Operating expenses are recognised as an expense in the period to which they relate.
Operating leases
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to the ownership of an asset. Accommodation lease rentals payable under operating leases are recognised as an expense on a straight-line basis over the term of the relevant lease. Lease incentives received as an incentive to enter into an operating lease are also recognised on a straight-line basis over the term of the lease as a reduction in the rental expense.
| Operating expenses | Actual 2024 ($000) | Actual 2025 ($000) | Unaudited budget 2025 ($000) |
|---|---|---|---|
| Technology and telecommunications | $122,367 | $124,552 | $123,472 |
| Accommodation leases | $28,141 | $27,363 | $27,641 |
| Contractors and consultants | $28,464 |
$23,422 | $33,441 |
| Contingent workers—customer-facing |
$5,602 |
$11,460 | $9,677 |
| Office expenses | $9,849 | $9,951 |
$10,693 |
| Outsourced contracts | $7,607 | $6,724 |
$7,643 |
| Legal expenses |
$3,343 |
$4,612 | $3,756 |
| Travel and transport | $4,658 | $3,878 | $4,351 |
| Communications and publicity | $3,752 | $3,735 | $4,551 |
| Audit fees for the audit of the financial report[1] | $1,456 |
$1,236 | $1,716 |
| Bank fees | $1,520 | $1,169 | $1,600 |
| Net loss on disposal of assets | $433 | $353 | - |
| Debt expected credit losses and write-offs | $156 | $265 | - |
| Disbursements for the audit of the financial statements | $118 | $89 | $155 |
| Net realised and unrealised foreign exchange losses |
$1,579 | - | - |
| Other operating expenses | $1,385 | $940 | $6,497 |
| Total operating | $220,430 | $219,749 | $235,193 |
[1] Fees incurred for services provided by our audit firm:
The departmental financial statements, non-departmental financial schedules, and the service performance information for the year ended 30 June 2025 (the “financial report”) are audited by Audit New Zealand on behalf of the Auditor-General.
Explanation of major variances against budget
Operating expenses were $15.444 million lower than budget. This is mainly due to reductions in operating expenditure that IR committed to in Budget 2024, including efficiencies and reductions in accommodation leases, contractors and consultants, outsourced contracts and travel expenditure.