As part of our transformation programme, we committed to being approximately 25% to 30% smaller from an administration perspective, all things being equal. We have achieved this commitment.
Remuneration and inflationary cost pressures have been and will be our key financial risks. Our current financial position will help lessen the level of this risk
Each year, we receive funding from the Government to deliver services under 3 departmental appropriations.
An appropriation is a parliamentary authorisation for the Government or an Office of Parliament to incur expenses or capital expenditure. Expenditure can only be incurred under an appropriation or other statutory authority.
2022-23 Appropriations
We were funded through 3 appropriations in 2022-23.
- Services to Other Agencies - $2m.
- Residual Activities Transformation annual appropriation - $33m
- Services for Customers multi-category appropriation - $700m.
The total budgeted appropriation for 2022–23 was $735 million. Our actual spend was $691 million, $44 million lower.
This underspend was partly due to challenges recruiting staff in the tight labour market and the timing of residual transformation activities.
Some of this underspend will be transferred to 2023–24, subject to confirmation by ministers.
Our operating expenditure against appropriations including remeasurements (expenditure that does not require an appropriation) was $704 million. It covers spending on personnel (56% of the total), operating (34%), depreciation including amortisation and impairment (7%) and capital charge (3%).
| Year | Personnel | Operating | Depreciation and amortisation | Capital charge |
|---|---|---|---|---|
| 2021-22 | $373 | $236 | $50 | $24 |
| 2022-23 | $395 | $238 | $48 | $23 |
Total personnel costs were for our people’s remuneration, employee entitlements and training and development costs. New collective agreements incorporating the outcome of the Public Sector Pay
Adjustment increased this spending in 2022–23 and will do so in outyears.
Operating costs this year mainly related to information technology, telecommunications, accommodation leases, contractors, consultants and office expenses.
Operating expenditure on contractors and consultants fell to $42 million in 2022–23 from $75 million in 2021–22. This reflects reduced requirements for contractors and consultants now that the transformation programme has ended.
The ratio of contractors and contractor operating expenditure to workforce operating spend was 10.3% in 2022–23 compared to 17.6% last year.
Our operating appropriation for 2023–24 is forecast to be $738 million, an increase of
$47 million from 2022–23.
In terms of capital expenditure, Te Tari Taake Inland Revenue is maintaining capital reserves, funded from annual depreciation for technology and other upgrades and replacements.
Like other government agencies, Te Tari Taake Inland Revenue considers social, environmental, cultural and economic outcomes when sourcing goods and services. Our key considerations around these broader outcomes when we go to market include:
- increasing New Zealand businesses’ access to government contract opportunities, including supplier diversity
- supporting quality employment outcomes for potentially disadvantaged groups
- helping to improve conditions for New Zealand workers
- reducing carbon emissions.
We report on the awarding of contracts to suppliers who have self-selected as a Māori business. Our result this year improved slightly from 0.96% of contracts to 1.78%. Because of the market we operate in, we’re unlikely to improve this result. We’re continuing to identify Maori businesses where possible and raise awareness within our organisation.
We also track timeliness in paying invoices to domestic suppliers as a way of ensuring we’re paying businesses quickly for their services. This year, 96.6% of the 10,200 invoices received were processed within our target of 10 working days.
- $691m in operating expenditure against appropriations to deliver outcomes in 2022-23. In 2022 this was $685m.
- $40m in capital investment in 2022-23.
- 96.6% is the percentage of domestic invoices paid within 10 working days, against a target of 95%. In 2022 this was 91.3%.
- 1.8% of our contracts (based on purchase orders issued) were awarded to Māori businesses to March 2023. This was 0.8% in 2022.