by 31 October 2014 to Treasury.

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STATEMENT OF SERVICE PERFORMANCE
For the year ended 30 June 2014

The PCO agreed to provide outputs in 2013/14 to meet the requirements of the Attorney-General in terms of their nature, outcome emphasis, quality and quantity specifications, and cost.

Output Class—Law Drafting Services

Description

Under this output class, the PCO delivered a service that provides for:

  • drafting of legislation
  • examining and reporting on local and private Bills and drafting amendments to them
  • providing advice on the drafting of disallowable instruments that are not drafted by the PCO
  • providing legislative drafting assistance to Pacific Island nations
  • administering the Legislation Act 2012 and any other legislation PCO is responsible for.
Objective

The objective that the PCO seeks to achieve is to contribute to parliamentary democracy under the rule of law by supporting Parliament and the executive in their law-making roles and contributing to the Government’s objectives by ensuring that:

  • legislation that is necessary to change the law to implement Government policies is effective, clear, and consistent with other legislation, the general law, and international law.
Quantity

This output class is demand driven. It is accordingly difficult to estimate accurately the number of Government Bills and legislative instruments that will be drafted in any year, or the extent of the amendments required to Bills before the House.

 For the year ended 30 June
  2014 2013 2012
Measure Standard Actual Actual Actual
all Bills on the annual legislative programme in categories 1 and 2 (both of which are Bills that must be passed in the current year) are drafted 100% 100% (for calendar year 2013)1 100% (for calendar year 2012) 100% (for calendar year 2011)
number of Government Bills drafted, and amendments to same number drafted during their passage through the House2 50—70 drafted 62 drafted
(for calendar year 2013)
51 drafted
(for calendar
year 2012)
67 drafted
(for calendar
year 2011)
number of legislative instruments drafted2 300—400 drafted 499 drafted
(for calendar
year 2013)
414 drafted
(for calendar
year 2012)
451 drafted
(for calendar
year 2011)
proportion of Bills drafted by the PCO and introduced that are peer reviewed 80% 83% 77% 80%
proportion of legislative instruments drafted by the PCO and submitted to Cabinet that are peer reviewed 80% 95% 91% 93%
proportion of introduced Bills drafted by the PCO that are proofread 97% 78% 75% 65%
proportion of legislative instruments drafted by the PCO that are proofread 97% 100% 99% 100%

1All Bills in category 1 were drafted and enacted with the exception of the Appropriation (2012/13 Financial Review) Bill that was introduced on 19 November 2013 and was enacted on 7 March 2014. Of the 65 Bills in category 2, 46 were enacted and the remaining Bills were drafted.
2 The variance between the standard and actual figures is due to the demand-driven nature of the outputs.

Quality

The quality standards for the Attorney-General are that:

  • Bills and legislative instruments are legally effective, clear, and consistent with other legislation, the general law, and international law
  • Bills and legislative instruments are consistent with the policy they implement, legal principle, the New Zealand Bill of Rights Act 1990, and the Human Rights Act 1993
  • advice given on matters relating to the provision of legislative drafting services, including advice on legislative drafting, parliamentary procedure, executive government process, and the law, is sound, practical, and clear.

The quality standards for instructing departments and agencies are that:

  • the legislation produced is drafted as clearly and simply as possible
  • the legislation produced gives effect to Government policy
  • the legislation produced is legally effective
  • the instructing agency is satisfied with the final product
  • advice on legislative drafting matters is provided in a professional, impartial and responsive manner.

The quality standard for select committees is that:

  • advice given on matters relating to the provision of legislative drafting services, including explaining the changes made by the revision tracked version of a Bill, is objective, accurate, and sufficient.

The quality standard for Pacific Island instructors is that:

  • advice given on matters relating to the provision of legislative drafting services is objective, accurate, and sufficient.

The quality standards for peer reviewing are that:

  • Bills drafted by the PCO are reviewed twice before introduction for their legal effectiveness, workability, compliance, structure, and readability
  • Legislative instruments drafted by the PCO are reviewed once before being submitted to Cabinet for their legal effectiveness, workability, compliance, structure, and readability.

The quality standards for proofreading legislation are that:

  • Bills drafted by the PCO are read in full at least twice by Editorial Services to detect errors before introduction
  • Legislative instruments drafted by the PCO are read in full at least once by Editorial Services to detect errors before they are made.
 For the year ended 30 June
  2014 2013 2012
Measure Actual Actual Actual
whether the Attorney-General is satisfied that the quality standard has been achieved the A-G was satisfied the A-G was satisfied the A-G was satisfied
whether the proportion of instructing departments and agencies we survey rate the quality standard as 4 or better on a scale of 1 to 5 (target: 90%)1 98% satisfaction 51% response rate 93% satisfaction
53% response rate
90% satisfaction 69% response rate
whether select committees are satisfied that the quality standard has been achieved, as determined by survey responses from relevant select committees select committees were satisfied select committees were satisfied select committees were satisfied
whether Pacific Island instructors are satisfied that the quality standard has been achieved, as determined by survey responses from relevant Pacific Island instructors Pacific Island instructors were satisfied Pacific Island instructors were satisfied Pacific Island instructors were satisfied
whether Bills drafted by PCO are reviewed twice before introduction for their legal effectiveness, workability, compliance, structure, and readability (target: 80%)2 83% 77% 80%
whether legislative instruments drafted by PCO are reviewed once before being submitted to Cabinet for their legal effectiveness, workability, compliance, structure, and readability (target: 80%)2 95% 91% 93%
whether Bills drafted by the PCO are read in full at least twice by Editorial Services to detect errors before introduction (target: 97%)3 78% 75% 65%
whether secondary legislation drafted by the PCO is read in full at least once by Editorial Services to detect errors before it is made (target: 97%)3 100% 99% 100%

1 Prior to 2012/13, the satisfaction rate was based on the average response to all survey questions. From the year ended 30 June 2013 onwards, the level of satisfaction was measured using a 1 to 5 scale with 1 being very dissatisfied and 5 being very satisfied. The result was based on the proportion of instructing departments and agencies we surveyed that rated the quality as a 4 or 5 on that scale for the following statements:

  • legislation was drafted as clearly and simply as possible;
  • legislation was legally effective;
  • the instructing agency was satisfied with the final product;
  • advice on legislative drafting matters was provided in a professional, impartial, and responsive manner.

2 The performance measures and standards for peer reviewing exclude Bills drafted by the Pacific Island desk and local, private, and Members’ Bills.
There are also some instances when peer review of legislative instruments is not required. These include:

  • single date commencement orders (if not revoking a commencement order and replacing it with a new commencement order)
  • Levies and fees if the change relates to figures only
  • Ministerial notices that are pro forma (no choice regarding wording)
  • Takeovers exemption notices unless a class notice.

3 The performance measures and standards for proofreading exclude Bills drafted by the Pacific Island desk.

Timeliness

The timeliness standard for the Attorney-General is that:

  • Bills, legislative instruments and SOPs are drafted in accordance with time frames set by, or agreed with, the Government, select committees, instructing departments and agencies.

The timeliness standard for instructing departments and agencies is that:

  • drafts of legislation are produced within required deadlines.

The timeliness standard for select committees is that:

  • revision tracked documents are provided for the select committee in accordance with deadlines set by or negotiated with the committee.

The timeliness standard for Pacific Island instructors is that:

  • legislation is provided to Pacific Island instructors in accordance with agreed deadlines.
 For the year ended 30 June
  2014 2013 2012
Measure Actual Actual Actual
whether the Attorney-General is satisfied that the timeliness standard has been achieved the A-G was satisfied the A-G was satisfied the A-G was satisfied
whether the proportion of instructing departments and agencies we survey rate the timeliness standard as 4 or better on a scale of 1 to 5 (target: 90%)1 96% satisfaction 51% response rate 93% satisfaction
53% response rate
90% satisfaction 69% response rate
whether select committees are satisfied that the timeliness standard has been achieved, as determined by survey responses from relevant select committees select committees were satisfied select committees were satisfied select committees were satisfied
whether Pacific Island instructors are satisfied that the timeliness standard has been achieved, as determined by survey responses from relevant Pacific Island instructors Pacific Island instructors were satisfied Pacific Island instructors were satisfied Pacific Island instructors were satisfied

1 Prior to 2012/13, the satisfaction rate was based on the average response to all survey questions. From the year ended 30 June 2013 onwards, the level of satisfaction was measured using a 1 to 5 scale with 1 being very dissatisfied and 5 being very satisfied. The result was based on the proportion of instructing departments and agencies we surveyed that rated the timeliness as a 4 or 5 on that scale for the following statement: drafts of legislation were produced within agreed deadlines.

Financial performance for Output Class—Law Drafting Services
30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Appropriation Voted
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
9,360 Revenue—Crown 9,787 9,394 10,187 10,574
226 Other revenue 271 80 287 100
9,586 Total revenue 10,058 9,474 10,474 10,674
9,026 Total expenses 9,422 9,474 10,474 10,674
560 Net surplus 636 0 0 0

Note: Figures are GST exclusive.
*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

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Output Class—Access to Legislation

Description

Under this output class, the PCO delivered a service that provides for:

  • supplying printed copies of Government Bills and SOPs to the House and, on a selective basis, copies of Acts with proposed amendments incorporated
  • publishing legislation
  • publishing tables of legislation
  • providing the above for sale at designated bookshops and by subscription
  • ensuring that the drafting system is available to the Office of the Clerk and Inland Revenue Department drafting staff
  • providing free public access to legislation via the New Zealand Legislation (NZL) website at www.legislation.govt.nz.
Objective

The objective that the PCO seeks to achieve is to contribute to parliamentary democracy under the rule of law by supporting Parliament and the executive in their law-making roles and contributing to the Government’s objectives by ensuring that:

  • legislation, including Bills and SOPs, is accessible to the public in both printed and electronic forms and printed copies of Bills and SOPs are provided to the House
  • Acts and legislative instruments are published with official, authoritative status.
Quantity

This output class is substantially demand driven. It is accordingly difficult to estimate accurately the number of Bills, SOPs, Acts, and legislative instruments that will be published in any year, or the number of printed copies of Bills and SOPs that will be provided to the House.

 For the calendar year
  2013 2012 2011
Measure Standard Actual Actual Actual
number of Government Bills supplied to the House and published1 50–70 62 50 59
number of SOPs supplied to the House and published1 70–100 90 168 85
number of Acts of Parliament published1 80–120 153 130 100
number of Legislative Instruments published1 300–400 499 425 433

1 The variance between the standard and actual figures is due to the demand-driven nature of the outputs.

 For the year ended 30 June
  2014 2013 2012
Measure Standard Actual Actual Actual
the annual volumes of Acts for 2013 and the annual volumes of legislative
instruments for 2013 are published
volumes are published 5 volumes of Acts and 6 volumes of legislative instruments published 4 volumes of Acts and 4 volumes of legislative
instruments published
3 volumes of Acts and 5 volumes of legislative
instruments published
publication of the Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force 2013 edition 2013 edition was published 2012 edition was published 2011 edition was published
publication of the interim indexes of Statutory Regulations indexes are published indexes were published indexes were published indexes were published
free public access to the NZL website is available 99% availability 99% availability 99% availability 99% availability
availability of the drafting system for PCO, Office of the Clerk, and Inland Revenue Department drafting staff 92% availability 99% availability 99% availability 99% availability
Quality

The standards are:

  • Government Bills approved for introduction and SOPs approved for release are published in an accurate form
  • accurate publication of Acts of Parliament and legislative instruments
  • the annual volumes of Acts for 2013 contain correct copies of the Acts of Parliament and the annual volumes of legislative instruments for 2013 contain correct copies of the legislative instruments
  • the Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force are accurate
  • the electronic database of Acts (both as enacted and with their amendments incorporated), legislative instruments (both as made and with their amendments incorporated), Bills, and SOPs is up to date and accurate
  • Bills, SOPs, Acts of Parliament, legislative instruments, the annual volumes, reprints, and the Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force are published in accordance with best industry practice.
 For the year ended 30 June
  2014 2013 2012
Measure Actual Actual Actual
whether the Attorney-General is satisfied that the quality standard has been achieved the A-G was satisfied the A-G was satisfied the A-G was satisfied
Timeliness
 For the year ended 30 June
  2014 2013 2012
Measure Standard Actual Actual Actual
the time taken to supply Bills and SOPs to the House in accordance with the requirements of the Ministers of the Crown in charge of those Bills or SOPs met met met
the time taken to make legislation (including Bills and SOPs) available on the NZL website new Government Bills: within 1 working day after introduction met met met
subsequent versions of Bills: within 1 working day after the printed version is made available to the House met met met
SOPs: within 1 working day after they have been circulated to Members of Parliament not met1 met met
Acts: within 5 working days of assent not met2 met met
Legislative Instruments: within 1 working day of the date they are notified in the New Zealand Gazette met met met
the time taken to make legislation (including Bills and SOPs) available for sale at designated bookshops and by subscription Government Bills and SOPs: within 5 working days of introduction or release met met met
Acts: within 10 working days of assent met met met
Legislative Instruments: within 5 working days of being made met met met
amendments are consolidated within 15 working days of the date of effect of the amendment 100% 70%3 91%4 100%
the date of publication of the annual volumes of Acts and Legislative Instruments within first half of 2014 for 2013 year: met (March 2014) for 2012 year: met (March 2013) for 2011 year: met (March 2012)
the date of publication of the Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force within first half of 2014 met met met
the frequency of publication of the interim indexes of Legislative Instruments 4 times a year 4 times a year 4 times a year 4 times a year
the time taken to respond to public enquiries 90% within 1 working day of receipt 97% 96% 98%
all public enquiries are responded to within 5 working days of receipt 100% 100% 100%

1 99.5% of SOPs were published on the NZL website within the 1 working day standard. One SOP was published later than the standard due to a process error, which has since been rectified.
2 99% of Acts were published on the NZL website within the 5 working days standard. Two Acts were published later than the standard due to a process error, which has since been rectified.
3 The budgeted standard was not achieved due to a large number of compilations that commenced on specific dates (742 on 1 July 2013 and 160 on 5 August 2013).
4 The 94 compilations from the Search and Surveillance Act 2012 were completed later than the 15 working day standard due to a process error, which has since been rectified.

Financial performance for Output Class—Access to Legislation
30/06/13

Actual
$000
 30/06/14

Actual
$000
30/06/14
Main
Estimates
$000
30/06/14
Appropriation Voted
$000
30/6/15
Unaudited
Forecast*
IPSAS
$000
11,149 Revenue—Crown 9,331 11,131 8,931 9,931
0 Other revenue 7 71 0 0
11,149 Total revenue 9,338 11,202 8,931 9,931
10,647 Total expenses 7,869 11,202 8,931 9,931
502 Net surplus 1,469 0 0 0

Note: Figures are GST exclusive.
*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

Overall financial performance

The financial performance of the Parliamentary Counsel Office for the year ended 30 June 2014 resulted in:

30/06/13

Actual
  30/06/14
Actual
30/06/14
Supp. Estimates
30/6/15
Unaudited
Forecast*
IPSAS
  Operating results        
20,509 Revenue—Crown $000 19,118 19,118 20,505
226 Revenue—other $000 278 287 100
19,673 Output expenses $000 17,291 19,405 20,605
1,062 Net surplus/(deficit) $000 2,105 0 0
           
  Working capital management        
321 Liquid ratio % 327 428 428
0 Debtor collection period (third party sales) days 0 0 0
28 Creditor payment period days 28 28 28
           
  Resource utilisation        
  Property, plant, and equipment (PPE)—        
21.5 Additions as a percentage of total PPE % 3.2 55.8 75.0
1.4 PPE as percentage of total assets % 0.7 1.5 1.5
15,091 Taxpayers’ funds at year end $000 15,091 15,091 15,091
           
  Forecast net cashflows        
(16,137) Cash disbursed to producing outputs $000 (15,463) (19,636) (20,410)
(3,747) Net increase/(decrease) in cash held $000 (650) 3,222 0

*Forecast figures are Budget Economic Forecast Update (BEFU) forecast figures, which are not audited.

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Independent Auditor’s Report

TO THE READERS OF THE PARLIAMENTARY COUNSEL OFFICE’S FINANCIAL STATEMENTS AND NON-FINANCIAL PERFORMANCE INFORMATION
for the year ended 30 June 2014

The Auditor-General is the auditor of Parliamentary Counsel Office (the PCO). The Auditor-General has appointed me, Karen Young, using the staff and resources of Audit New Zealand, to carry out the audit of the financial statements and the non-financial performance information of the PCO on her behalf.

We have audited:

Opinion

In our opinion:

  • the financial statements of the PCO comprising the statement of financial position, statement of commitments, statement of contingent liabilities and contingent assets as at 30 June 2014, the statement of comprehensive income, statement of changes in taxpayers funds equity, statement of Departmental expenses and capital expenditure against appropriations, statement of unappropriated expenditure and capital expenditure and statement of cash flows for the year ended on that date and the notes to the financial statements that include accounting policies and other explanatory information:
    • comply with generally accepted accounting practice in New Zealand; and
    • fairly reflect the PCO’s:
      • financial position as at 30 June 2014;
      • financial performance and cash flows for the year ended on that date;
      • expenses and capital expenditure incurred against each appropriation administered by the PCO and each class of outputs included in each output expense appropriation for the year ended 30 June 2014; and
      • unappropriated expenses and capital expenditure for the year ended 30 June 2014.
  • The non-financial performance information of the PCO comprising the statement of service performance and the report about strategic objectives:
    • complies with generally accepted accounting practice in New Zealand; and
    • fairly reflects the PCO’s service performance and outcomes for the year ended 30 June 2014, including for each class of outputs:
      • its service performance compared with the forecasts in the statement of forecast service performance at the start of the financial year; and
      • its actual revenue and output expenses compared with the forecasts in the statement of forecast service performance at the start of the financial year.

Our audit was completed on 30 September 2014. This is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Chief Parliamentary Counsel and our responsibilities, and we explain our independence.

Basis of opinion

We carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and carry out our audit to obtain reasonable assurance about whether the financial statements and the non-financial performance information are free from material misstatement.

Material misstatements are differences or omissions of amounts and disclosures that, in our judgement, are likely to influence readers’ overall understanding of the financial statements and the non-financial performance information. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.

An audit involves carrying out procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the non-financial performance information. The procedures selected depend on our judgement, including our assessment of risks of material misstatement of the financial statements, and the non-financial performance information, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the PCO’s preparation of the financial statements and the non-financial performance information that fairly reflect the matters to which they relate. We consider internal control in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the PCO’s internal control.

An audit also involves evaluating:

  • the appropriateness of accounting policies used and whether they have been consistently applied;
  • the reasonableness of the significant accounting estimates and judgements made by the Chief Parliamentary Counsel;
  • the appropriateness of the reported non-financial performance information within the PCO’s framework for reporting performance;
  • the adequacy of all disclosures in the financial statements and the non-financial performance information; and
  • the overall presentation of the financial statements and the non-financial performance information.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements and the non-financial performance information. Also we did not evaluate the security and controls over the electronic publication of the financial statements and the non-financial performance information.

We have obtained all the information and explanations we have required and we believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.

Responsibilities of the Chief Parliamentary Counsel

The Chief Parliamentary Counsel is responsible for preparing:

  • financial statements and non-financial performance information that:
    • comply with generally accepted accounting practice in New Zealand;
    • fairly reflect the PCO’s financial position, financial performance, cash flows, expenses and capital expenditure incurred against each appropriation and its unappropriated expenses and capital expenditure; and
    • fairly reflect its service performance and outcomes.

The Chief Parliamentary Counsel is also responsible for such internal control as is determined is necessary to enable the preparation of financial statements, and non- financial performance information that are free from material misstatement, whether due to fraud or error. The Chief Parliamentary Counsel is also responsible for the publication of the financial statements and non-financial performance information, whether in printed or electronic form.

The Chief Parliamentary Counsel’s responsibilities arise from the Public Finance Act 1989.

Responsibilities of the Auditor

We are responsible for expressing an independent opinion on the financial statements and the non-financial performance information and reporting that opinion to you based on our audit. Our responsibility arises from section 15 of the Public Audit Act 2001 and the Public Finance Act 1989.

Independence

When carrying out the audit, we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the External Reporting Board.

Other than the audit, we have no relationship with or interests in the PCO.

Karen Young
Audit New Zealand
On behalf of the Auditor-General
Wellington, New Zealand

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APPENDICES

Legislative framework

The PCO is constituted as a separate statutory office by the Legislation Act 2012 (the 2012 Act). The PCO is under the control of the Attorney-General or, if there is no Attorney-General, the Prime Minister.

Under the 2012 Act, the functions of the PCO are to:

  • draft Government Bills and Legislative Instruments
  • publish Bills, Acts, Legislative Instruments, and reprints of legislation in electronic and printed forms
  • prepare reprints of Acts and Legislative Instruments
  • prepare Bills to revise Acts in accordance with the current revision programme
  • advise departments and agencies on the drafting of disallowable instruments that are not drafted by the PCO
  • examine local and private Bills, and Members’ Bills that the Attorney-General directs to be examined
  • advise on and assist with the drafting of all local and private Bills, and draft Members’ Bills on the Attorney-General’s direction.

The Legislation Amendment Bill has been introduced but will not have its first reading until after the 2014 general election. The policy objectives of this Bill are to:

  • improve the accessibility of the law by re-enacting the Interpretation Act 1999 in the Legislation Act 2012, so the main provisions of New Zealand legislation that are concerned with parliamentary enactments can be found in one statute
  • improve the interpretation rules from the Interpretation Act 1999 for the courts and the public by addressing (through some small fine-tuning amendments) a few technical issues identified since 1999
  • further encourage the production of good legislation by increasing the availability of information about the development and content of new Government initiated legislation in order to inform the parliamentary and public scrutiny of that legislation
  • clarify and update the Legislation Act 2012 by making some small related and other amendments, in particular, to take into account the publication of disclosure statements and the legal status of official electronic versions of legislation available online free of charge.

From time to time, the PCO also drafts certain other instruments such as Orders in Council establishing commissions of inquiry, instruments made under the Royal prerogative, and other official documents.

The Inland Revenue Department is responsible for drafting certain Bills that will become Acts administered by that department (see Inland Revenue Department (Drafting) Order 1995).

The PCO is not part of the core Public Service under the State Sector Act 1988, and thus is not under the direct control of the State Services Commissioner. However, the PCO is subject to certain provisions of the State Sector Act 1988, including those that relate to the setting and enforcement of minimum standards of integrity and conduct.

Governance arrangements and structure in the PCO

The Chief Parliamentary Counsel is appointed under the Legislation Act 2012 by the Governor-General on the recommendation of the Prime Minister. All other staff are employed by the Chief Parliamentary Counsel.

The Minister responsible for the PCO is the Attorney-General. Under the Output Plan agreed each year by the Attorney-General and the Chief Parliamentary Counsel, the PCO is required to report six-monthly to the Attorney-General. The Chief Parliamentary Counsel is responsible to the Attorney-General for the operations and management of the PCO.

The organisational structure of the PCO is shown below.

The PCO has key relationships with a number of other organisations. In particular, the PCO:

  • receives a range of services from the Parliamentary Service including accounting and financial reporting services, payroll, and the parliamentary core computing network. Service level agreements are in place to manage the provision of these services
  • works closely with the Office of the Clerk of the House of Representatives and has developed a Memorandum of Understanding with that office for the processing, printing, supply, and publication of legislation
  • provides access to the NZL system for the drafting unit in the Inland Revenue Department, which is responsible under current arrangements for the drafting of tax legislation. The PCO has developed a Memorandum of Understanding with that department for the processing, printing, supply, and publication of legislation
  • works closely with the Legislation Coordinator in the Cabinet Office, whose role is to provide support to the government of the day in developing, monitoring, and modifying the legislative programme, and with the Secretary of the Cabinet Legislation Committee
  • has extensive working relationships with all central government departments and agencies in terms of taking instructions from them for the drafting of new and amending legislation and providing links and electronic “feeds” from the legislation website
  • works closely with the offices of the Leader of the House and Deputy Leader of House in assisting with the progress of government legislation through the House of Representatives
  • fulfils its obligation to publish hard-copy New Zealand legislation through a contract with Printlink for the printing, distribution, and sale of printed legislation
  • is audited by the Auditor-General. The Auditor-General has appointed Audit New Zealand to perform the audit of the PCO on her behalf
  • manages a number of contracts with suppliers under the all-of-government contracts relating to syndicated procurement of infrastructure-as-a-service.

Organisational structure

PCO's organisational structures

1 Preparing the Annual Report: Technical and Process Guide for Departments (June 2014)
www.treasury.govt.nz/publications/guidance/reporting/annualreports.
2 Statement of Intent Parliamentary Counsel Office for the period 1 July 2013 to 30 June 2018 www.pco.parliament.govt.nz/soi2013-2018/.
3Justice Sector—Information Supporting the Estimates 2013/14 www.treasury.govt.nz/budget/2013/ise/v7.
4 Page 9 Statement of Intent Parliamentary Counsel Office for the period 1 July 2013 to 30 June 2018.
5 This is further explained in the Statement of Intent Parliamentary Counsel Office for the period 1 July 2013 to 30 June 2018, page 9.
6www.courtsofnz.govt.nz/about/system/rules_committee/projects.
7beehive.govt.nz/release/official-legislation-online-today (gazette.govt.nz/notice/id/2014-ps71).
8 See for example: “Law News gets the heads up on official electronic legislation” Law News Issue 43 pp.2-10 www.adls.org.nz and www.lawsociety.org.nz/lawtalk/lawtalk-archives/issue-833/the-official-word-on-online-legislation.

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