Guidance for Developing and Maintaining a Long Term Investment Plan

Version 3 October 2016

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ISBN: 978-0-947519-37-7 (Online) The Treasury URL at October 2016 for this document is http://www.treasury.govt.nz/statesector/investmentmanagement/think/ltip/guidance The PURL for this document is purl.oclc.org/nzt/g-ltip

Contents About This Guidance ........................................................................................................... 2 Implementing Long Term Investment Planning .................................................................... 4 Overview.............................................................................................................................. 5 About Long Term Investment Plans ..................................................................................... 7 What is a Long Term Investment Plan? ........................................................................ 7 Why do we need to develop LTIPs? .............................................................................. 8 Relevant rules, policy and legislation ............................................................................ 9 How is a Long Term Investment Plan evaluated? ....................................................... 11 Content .............................................................................................................................. 12 What does a good LTIP look like and what’s in it? ...................................................... 12 Context for thinking about investment details .............................................................. 14 Process.............................................................................................................................. 20 How is a Long Term Investment Plan developed? ...................................................... 20 How will Long Term Investment Plans be used? ......................................................... 23 How will Long Term Investment Plans be approved and refreshed? ........................... 23 What Support is Available? ................................................................................................ 25 Tools ........................................................................................................................... 25 Services ...................................................................................................................... 25 Useful links ................................................................................................................. 26 Glossary and Acronyms ..................................................................................................... 27 Annex 1 Self Check ........................................................................................................... 29 Annex 2 Tips for Success .................................................................................................. 30 Annex 3 Assessment Framework....................................................................................... 31 Annex 4 Summary LTIP Financial Statements ................................................................... 33

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 1

About This Guidance This guidance replaces Version 2 which was released in February 2016. The only substantive change in this version is shown in the table below. Version

What’s changed?

3

·

Forecast Financial Statements page 14 and annex 4 The Treasury needs to be able to consolidate the information in agency Long Term Investment Plans (LTIPs). It requires financial statements to be provided in a common format. The form selected Is that which is found in the ‘forecast financial report’ view in CFISnet. Annex 4 has been added. It provides the standard report formats and line numbers for particular forecast financial statements generated through CFISnet.

The guidance supports the LTIP requirements in Cabinet Office circular CO (15) 5 Investment Management and Asset Performance in the State Services which is available from the Cabinet Office website: www.dpmc.govt.nz/cabinet/circulars/co15/5 This guidance document: ·

is primarily intended for use by investment-intensive agencies. Other (non-investmentintensive) departments, Crown entities and Schedule 4A companies in scope of the circular should also find this guidance useful to support their medium term planning and meet their obligations under the circular

·

has been written by the Investment Management and Asset Performance team in the Treasury, with input from a working group comprising staff from the corporate centre and some of the affected agencies, and from other advisors, and

·

may evolve over time to incorporate lessons learned. The latest version will be available at: www.treasury.govt.nz/statesector/investmentmanagement/think/ltip

This guidance document complements other published guidance on the Investor Confidence Rating (ICR), as shown in the figure below. Figure 1: Suite of related Treasury ICR guidance publications

2 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

Questions and feedback This document is the main source of information on LTIPs. General enquiries about the information contained in this guidance, not addressed in this guidance or in supplementary material (below) can be directed to: [email protected] Any agency-specific questions should be addressed to the relevant Treasury Vote team. Any comments as to how we could improve this guidance can be directed to: [email protected]

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 3

Implementing Long Term Investment Planning The Treasury is implementing the long term investment planning requirements in a phased approach over 24 months from July 2015 to June 2017. More information on the implementation programme can be found on the Treasury website: www.treasury.govt.nz/statesector/investmentmanagement/investmentmanagement-co15-5plan.pdf The primary focus of the change effort is on investment-intensive agencies. The current list of investment-intensive agencies is on the Treasury website: www.treasury.govt.nz/statesector/investment-intensive-agencies The phased approach allows agencies and the corporate centre to adjust to the new expectations in an orderly manner. The Treasury will work closely with agencies to identify the specific information required to inform each agency’s LTIP. LTIPs need to be updated at least once every three years. LTIPs may need to be reviewed and refreshed within that cycle if circumstances change.

4 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

Overview Government policy on investment management and asset performance Owning the right investments, managing them well, funding them sustainably, and managing risks to the Crown balance sheet, are all critical ingredients to the ongoing provision of highquality and cost-effective public services that New Zealanders value. That means that the quality of investment management is vital to maintaining New Zealanders' living standards now and in the future and it explains why the Government is committed to ensuring investment management and asset performance practices remain fit-for-purpose. In April 2015, Cabinet agreed to adopt new policy settings and issue a new Cabinet Office circular CO (15) 5 Investment Management and Asset Performance in the State Services. The circular took effect on 1 July 2015. It sets out Cabinet’s expectations relating to the investment management system in the state services: the processes, rules, capabilities, information and behaviours that work together to bring discipline to the way investments are managed throughout their life cycles. The objectives of the investment management system are to: ·

optimise value generated from new and existing investments

·

increase the efficiency and effectiveness of the investment management system, and

·

enable investments to achieve their specific investment objectives.

Agencies in scope of the circular Agencies in scope of the circular are: ·

all departments (including departmental agencies) as defined by the Public Finance Act

·

the following types of Crown entities:

·

-

Crown agents

-

Autonomous Crown entities

-

Independent Crown entities

-

Crown entity companies, including Crown Research Institutes, and

companies listed on Schedule 4A of the Public Finance Act.

Which agencies in scope need to have Long Term Investment Plans? Investment-intensive agencies (defined in the circular and approved by Investment Ministers) must develop and maintain a LTIP that covers at least 10 years. The list of investment-intensive agencies in scope of the circular can be found at www.treasury.govt.nz/statesector/investment-intensive-agencies Other (non-investment-intensive) agencies in scope of the circular need to ensure their medium term plans (for example departmental Four-year plans) fulfil the same type of

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information requirements as a LTIP. That gives non-investment intensive agencies scope to right-size their planning to the scale and significance of their assets and investments.

Purpose of Long Term Investment Planning Government expects its investments to be managed as part of a portfolio of inter-related work, rather than solely on an individual agency or project basis. Taking a long term view in investment planning will enable investment-intensive agencies to make best use of limited resources, help stakeholders anticipate and respond to changing circumstances, and assist ministers to make informed investment decisions across the system to support the desired outcomes. This will collectively deliver on government priorities and ultimately benefit all New Zealanders.

Scope For the purposes of long term investment planning, investments are considered to be the commitment of capital or balance sheet resources to the delivery of government services with the expectation of receiving future benefits. As described in the circular; the focus of investments is on capital expenditure, asset performance and disposals, lease arrangements, and "as-a-service" type investments. “As-a-service” type investments refer to the growing diversity of (typically ICT) on-demand services available over the internet as opposed to being provided locally or on premises.

Do Long Term Investment Plans have to be published? There are no requirements for LTIPs to be published; however there is value in sharing LTIPs with other agencies. This helps promote a system view enabling agencies to identify opportunities to align and coordinate investments for mutual benefit. The Treasury will also be applying portfolio management methods and facilitating strategic discussion amongst Investment Ministers to help identify system opportunities. LTIPs can be requested by select committees and investment-intensive agencies should keep this in mind in considering if, how and when to publish their LTIP. Publication of any new LTIP in the lead up to Budget day will be subject to any Government embargoes issued. Whenever publication is being considered the requirements of the Official Information Act need to be taken into account.

Expected Impact of Long Term Investment Planning Across the investment management system, long term investment planning will promote: ·

the grounding of investments in organisational strategic thinking over a long term horizon

·

a portfolio-view of investments for effective ministerial decision making, and

·

improvements in the stewardship of Crown resources and value for New Zealanders.

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About Long Term Investment Plans What is a Long Term Investment Plan? Long term investment plans communicate a journey Long Term Investment Plans describe an agency’s investment journey: what it needs to invest to support delivery of the agency or sector long term goals. LTIPs are one output of an agency’s strategic thinking and planning processes. Other outputs may include strategic intentions, medium term plans (eg, Four-year plans), and annual plans. Further information on these outputs can be found in How the Long Term Investment Plan fits with other planning processes on page 22.

Strategic thinking and interventions inform investment planning The strategic thinking is where the long term vision and goals are established, resulting in documented strategic intentions (eg, in Statements of Intent). This process considers how different strategic interventions might be applied in order to deliver the agency’s strategic intentions. The types of interventions that can be applied include: ·

changing the type or mix of assets

·

influencing demand for services

·

changing regulatory or operational policy settings

·

influencing the capability of the supplier market

·

changing the way services are delivered or levels of service, and

·

changing the business model.

Once the strategic intentions and objectives are clear these can be documented in the LTIP, along with the rationale for interventions, the key decisions and trade-offs. The interplay between the thinking and planning activity and the planning outputs is shown in Figure 2 below.

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Figure 2: Think and Plan parts of the Investment Life Cycle

Why do we need to develop LTIPs? Effective investment planning and management ensures resources are allocated in a manner that clearly supports targeted outcomes and government priorities.

Purpose of the LTIP The investment life cycle is made up four phases: think, plan, do and review. Because the LTIP is developed through the thinking and planning phases of the cycle, it enables agencies to test their thinking and prioritise investments. Over time the LTIP helps, agencies implement investment decisions, manage their investments, and measure asset and investment performance. The LTIP not only details the investments required to support delivery of strategic intentions, but also conveys any key investment milestones such as key policy setting changes or possible significant events which may affect the agency or sector intentions.

Value of LTIP The LTIP is valuable to a range of stakeholders, including the authoring investment-intensive agency, other agencies, specific ministers, the corporate centre and the Government. For the investment-intensive agency and their responsible Minister The LTIP provides a vehicle for an agency to present an overarching organisational view of its investment needs and priorities, and an understanding of the expected impacts of those investments on agency outcomes over a long period of time, and the affordability of those investments. The long term view provides the agency sufficient opportunity to apply the relevant interventions and investments.

8 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

For other agencies When shared, LTIPs allow other agencies to understand their business imperatives and identify commonalities or opportunities to work together and potentially achieve efficiencies and improved outcomes. For the corporate centre The quality of agency LTIPs is an important factor in Investor Confidence Ratings for investment-intensive agencies. 1 LTIPs provide the context for information on individual investment intentions in the Government Project Portfolio database which in turn provides an input to the National Infrastructure Plan developed by the National Infrastructure Unit in the Treasury. LTIPs collectively provide a portfolio view of investment intentions. This enables Functional Leads to look for shared investment opportunities to minimise duplication and fragmentation across the system and gain economies of scale. It also enables the corporate centre to identify challenges or issues over the medium to long term (eg, deliverability and sustainability of the portfolio and the market’s ability to deliver). For Investment Ministers LTIPs provide the important contextual and pipeline information that Investment Ministers need to fulfil their investment system oversight and portfolio management roles. For Government LTIPs underpin long term fiscal planning and forecasting, providing a key reference for efficient balance sheet management.

Relevant rules, policy and legislation Requirements in the circular Cabinet’s expectations for LTIPs are set out in the circular at paragraphs 50 to 54. The policy imperative for LTIPs is that the effectiveness of the investment management system depends on high quality information on agency investment intentions and performance linked to outcomes. Such information informs all of government prioritisation processes, decisions on fiscal policy settings and the affordability of current policies and future service delivery strategies. In terms of investment management, the circular states that LTIPs must: ·

be integrated with, and provide the investment context for, agency short to medium term plans

·

provide a sound basis for regular investment performance reporting and for an agency’s annual report to Parliament

·

provide a reliable focus for the investment decisions and activities of the agency or sector

1

www.treasury.govt.nz/statesector/investmentmanagement/review/icr Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 9

·

enable integrated decision making and co-ordination of the resources of the agency and other parts of the State services

·

reveal sufficient details of proposed investments and disinvestments, as reported to the Treasury in the government project portfolio dataset, to enable Investment Ministers and the corporate centre to fulfil their respective roles

·

reveal the impact of investment intentions on the agency’s forecast financial statements, taking account of expected costs and funding sources such as asset disposals and the use of baseline and depreciation funding over the planning period, and

·

consider what capabilities will involve third party suppliers and provides an overview of how these supplier relationships will be managed.

In terms of asset performance, LTIPs must: ·

reveal the expected impact of investment intentions on future asset performance, in terms of meeting changes in demand, enabling level of service improvements, and renewing assets, and

·

reveal assets that are expected to be surplus to requirements, and whether such assets will be subject to formal Crown disposal processes.

Investment-intensive agencies or sectors must have a current LTIP that covers a period of at least 10 financial years. Such plans must be updated at least once every three years. Investment-intensive agencies or sectors must provide draft LTIPs to the corporate centre for review prior to final approval by the relevant chief executive or Board as appropriate. All other agencies must have current multiyear (at least 4 financial years) investment plans that provide an appropriate level of information and fulfil the same purposes as plans required of investment-intensive agencies or sectors. Legislation Three pieces of legislation are directly relevant to long term investment planning: ·

the Public Finance Act 1989, notably for the requirement to develop and publish strategic intentions

·

the State Sector Act 1988, notably in relation to departmental chief executive’s stewardship obligations, and

·

the Crown Entities Act 2004, notably for the requirement to develop and publish strategic intentions.

Specific investments must also meet standards required in any legislation relevant to that investment: eg, the Health and Safety in Employment Act 1992 or the Building Act 2004.

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The Treasury Investment Statement 2014 The Treasury Investment Statement 2014 contains several areas of focus directly related to long term investment planning, as follows: Governments need to be efficient and effective in the use of resources ·

·

ensure settings bring about more rigorous capital investment decision making and support asset management practice to improve alignment between investment and government’s long term priorities, and

Treasury Investment Statement

explore how capital could be recycled to meet changing demands and priorities without incurring unnecessary costs.

More systematic collection and use of information is necessary ·

develop a structured, systematic and robust mechanism for the collection of better information required to support more rigorous investment decision making and deliver on actions discussed in the Investment Statement 2014.

The Treasury Investment Statement 2014 alludes to capital sustainability. Capital sustainability is the ability of an agency to fund its capital intentions from existing resources and baselines for the foreseeable future (ie, without new funding that is not currently budgeted). LTIPs help investment-intensive agencies, the corporate centre, ministers and Parliament communicate and understand the long term capital sustainability prospects of each agency and the overall Crown balance sheet.

How is a Long Term Investment Plan evaluated? LTIPs are evaluated against the 10 criteria in paragraphs 50-51 of the circular. Each criterion is given equal weight. Corporate centre teams should be engaged throughout the development process to help ensure a robust plan is delivered, and to ensure no surprises during evaluation. This will also help the evaluation process proceed as quickly and smoothly as possible. The detailed evaluation methodology with explanations of what the assessors are looking for is outlined in Annex 3.

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Content What does a good LTIP look like and what’s in it? Exemplars The Treasury intends to publish exemplars from agency LTIPs as they become available at: http://www.treasury.govt.nz/statesector/investmentmanagement/think/ltip

Components of a good Long Term Investment Plan This guidance doesn’t prescribe a single approach to long term investment planning, or the structure of LTIPs. The approach and the form of the LTIP should be designed by the agency for the agency, to meet the requirements set out in the circular. Nevertheless, while there is flexibility in the structure of the LTIP and the way the investment journey is explained, the LTIP has to have certain attributes which are listed in the previous section. The requirements can be characterised as follows: ·

the fitness for purpose of the representations, and

·

the type of information to be provided in the LTIP.

Fitness for purpose requirements The integrity of the agency’s planning processes is highly influential on meeting the fitness for purpose characteristics of an LTIP. These processes affect the extent to which the LTIP is a reliable basis for agency, sector or all-of-government, planning, decision making and reporting processes. They also affect the level of alignment and integration between planning outputs, particularly medium and long term plans (eg, where LTIP milestones occur within the medium term planning horizon, these should be clearly identifiable within the medium term plan as well as the LTIP).

Information requirements Strategic context This part of the LTIP covers the strategic context within which the agency operates, including: ·

strategic intentions 2 and any other relevant agency or sector strategies and plans (eg, the agency’s customer and service delivery strategy)

·

how these are aligned with the objectives and priorities of the Government

·

the agency’s overall position in the investment lifecycle 3 and how the current and planned parts of the investment portfolio will progress through the lifecycle, and

·

long term investment objectives and criteria for prioritising investments.

2

Only summarised strategic intentions information is required in the LTIP; to understand the strategic drivers for investment and the outcomes the investments are supporting.

3

An agency’s portfolio of investments may be at varying stages within the investment lifecycle, from a planning or delivery phase, operational phase, divestment phase, or a mix of these.

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Details of individual investments (programmes and projects) The LTIP should set out the rationale for investments that directly support achieving the agency’s strategic intentions. The details on the planned investments represent the agency’s current thinking and are based on what the agency knows now and expects, at this point, along the investment journey. Importantly, the LTIP does not constitute a decision making tool for individual investments: each investment identified in the LTIP remains subject to any current decision making processes and financial approvals. The detail in LTIPs should include: ·

a description of the planned investments that clearly explain what is intended to be invested in, and the underlying rationale for those investments

·

anticipated benefits from the investments

·

the estimated costs of each investment, including the estimated direct operating implications (ie, a whole of life cost approach). Costs should be expressed in terms of both the expected range of costs and most likely estimated cost within the range, along with the rationale for those estimates. Agencies should reveal the basis for the estimates, and the degree of confidence around those numbers

·

any risks identified relating to each investment and to the investment plan as a whole, and how the agency will manage these within its risk management framework

·

the key milestones relating to each investment over the planning timeline (eg, when investments are expected to be scoped, business cases developed, and when ministerial or Cabinet decisions will need to occur), and

·

the potential impacts of each investment on the agency’s workforce, capability and service delivery models.

Portfolio-level details (investments and assets) Some aspects of the thinking and planning may also apply across a portfolio of investments or portfolio of assets. In these cases the agency should reveal the following information: ·

the risks, constraints, dependencies and assumptions the agency has applied during the investment planning and modelling, including procurement and market assumptions

·

the likely impacts of the investments on future asset performance or levels of service, and the implications of not making the investments

·

specialist capabilities the agency anticipates are needed in order to effectively scope, plan, deliver and manage each investment. This includes the current capabilities and those that may be procured in future

·

the extent to which the market maturity, capability and capacity can support the agency’s investment intentions, or help inform the agency’s investment intentions

·

the governance arrangements the agency will have in place over its investment planning and management and why it thinks these arrangements are appropriate to the scale and risk of the investment intentions

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 13

·

how the agency will manage change related to the investments across the organisation and the extent of deviation from the plan that the agency can tolerate before assumptions or investment intentions need to be retested

·

how the agency has evaluated options and trade-offs across the portfolio, how the preferred choices represent best value, and the extent to which the preferred choices are affordable, and

·

the funding intentions the agency considers at this point would be most appropriate and likely to deliver best value, along with the range of funding options considered.

Forecast financial statements In addition to providing details at the investment level, agencies will need to develop and present forecast financial statements that reveal the most likely impact of their investment plan over the entire planning horizon (currently 10 years). These statements need to be in the form found in the ‘forecast financial report’ view in CFISnet so that we can consolidate LTIP forecasts and compare them with other financial information already held by the Treasury. The required financial statements are: a statement of comprehensive income, statement of changes in taxpayers’ funds, statement of financial position, and statement of cash flows. Sample statements are shown in Annex 4. For DHBs, please refer to supplementary DHB guidance for detail on health specific financial statement requirements. Link to DHB LTIP guidance

Context for thinking about investment details Investment lifecycle An agency’s portfolio of investments will reflect the fact that assets and capabilities are at varying stages within the investment lifecycle. These may be characterised as being in a planning or delivery phase, operational phase, divestment phase, or a mix of these. LTIPs should clearly convey how the current and planned parts of the investment portfolio will progress through the investment lifecycle as well as the agency’s overall position in the lifecycle.

Dealing with uncertainty The level of uncertainty increases with time and may vary for different types of investments (eg, ICT investments feature a much shorter lifecycle and higher rate of change than property and as such will be subject to uncertainty sooner). The agency should apply the best assumptions it can, and clearly explain what assumptions it has applied. The first four to five years are expected to be a fairly defined journey, focusing on allocating and managing resources to deliver outputs, as set out in medium term planning such as department’s Four-year plans. Investments in this timeframe will be quite detailed to project level. After year five, it is accepted that investments will be subject to greater levels of uncertainty and this will be reflected in the investment planning. Investment detail may not be available

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to project level and planning will likely be based on programme level information. Details of investments are likely to reduce as assumptions increase. Figure 2: Recognising and treating uncertainty

Investment-intensive agencies should detail investments in their planning beyond the five year timeframe where certainty allows and information exists, such as for leasehold property which commonly includes fixed terms for 6, 12, 15 or even 18 years. Where detail lessens, investment-intensive agencies must explain why uncertainty exists beyond that point, and what basis and assumptions are being applied to planning from that point. Useful links Local Government in New Zealand is required to produce 30 year plans. The Wellington City Council’s Long Term Plan contains a useful example of how strategic planning assumptions could be laid out in the LTIP. Similarly the latest National Land Transport Programme of the NZ Transport Agency provides a useful example of to how depict variations from a plan (see Useful links).

Defining the investments During the strategic thinking process, stakeholders will need to begin considering the range of strategic interventions which will be best deployed to support the resulting strategic intentions. Long term investment planning stakeholders will take this thinking and will need to define investments which will provide best value to support the strategic intentions. The Treasury’s Better Business Cases system includes some potentially useful tools, such as the five-case model, which can help provide a framework for thinking about investment options, what levels of service are appropriate and most efficient, and what investments will be most aligned and provide the best value. Information on the Better Business Case process and tools can be found at: www.treasury.govt.nz/statesector/investmentmanagement/plan/bbc/guidance

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Materiality of investments It is acknowledged that investments, and business units owning each investment, will feature a variety of maturity levels, risk levels, and investment values. LTIPs need to present an integrated organisational view of planned investments as opposed to a simple aggregation of business unit requirements. While large projects, programmes or investments will be individually detailed in planning, there are often a range of projects which each represent only a comparatively small spend, yet collectively can amount to a relatively large investment and be important within a wider programme. If these smaller investments were individually detailed the plan would likely grow to an excessive size, require excessive time to develop, and lose focus against its purpose. These smaller investments must still be included; however they can be rolled up into appropriate programmes or groups. Example One mid-sized investment-intensive agency has a number of significant ICT programmes and individual investments, as well as various low risk investment intentions that, while individually immaterial, add up to a significant portion of the agency’s overall portfolio. A selection of these smaller investments all relate to ICT hardware upgrades. The individual transactions are worth between $20,000 and $3.3m, and they total $26m over the planning period. For LTIP purposes these smaller investments can be grouped together and presented as part of the overall programme as shown in Table 1. Table 1: Example of presenting significant investments Investment type

Breakdown of investments by financial year

Total capital investment ($millions)

Project A

...

55.0

Project B

...

18.0

...

73.0

ICT Hardware upgrades

...

26.0

Other programmes

...

13.0

...

37.0

...

110.0

Sub-total significant investments

Sub-total minor works Total capital investment over the planning period

Where lower value or risk investments are grouped together in this way, the agency must explain the rationale for aggregating information on individual investment intentions.

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Revealing risks, constraints, dependencies and assumptions Risks, constraints, dependencies and assumptions are naturally part of any planning process and combined with known facts, help form a future view of how the agency intends to deliver its strategic intentions. Investment-intensive agencies must clearly set out what risks, constraints, dependencies and assumptions have been applied to each investment. These may be grouped by type of investment as long as the risks, constraints, dependencies and assumptions used are consistent across that group of investments. Figure 3: Revealing key risks, constraints, dependencies and assumptions

Investment-intensive agencies can think about risks, constraints, dependencies and assumptions through a layered approach such as: ·

those that are standard and are applied across all long term investment planning, for example inflation rates (eg, standard planning and modelling assumptions can be found at www.treasury.govt.nz/statesector/investmentmanagement/think/ltip)

·

those that are common across sector investments (eg, demand from particular population groups)

·

those that impact all investments or assets at the agency’s level (eg, taking account of the agency’s ICR), and

·

those that relate to individual programmes, projects or investments (eg, risk profiles and levels of service).

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Cost modelling and affordability It should be clear how the agency has calculated the costs and affordability of the investments reflected in the LTIP. The agency may need to develop an investment model that allows it to quickly re-cost and recalculate the affordability of investments in response to potential changes in key factors such as demand, policy changes or fiscal constraints. It may be necessary to scale investment options or bring investments forward or back along the planning horizon. The model should be capable of quickly assessing the impact of such changes to maximise the planning flexibility of the agency with minimum rework. The modelling should show the agency’s longer-term sustainability prospects – can the agency fund its capital intentions from existing resources and baselines for the foreseeable future? When thinking about capital sustainability, investment-intensive agencies should take account of: ·

the robustness of their capital planning tools and process

·

the credibility of their capital fiscal forecasting

·

the affordability of their capital intentions

·

the condition of their asset portfolio, and

·

whether any other risks to their sustainability are evident.

The plan should reveal value of different investment options that can meet government priorities and strategic intentions even if these may not be affordable within baselines. Taken across all LTIPs, this will outline where future cost pressures are across the government portfolio and can be used to facilitate strategic conversations with Investment Ministers.

Impact of change and deviation from plan Change is a constant for any agency and the services needing to be delivered in the future have varying levels of uncertainty. While the primary focus of long term investment planning is to provide the intended investment journey supporting strategic intentions, it is accepted that the interventions and investments can change and planning must also include preparation for change. As part of planning for change, the LTIP should outline any key investment milestones relating to the planning and how those milestones have the potential to impact the achievement of strategic intentions. Also refer to the previous section on revealing risks, constraints, uncertainties and assumptions. For this to be meaningful, agencies would need to: ·

understand the investment milestones and explain the variability around these

·

summarise the anticipated impact that a change in direction or deviation from the LTIP may have on the strategic intentions and intended investments

·

identify when any decision would need to be made by and by whom, and

·

agree with their responsible Minister, the tolerance for deviation from the plan.

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In this way, some deviation from the plan is expected and accepted. The amount of acceptable deviation will be specific to each investment-intensive agency, where they are on the investment maturity lifecycle and the size and risks of investments planned. If the agency is facing high levels of uncertainty that might result in lot of deviation from their LTIP, one approach could be to complete more frequent refreshes of the LTIP. Investment-intensive agencies should assess the level of deviation they consider relevant and appropriate given the context of their planned investments, and seek agreement from the responsible Minister. The agreed level of deviation should be included in the planning by the time the corporate centre reviews the LTIP.

Sector or system-focused investments Some LTIPs may incorporate investments both for the agency and on behalf of a sector or the wider system (for example developing a common capability). In these circumstances, the LTIP should ensure an appropriate coverage between the agency, sector or system needs, clearly communicating how sector or system investment supports the agency long term objectives and goals, how the sector or system-oriented investments may impact the agency’s own investment journeys, what funding and procurement options are most appropriate for sector or system investments, and where benefits of sector or system investments are being “counted” and reported.

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Process How is a Long Term Investment Plan developed? Approach A good LTIP begins with the strategic thinking and long term vision of how the agency expects to be functioning and delivering at least 10 years out. It then maps out key milestones and steps on that journey, and what investments are needed during or between each of those steps. Planning processes should leverage off processes already in place in the agency. Known issues should be explored and may provide a focus for future improvement. The agency should also leverage off established industry good practices, such as those set out in the International Infrastructure Management Manual (IIMM). The LTIP will have some unique content; however a proportion of the LTIP will be content from current planning materials and these can be referenced in the LTIP as necessary to support the focus on investments. In this sense, the LTIP may be a collation of information currently contained across a range of documents, with some potentially new thinking and narrative to bring it together to form the investment management story. How coherent this story is will show the alignment of thinking across the agency. This guidance includes suggested procedural tips for success in Annex 2.

Governance The role of governance is to provide a decision making framework that is rightsized, logical, robust and repeatable to govern an agency’s investments. While an effective governance structure is important to developing a quality LTIP integrated with the agency’s other planning processes, the LTIP process should also have a robust governance structure that supports the ongoing management of investments throughout the investment lifecycle. It is expected that the governance of developing the LTIP will likely be quite different to the governance of ongoing investment and asset management.

Engaging with stakeholders Planning contributors A key component to meaningful and integrated investment planning is engaging the right people and areas of responsibility at the beginning of the planning process. This can be achieved by first identifying the planners and managers in all business areas and then those areas which support their activities. The planning process should involve people from: ·

senior leadership of the agency and sector

·

strategic and corporate planning

·

procurement and contract management

·

project, programme and portfolio management

·

infrastructure and asset management

·

information and technology management

·

financial and vote management

20 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

·

human resource or workforce management

·

performance management

·

property and facilities management, and

·

risk management and internal audit.

Key internal and external stakeholders Relevant external stakeholders include Ministers, the Treasury, key commercial service providers, and functional leads. One way to get these stakeholders on board with the planning process is to share an outline of the LTIP as soon as possible in the planning process. The potential range of LTIP stakeholders is shown in Table 2 below. Table 2: Range of LTIP stakeholders Role

Responsibility

Investment Ministers

Portfolio management of Government investments and guiding the investment system to achieve the best outcomes New Zealand.

Responsible Minister

The agency’s performance and alignment with Government priorities.

Corporate centre

Review of and advice on LTIPs prior to approval. The Treasury, the Department of Prime Minister and Cabinet, the State Services Commission and Functional Leaders collectively support, coordinate and provide oversight of the Government portfolio of investments.

Monitoring department

Involvement in evaluation of LTIPs, and monitoring the investmentintensive agency’s performance against its LTIP.

Board

Oversight of agency outcomes and performance.

Chief Executive

The long term stewardship of the agency, including oversight and approval of significant assets and investments. Responsible for ensuring the LTIP is aligned to government and responsible Minister’s priorities and approving the plan.

Chief Financial Officer

The long term sustainability of the agency through being responsible for the financial aspect of the LTIP.

Chief Information Officer

Oversight of the technology components of planned investments to ensure integrated planning.

Head of infrastructure or asset management

Oversight of the asset or infrastructure components of planned investments to ensure integrated planning.

Head of property or facilities

Oversight of the property or facilities components of planned investments to ensure integrated planning.

Head of procurement

Ensuring appropriate strategies and planning are in place prior to engaging the market and subsequent supplier management, to help get maximum value from procurement activity.

Head of service delivery (Personnel primarily responsible for delivery of services)

Ensuring investments are focussed on supporting efficient and effective delivery of services.

Sector Lead

Ensuring sector outcomes, strategy, policy and planning are integrated throughout the strategic thinking and planning process, including in long term investment planning.

(Personnel primarily responsible for relevant sector strategy, planning and delivery)

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 21

How the Long Term Investment Plan fits with other planning processes The LTIP should be one element of the agency’s overall planning, management and reporting activity. The LTIP should clearly align and integrate with agency or sector strategic processes such as: ·

strategic thinking and strategic intentions (eg, Statement of Intent)

·

medium term planning (eg, a department’s Four-year Plan)

·

annual business planning, and

·

functional planning (eg, asset management planning)

Good practice includes generating, checking and refreshing strategic intentions on a regular basis, as well as looking at how to achieve those intentions. Long term investment planning uses this thinking and these discussions to plan out the investments and interventions needed to meet the investment-intensive agency’s strategic intentions. Figure 4 illustrates how strategic intentions inform and are informed by a range of typical planning outputs. Planning outputs will be tailored to different audiences, purposes and planning horizons. They can include functional plans such as ICT, asset management, property or workforce, and Better Business Cases for programmes and projects relating to investments in the LTIP. Figure 4: Relationships between planning outputs

22 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

Government Project Portfolio data Investment-intensive agencies will continue to provide data to the Treasury on significant projects three times per year to keep the Government Project Portfolio system up to date. As investments identified in the LTIP develop into individual programmes and projects, detailed data needs to be submitted to the Treasury. Further information can be found at: www.treasury.govt.nz/statesector/investmentmanagement/think/governmentprojectportfolio

How will Long Term Investment Plans be used? Use by monitoring departments Monitoring departments of Crown entities will be involved in evaluating LTIPs and will use them to inform their monitoring activity. Monitoring departments may also embed their own requirements within or alongside long term investment planning as appropriate, and should do this in as integrated manner as possible to help streamline Crown entities’ strategic planning processes.

Use by the corporate centre The Treasury uses LTIPs to inform a variety of planning, oversight, processes and support, including: ·

for the Investor Confidence Rating (ICR), the Investment Panel, advice on Better Business Cases, the Government Project Portfolio, to support Investment Ministers and for portfolio management

·

to support development of the National Infrastructure Plan, and planning and management of infrastructure generally

·

to support analysis, reporting and support of sectors, agencies and entities, and

·

to inform balance sheet management, strategy and reporting including the Treasury Investment Statement.

Functional Leaders use LTIPs to inform their planning and analysis, and to focus support appropriately to agencies.

How will Long Term Investment Plans be approved and refreshed? Approving Long Term Investment Plans LTIPs are reviewed by the corporate centre and approved by chief executives or boards (as appropriate). The corporate centre will provide feedback and advice to help investment-intensive agencies hone final plans, and will use the view across LTIPs to keep Investment Ministers informed of portfolio progress and direction. Once the LTIP is approved by the relevant chief executive or board, the investment-intensive agencies will need to submit the final LTIP, along with the associated data relating to the investments, to the corporate centre. Relevant data should be submitted to the Treasury via the Government Project Portfolio dataset.

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 23

Refreshing Long Term Investment Plans The LTIP needs to be refreshed regularly to maintain its relevance as the foundation for the investment-intensive agency’s investment planning and management. This means both a planned and a responsive process are necessary. As set out in the circular, LTIPs must be updated at least once every three years. Some circumstances may warrant sooner update though, such as a ministerial decision on a key policy setting, or a significant change in the market or service delivery demand, or as ministerial priorities change. These types of circumstances may mean a responsive update is appropriate to ensure LTIPs remain relevant and meaningful. Investment-intensive agencies should embed appropriate processes within their corporate accountability structure to support planned or responsive updates in an integrated manner with other planning products such as strategic intentions and medium term plans. Planned updates Investment-intensive agencies should update their LTIP as part of strategic thinking and planning whereby strategic intentions are refreshed and used to inform long term investment planning, medium term planning and annual planning. This thinking and planning cycle is shown on page 8. Responsive updates LTIPs could be updated in response to things such as a policy decision, a significant demand or service delivery change, or simply a change in government or ministerial priority. Investment-intensive agencies should describe how they have embedded a responsive review process within their corporate accountability structure to efficiently respond if required.

24 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

What Support is Available? A range of tools and services are available to support investment-intensive agencies in their long term investment planning:

Tools Frequently Asked Questions and their answers are on Treasury’s website and is a useful guide to common queries and solutions: http://www.treasury.govt.nz/statesector/investmentmanagement/review/icr/faqs The Self Check provides investment-intensive agencies with a list of questions which they can use to test the robustness of their long term investment planning and development processes. This can be useful to test the draft plan before proceeding to finalise it. It forms the first annex of this guidance: Annex 1 Self Check. The Strategic Planning Communication Tool for Senior Leaders contains material, information and key messages tailored to several senior leadership roles. This package can be useful for planners to use during engagements with senior leaders involving strategic intentions, long term investment planning or medium term planning. The tool is available at: www.ssc.govt.nz/four-year-plans The Asset Management Maturity Assessment tool can be used, either as a selfassessment or by an independent assessor, to determine an agency’s maturity in the asset management lifecycle. The tool can be found at: www.treasury.govt.nz/statesector/investmentmanagement/review/assetmgmt An Exemplar LTIP has been produced and is available via: [email protected]

Services Treasury can facilitate investment planning workshops with leadership or planning teams in investment-intensive agencies, to explain how the various planning products can be integrated and how the senior leadership team can support and enable high quality LTIPs. Agencies can contact the Treasury at any time to discuss further services they might find valuable from the Treasury or the wider corporate centre, at: [email protected]

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 25

Useful links External Reporting Board: Financial Reporting Standards for prospective financial statements www.xrb.govt.nz/Site/Accounting_Standards/Current_Standards/Standards_for_Public_Sect or_PBEs/Stds_for_PS_PBEs_T1-4.aspx NZ Asset Management Support: Good practice manuals and guidelines www.nams.org.nz/pages/6/manuals---guidelines.htm NZ Society of Local Government Managers: Guide to Preparing a Long Term Plan www.solgm.org.nz/Folder?Action...Jigsaw%20IV%202015 NZ Transport Agency: 2015-18 National Land Transport Programme beta.nzta.govt.nz/planning-and-investment/2015-18-national-land-transportprogramme/about-the-2015-18-national-land-transport-programme/investment-levels/ Treasury: Investment Management information and guidance www.treasury.govt.nz/statesector/investmentmanagement Treasury: Long Term Investment Planning information and guidance www.treasury.govt.nz/statesector/investmentmanagement/think/ltip Treasury: Four Year Plan Guide for department’s medium term planning www.ssc.govt.nz/four-year-plans Victoria, Australia, Department of Treasury and Finance: Benefit management tracking tool www.dtf.vic.gov.au/Publications/Investment-planning-and-evaluationpublications/Investment-management/Benefit-management-tracking-tool Wellington City Council: Long Term Plan forecasting assumptions as an example wellington.govt.nz/~/media/your-council/plans-policies-and-bylaws/plans-andpolicies/longtermplan/2012-2022/files/ltp-20-assumptions.pdf

26 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

Glossary and Acronyms Capabilities in the context of Long Term Investment Plans refers to people (eg, skill or knowledge), procedural, system and information inputs required to effectively carry out thinking, planning, delivery and monitoring of investments. CFISNET refers to the Crown’s Financial Information System on the Net. Circular refers to the Cabinet Office circular CO (15) 5 Investment Management and Asset Performance in the State Services, effective from 1 July 2015 www.dpmc.govt.nz/cabinet/circulars Corporate centre refers collectively to The Treasury, the State Services Commission, the Department of Prime Minister and Cabinet, and the three Functional Leaders (of Property, Procurement and ICT). Four Year Plans or 4YPs provide a snap-shot in time of a department’s medium term planning. More information can be found at: www.ssc.govt.nz/four-year-plans Functional Leads refers to the three functional leaders of Property, Procurement and ICT. Further information can be found at: www.ssc.govt.nz/bps-functional-leadership More information on the Government Project Portfolio process can be found at: www.treasury.govt.nz/statesector/investmentmanagement/think/governmentprojectportfolio ICR means the Investor Confidence Rating described in the circular. More information can be found at: www.treasury.govt.nz/statesector/investmentmanagement/review/icr IIMM refers to the International Infrastructure Management Manual available from: www.nams.org.nz/ Investment-intensive agencies are those that manage large or service-critical portfolios, programmes or projects. The list of investment-intensive agencies is approved by Investment Ministers and can be found at: www.treasury.govt.nz/statesector/investment-intensiveagencies Investment Ministers means the group of ministers designated to give effect to the investment objectives of the system, and whose role is described in the circular and at: www.treasury.govt.nz/statesector/investmentmanagement/think/ministersgroup Investments are, for the purposes of long term investment planning, considered the commitment of capital or balance sheet resources to the delivery of government services with the expectation of receiving future benefits. LTIP(s) means Long Term Investment Plan(s) as described in the circular and Long Term Investment Planning refers to the process of generating long term investment plans. Medium term plans/planning refers to the integrated medium term (at least four years) view of planned interventions and resource management to deliver the strategic intentions. Referred to as Four Year Plans or 4YPs for departments. Responsible Minister means the minister responsible for the performance of the agency, more particularly as defined in the Public Finance Act 1989 or the Crown Entities Act 2004 as relevant.

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 27

State services (in the context of the circular) refers to: ·

all departments (including departmental agencies) as defined by the Public Finance Act

·

the following types of Crown entities:

·

-

Crown agents

-

Autonomous Crown entities

-

Independent Crown entities

-

Crown entity companies, including Crown Research Institutes, and

companies listed on Schedule 4A of the Public Finance Act.

Strategic planning refers to the process of converting strategic intentions into planned interventions, investments, resource allocations and actions. Strategic thinking refers to the process of strategic thinking and dialogue, resulting in the documented strategic intentions of the agency. Strategic intentions are required under the

28 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

Annex 1 Self Check These questions are intended to help investment-intensive agencies test their own processes and their draft LTIP. Agencies can pick questions which test areas they consider might be relevant. Discussing these questions with the agency’s corporate centre team can also be useful in informing the continuous improvement of this guidance and the lessons that can be shared with other agencies.

Planning process 1

Do we clearly understand the underlying drivers for our services?

2

Are we clear on where we want to be in 10 years? Is it clear how we propose to pursue the direction of travel and achieve our end point?

3

Do we understand our available investment options and the trade-offs involved with each, and have we shown why the chosen options are the most affordable? If the future is not affordable at any point, have we explained where, when, why and how?

4

What is our capability and capacity for investment planning? How effective is our planning process?

5

How are we considering and factoring sector or system objectives into planned investments?

6

Are we confident all relevant stakeholders are involved and will receive relevant, quality and timely communications during the process?

7

Are our information systems fit-for-purpose (ie, are they integrated across the agency, do they support planning, budgeting and accounting for resource allocations)?

Lessons learned 8

Did previously planned investments achieve their intended outcomes? What lessons have we learnt?

9

Was the plan effectively implemented? What evidence do we have?

10 Did the planning process lead to well-informed and effective investment decisions?

Draft LTIP 11 Are we clear on our strategic priorities and objectives? How do the planned investments link to the strategic priorities and government outcomes? 12 Have we described a clear and effective governance structure for investment planning, decision making and ongoing management? 13 Do our systems effectively allocate resources towards these prioritised investments? 14 Does our draft LTIP provide the right information (eg, investment priorities across the agency or sector aligned with strategic objectives and programme delivery in consideration of available resources) and support our capital sustainability? 15 What is our capability and capacity to deliver on the LTIP? Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 29

Annex 2 Tips for Success How long term investment planning is carried out is best designed by investment-intensive agencies to integrate with both their planning processes and any sector planning. There are some aspects of developing planning which commonly come up in lessons learned type exercises and can be applied to help ensure a quality process and product. Some suggestions for setting up to deliver a quality long term investment plan... 1

Designate a cross-functional team with documented terms of reference, defined roles and responsibilities, lines of authority, decision making points, risks/challenges identified, and performance expectations. You could formalise this information in a short project charter.

2

Involve your responsible Minister, sector and other stakeholders in the strategic thinking process early and provide enough time to undertake a thorough and high quality process.

3

Manage the development of your plan as a project. The project should include milestones, deliverables and any deadlines; tracking progress and managing risks to achieving the objectives and completing the plan according to the defined schedule.

4

Engage the corporate centre early in the development of your plan. This is best managed initially through your Vote Analyst or corporate centre team member, who will in turn engage with other corporate centre members as appropriate.

5

Identify and document key elements of your strategic objectives and priorities, linking them back to your current plans. Establish how investments have supported, and will continue to support, your achievement of these objectives and priorities. This process should be supported by relevant performance information.

6

Create an outline of the plan (ie, a draft structure) to inform development and provide focus to discussions across, and contributions from, your agency.

7

Discuss Long Term Investment Planning with other agencies, including but not limited to those in your sector. Identify ways to innovate and collaborate to deliver to your common strategic intentions and Government priorities.

8

Senior leadership should take clear ownership of the quality of strategic thinking and decision making that underpins the planning. Strategic planning should be integrated across long, medium and short term views, connecting the individual components of the organisation together to create a clear direction and prioritisation.

9

Ensure the plan is relevant by considering the range of audiences using the plan and ensuring the sections and information relevant to each audience is designed to be easily accessed and digested by that audience.

30 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

Annex 3 Assessment Framework Each criterion is given equal weight.

Fitness for purpose of representations

Quality focus

Criterion per CO(15)5

Focus of criterion

Circular requirement and basis for assessment

What assessors are looking for

51

Future focus

The LTIP covers a period of at least 10 financial years

This is a fundamental requirement for the LTIP. The assessors are looking for substantive evidence that the thinking and planning spans the whole period.

50.1

Strategic alignment

Be integrated with, and provide the investment context for, agency short to medium term plans

Assessors are looking for evidence of alignment of thinking and planning in various dimensions – across short, medium and long term plans; between business functions, and between major transformations and business as usual activity.. This is best achieved by revealing how the agency intends to migrate from its current state to the position it wants to be in 10 years’ time as opposed to extrapolating the short to medium term view into the future.

50.2

Specificity (over desired results)

Provide a sound basis for regular investment performance reporting and for an agency's annual report to Parliament

Assessors are looking for clarity over how the agency expects performance to change over time in relation to agreed performance targets including benefits. Ideally agencies would express expected investment performance in SMART terms for each year over the planning horizon. This criterion links to the agency’s investment management capability including its ability to provide key investment performance information over time.

50.3

Durability, reliability

Provide a reliable focus for the investment decisions and activities of the agency or sector

Key factors in this part of the assessment are the extent to which stakeholder or sector requirements and implications have been taken into account, and prioritised in the plan. Assessors are also looking to see how the agency is thinking about and managing uncertainty over time.

50.4

Clarity over the implications for others

Enable integrated decision making and co-ordination of the resources of the agency and other parts of the State services

Assessors are looking for information that demonstrates how the agency is thinking about its place in the wider sector and the potential impact of its plans on other agencies or the public. High quality information on investment intentions can help enhance planning and service delivery across agencies.

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 31

Type of information provided

Quality focus

Criterion per CO(15)5

Focus of criterion

Circular requirement and basis for assessment

What assessors are looking for

50.5

Visibility, Value

Reveal sufficient details of proposed investments and disinvestments, as reported to the Treasury in the government project portfolio dataset, to enable Investment Ministers and the corporate centre to fulfil their respective roles

Assessors are looking for information on particular investment intentions (typically projects or programmes) that enable the agency to deliver on its long term objectives in the plan. The degree of specificity and therefore confidence in financial and nonfinancial impacts of proposed investment scenarios will vary with time. The plan needs to reveal the overall effects under different scenarios, with a central view revealed in the financial analysis (50.6).

50.6

Affordability

Reveal the impact of investment intentions on the agency's forecast financial statements, taking account of expected costs and funding sources such as asset disposals and the use of baseline and depreciation funding over the planning period

Assessors are looking for a full set of pro forma financial statements across the planning horizon, with key assumptions. The financial statements are expected to show the impact of planning decisions right across the ten year timeline. A flat line outer year profile can indicate a lack of careful consideration of requirements beyond the medium term. The plan needs to reveal the financial impact of capital efficiency programmes or changes in infrastructure (eg, as a result of procuring AaS type services) over time. Agencies need to provide for inflation (changes in input prices over time), as well as changes in demand and productivity.

50.7

Procurement choices

Consider what capabilities will involve third party suppliers and provides an overview of how these supplier relationships will be managed

Assessors are looking for evidence that the agency has considered different procurement options for the delivery of services, as well as the financial, assetperformance and supplier-related implications of such choices. This involves considering the effectiveness of existing or potential future contracts, and the potential to manage demand or shape the supplier market.

50.8

Asset (vs. service performance)

Reveal the expected impact of investment intentions on future asset performance, in terms of meeting changes in demand, enabling level of service improvements, and renewing assets.

Assessors are looking for information on what's driving performance of its main assets or asset portfolios over both the whole asset life cycle and the planning period. Assessors are looking for information on how the agency intends to meet its target levels of asset performance. A useful approach is to use scenarios to assess the potential impacts of different spending programmes on target levels of performance (eg, asset capacity, condition, and fitness for purpose).

50.9

Capital efficiency

Reveal assets that are expected to be surplus to requirements, and whether such assets will be subject to formal Crown disposal processes

Assessors are looking for the agency's approach to optimising or rationalising assets over time to ensure the right amount of capital is employed relative to required customer levels of service, and measurable impacts of the agency’s approach.

32 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

Annex 4 Summary LTIP Financial Statements Financial statements provided in agency LTIPs should cover each year of the planning horizon and take the following form, consistent with the ‘forecast financial report’ view in CFISnet.

Statement of Forecast Comprehensive Income

Line

20

Crow n

30

Department(s)

40

Other revenue

50

Gains

60

Interest

70

Total Income

90

Personnel

100

Operating

110

Depreciation and amortisation

120

Capital charge

130

Finance costs

140

Other

150

Total Expenses

160

Net Surplus / (Deficit)

170

Other comprehensive income

180

Total Comprehensive Income

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 33

Statement of Forecast changes in Taxpayers Funds

Line

20

General funds

30

Revaluation reserve

40

Other reserves

42

Taxpayers' Funds Opening Balance

70

Comprehensive income for the period

80

Repayment of surplus

90

Capital contribution

100

Capital w ithdraw al

110

Other

120

Total Changes in Taxpayers’ Funds

140

General funds

150

Revaluation reserve

160

Other reserves

162

Taxpayers' Funds Closing Balance

34 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016

Forecast Statement of Financial Position

Line

30

Cash and cash equivalents

40

Debtors and other receivables

50

Prepayments

60

Inventories

70

Other current assets

80

Total Current Assets

100

Property, plant and equipment

110

Intangible assets

120

Other non-current assets

130

Total Non-current Assets

140

Total Assets

170

Creditors and other payables

180

Repayment of surplus

190

Employee entitlements

200

Other current liabilities

210

Total Current Liabilities

230

Provisions

240

Employee entitlements

250

Other non-current liabilities

260

Total Non-current Liabilities

270

Total Liabilities

290

General funds

300

Revaluation reserve

310

Other reserves

320

Total Taxpayers' Funds

330

Total Liabilities and Taxpayers' Funds

Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016 | 35

Statement of Forecast Cash Flows

Line

20

Crow n

30

Department(s)

40

Other

50

Interest

60

Suppliers

70

Employees

80

Capital charge

90

Goods and services tax (net)

100

Other operating activities

110

Net Cash from Operating Activities

130

Sale of property, plant and equipment

140

Sale of intangible assets

150

Sale of other non-current assets

160

Property, plant and equipment

170

Intangible assets

180

Other non-current assets

190

Net Cash from Investing Activities

210

Capital contribution

220

Other financing cash inflow s

230

Repayment of surplus

240

Capital w ithdraw al

250

Other financing cash outflow s

260

Net Cash from Financing Activities

270

Net Increase / (Decrease) in Cash

280

Cash at the beginning of the year

290

Cash at the end of the year

36 | Guidance for Developing and Maintaining a Long Term Investment Plan: October 2016