Parliamentary Counsel Office Te Tari Tohutohu Paremata

A.9 Report of the Parliamentary Counsel Office Te Tari Tohutohu Paremata for the year ended 30 June 2013 PARLIAMENTARY COUNSEL OFFICE TE TARI TOHUTOHU PAREMATA

A.9 Report of the Parliamentary Counsel Office Te Tari Tohutohu Paremata for the year ended 30 June 2013 Presented to the House of Representatives under section 44(1) of the Public Finance Act 1989 October 2013 Wellington, New Zealand

Text printed on 100gsm 9lives Offset: Forest Stewardship Council 100% recycled, totally chlorine free. Cover printed on 250gsm Media Satin: Forest Stewardship Council mixed credit, elemental chlorine free. Annual Report of the Parliamentary Counsel Office Te Tari Tohutohu Pāremata Wellington, 2013 ISSN 1176-3914 (Print) ISSN 1177 6625 (Online) This report is available on the internet at the Parliamentary Counsel Office website: www.pco.parliament.govt.nz Crown copyright. This copyright work is licensed under the 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. To view a copy of this licence, visit http://creativecommons.org/licenses/by/3.0/nz/. 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. 2 Parliamentary Counsel Office Annual Report 2012/13...

CONTENTS Chief Parliamentary Counsel s Overview 5 Highlights of 2012/13 6 Strategic Objectives 8 Strategic Objective 1 High Quality Legislative Drafting Services 8 Strategic Objective 2 Ready Access to New Zealand Legislation 15 Organisational health and capability 18 Financial Statements 21 Introduction to the Financial Statements 21 Statement of Responsibility 21 Statement of Comprehensive Income 22 Statement of Changes in Taxpayers Funds 22 Statement of Financial Position 23 Statement of Cash Flows 24 Reconciliation of Net Surplus to Net Cash Flows from Operating Activities 25 Statement of Commitments 26 Statement of Contingent Assets and Liabilities 26 Statement of Unappropriated Expenses and Capital Expenditure 26 Statement of Departmental Expenses and Capital Expenditure against Appropriations 27 Transfers under Section 26A of the Public Finance Act 1989 27 Notes to the Financial Statements 28 Statement of Service Performance 42 Independent Auditor s Report 52 Appendices 56 Legislative framework 56 Governance arrangements and structure in the PCO 57... Parliamentary Counsel Office Annual Report 2012/13 3

The Attorney General I am pleased to present to you the Report of the Parliamentary Counsel Office for the year ended 30 June 2013. David Noble Chief Parliamentary Counsel 16 September 2013 4 Parliamentary Counsel Office Annual Report 2012/13...

CHIEF PARLIAMENTARY COUNSEL S OVERVIEW This is the Annual Report of the Parliamentary Counsel Office (PCO) for the 2012/13 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 Intent 2 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 access to the laws of New Zealand. The Statement of Intent for 2012 17 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 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 Regulations 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 The last financial year has seen an increase in Treaty settlement Bills being drafted and enacted (eight enacted, excluding amendment Bills, and three more introduced). Some of these Bills are complex and lengthy (Te Tau Ihu Claims Settlement Bill is approximately 480 pages long). The current legislative environment 1 Preparing the Annual Report: Technical and Process Guide for Departments (June 2013) www.treasury.govt. nz/publications/guidance/reporting/annualreports. 2 Statement of Intent Parliamentary Counsel Office for the period 1 July 2012 to 30 June 2017 www.pco. parliament.govt.nz/soi2012-2017/. 3 Justice Sector Information Supporting the Estimates 2012/13 www.treasury.govt.nz/budget/2012/ise/v7. 4 Page 9. 5 This is further explained in the Statement of Intent Parliamentary Counsel Office for the period 1 July 2012 to 30 June 2017, page 9.... Parliamentary Counsel Office Annual Report 2012/13 5

CHIEF PARLIAMENTARY COUNSEL S OVERVIEW continues to require Bills to be drafted quickly, often in tandem with the policy development process. This has resulted in some cases in significant amendments being required as Bills progress through Parliament. This developing trend is reflected in the increase in the number of Supplementary Order Papers (SOPs) drafted (some of which are substantial) and the need to allocate increased drafting resources to cope with amendments at the select committee and committee of the whole House stages. The speed at which Bills are drafted to meet introduction time lines has also had a measurable impact upon the ability of the PCO to meet its minimum peer review and proofreading standards (refer to pages 42 45). In the access to legislation area, the key focus has been on completing a tender process to select providers for the hosting, on-going support, and further development of the New Zealand Legislation (NZL) system, a core asset for the PCO. The other area of emphasis has been the completion of the officialisation 6 programme. Highlights of 2012/13 This year has been one of significant achievement and delivery for the PCO, and coupled with further changes to the support arrangements for the NZL system. 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 51 Government Bills and 414 Statutory Regulations in the 2012 calendar year. The Legislation Act 2012 was passed in December 2012 and replaced the PCO s former governing statute (Statutes Drafting and Compilation Act 1920) and associated legislation (Acts and Regulations Publication Act 1989 and Regulations (Disallowance) Act 1989). It modernises and improves the law regarding the publication of legislation and the PCO. The PCO s Pacific Island desk provided legislative drafting assistance to the Cook Islands, Niue, and Tokelau. Use of the NZL website 7 continued to increase over the year. New functionality has been implemented within the NZL system. A set of improvements to the NZL website was released. 6 Officialisation refers to the steps necessary to make each principal enactment in the database of legislation on the NZL website an accurate and authoritative version of compiled legislation. Auditing work is now underway. See page 16. 7 The New Zealand Legislation website, at www.legislation.govt.nz. 6 Parliamentary Counsel Office Annual Report 2012/13...

CHIEF PARLIAMENTARY COUNSEL S OVERVIEW The officialisation programme of the legislation displayed on the NZL website back to 1931 was completed. A tender process to select providers for the hosting, on-going support, and development of the NZL system was completed using the all-of-government procurement process.... Parliamentary Counsel Office Annual Report 2012/13 7

S T R A T E G I C O B J E C T I V E S 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. Drafting of 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 regulations). 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 or removed, and delays in making policy decisions can delay the drafting of Bills. The categories in the annual legislative programme are: Category Description 1 Bills that must be passed or introduced as a matter of law in the 2012 calendar year 2 Bills that must be passed in the 2012 calendar year 3 Bills to be passed if possible in the 2012 calendar year 4 Bills to proceed to a select committee in the 2012 calendar year 5 Bills for which instructions are to be provided to the PCO in the 2012 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 on page 42). 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: 8 Parliamentary Counsel Office Annual Report 2012/13...

S T R A T E G I C O B J E C T I V E S 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 and time consuming. Parliamentary Counsel also draft all amendments to Bills required by Ministers at the committee of the whole House stage. Extensive changes are possible at this stage of the legislative process to take account of 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. The PCO is currently assisting the Law Commission with a Trustees Bill and a rewrite of the Crown Proceedings Act. Legislation Advisory Committee The Chief Parliamentary Counsel is a member of the Legislation Advisory Committee (LAC) established by the Minister of Justice in 1986. The LAC advises the Government on good legislative practice and scrutinises the legislative work of the Government, making submissions to select committees where appropriate. Parliamentary Counsel have been heavily involved in assisting the LAC to achieve its outcomes this year. In July 2012, the PCO, with the LAC and the Office of the Clerk of the House of Representatives, provided a successful joint seminar to 180 policy and legal officials on The Making of Quality Legislation.... Parliamentary Counsel Office Annual Report 2012/13 9

S T R A T E G I C O B J E C T I V E S Drafting of Statutory Regulations In the calendar year 2012, 414 Statutory Regulations were drafted. In general, Acts of Parliament contain the main policy components of a legislative regime while Statutory Regulations 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 Statutory Regulations 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. Unlike the drafting of Bills, drafting Statutory Regulations and other legislative instruments can give rise to complex legal questions about whether there is power to make the regulations or instrument under the relevant Act. Parliamentary Counsel are required to certify whether proposed Statutory Regulations 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 Regulations (Disallowance) Act 1989 (since replaced by Part 3 of the Legislation Act 2012). Drafting for the judicial arm of government The PCO also provides drafting assistance to 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. This work is performed in addition to the PCO s core work on the Government legislation programme. It can be demanding, detailed, and time-consuming work dependent upon the scale and speed of change the Rules Committee contemplates. 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. Drafting resources The guidance material available to PCO staff involved in drafting legislation includes the PCO Style Manual and the PCO Drafting Manual. The Style Manual was substantially revised to make it easier to use in the 2012/13 financial year. 10 Parliamentary Counsel Office Annual Report 2012/13...

S T R A T E G I C O B J E C T I V E S Assistance to departments and the Government Legal Services 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. The PCO gave a joint presentation with the Office of the Clerk for new instructors on 7 March 2013 attended by over 200 people. 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 has also participated in the development of the Government Legal Services project. Contributing internationally The PCO has established a Pacific Island desk to provide legislative drafting assistance to Pacific Island nations. The desk has been established for the three years from 2011/12 to 2013/14 with the assistance of funding from the New Zealand Aid Programme managed by the Ministry of Foreign Affairs and Trade. The assistance is focused on the Cook Islands, Niue, and Tokelau, being the three other nations within the Realm of New Zealand. Assistance will be extended to other Pacific Island nations if resources permit. The assistance being provided includes drafting legislation for nations in order to increase their drafting capacity, preparing Guides to Preparing Instructions for the Drafting of Legislation, preparing sets of Legislative Drafting Directives, creating electronic drafting templates for Bills and for regulations, and training and mentoring on-island officials. The PCO has also been proactively 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. This includes the Pacific Islands Forum Secretariat, the Pacific Islands Law Officers Network, the Commonwealth Secretariat, and various divisions of the Australian Attorney-General s Department.... Parliamentary Counsel Office Annual Report 2012/13 11

S T R A T E G I C O B J E C T I V E S 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 technology to support legislative drafting and publishing. The PCO has strengthened its involvement with the Commonwealth Association of Legislative Counsel (CALC). Fiona Leonard, Acting Deputy Chief Parliamentary Counsel, was re-elected as CALC Secretary. David Noble, Chief Parliamentary Counsel and a CALC Council member for Australasia and the Pacific, represented the association at a number of meetings with the Commonwealth Secretariat. Richard Wallace, Acting Drafting Team Manager, attended the Pacific Islands Law Officers Network (PILON) annual meeting in Papua New Guinea. PILON is a network of senior public law officers from Pacific Island countries, including Australia and New Zealand, which focuses on common legal issues within the Pacific region. Quantity of legislation The following graphs compare the numbers of Government Bills drafted and published and Statutory Regulations made and published, plus the numbers of SOPs drafted and published, in the financial years ending 30 June 2009 and 30 June 2010, and the calendar years from 2010 to 2012. Number of Government Bills drafted and published 81 83 66 67 51................................... 2009 2010 2010 2011 2012 year to year to calendar calendar calendar 30 June 30 June year year year 12 Parliamentary Counsel Office Annual Report 2012/13...

S T R A T E G I C O B J E C T I V E S Number of Statutory Regulations made and published 451 491 451 418 414................................... 2009 2010 2010 2011 2012 year to year to calendar calendar calendar 30 June 30 June year year year Number of Government Bills and SOPs drafted and published and Statutory Regulations made and published 575 556 668 603 633................................... 2009 2010 2010 2011 2012 year to year to calendar calendar calendar 30 June 30 June year year year The current legislative environment requires Bills to be drafted quickly, often in tandem with the policy development process. This has resulted in significant amendments being required as Bills are progressed through Parliament and is reflected in the increase in the number of SOPs drafted.... Parliamentary Counsel Office Annual Report 2012/13 13

S T R A T E G I C O B J E C T I V E S 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). Callaghan Innovation Bill Climate Change Response (Emissions Trading and Other Matters) Amendment Bill Criminal Procedure Amendment Bill Crown Minerals Amendment Bill Education Amendment Bill Family Court Proceedings Reform Bill Government Communications Security Bureau and Related Legislation Amendment Bill Housing Accords and Special Housing Areas Bill Land Transport Management Amendment Bill Local Electoral Amendment Bill (No 2) Minimum Wage (Starting-out Wage) Amendment Bill National War Memorial Park (Pukeahu) Empowering Bill New Zealand Public Health and Disability Amendment Bill (No 2) Psychoactive Substances Bill Public Safety (Public Protection Orders) Bill Resource Management Reform Bill Social Housing Reform (Housing Restructuring and Tenancy Matters Amendment) Bill Social Security (Benefit Categories and Work Focus) Amendment Bill State Sector Amendment Bill Te Tau Ihu Claims Settlement Bill Telecommunications (Interception Capability and Security) Bill Victims Orders Against Violent Offenders Bill 14 Parliamentary Counsel Office Annual Report 2012/13...

S T R A T E G I C O B J E C T I V E S 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 readily accessible to the public in a timely manner and in an accurate and authoritative form. New Zealand Legislation system The New Zealand Legislation (NZL) system is a complete drafting, publishing, and reprinting system. The system provides public access to up-to-date official legislation in printed form, and in electronic form on the NZL website at www.legislation.govt.nz. Over the last year the PCO has continued to make progress in achieving its strategic goal of simplifying the NZL system by reducing its technical complexity, implementing all-of-government initiatives, and improving the usability of the system. New functionality has been implemented that is of significant business value, and the migration to all-of-government Infrastructure-as-a-Service has significantly increased the performance of the system. In the 2012/13 year, a tender process to select providers for the hosting, on-going support, and further development of the NZL system was completed. Previously, there had been a single external service provider for all three areas. As a result of the tender, a number of panel contracts for services have been established. The PCO is now using all-of-government ICT shared services for key elements of its information technology needs, and has brought other day-to-day operations in house. The NZL website Public use of the NZL website continues to increase strongly following the 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. Average monthly unique visitors to the NZL website 140,000 120,000 100,000 80,000 60,000 40,000 20,000 00 2009 2010 2011 2012 2013 As at 30 June... Parliamentary Counsel Office Annual Report 2012/13 15

S T R A T E G I C O B J E C T I V E S The PCO released a set of further improvements to the NZL website in February 2013, which built on changes released in the previous financial year. Improvements included: the ability to tag sections of legislation, and download tagged sections as Microsoft Word documents or PDFs reorganisation of the website document collections to improve access to amendment legislation enhancements to the custom web feed function, which alerts users to changes to legislation. Publishing The PCO publishes: new Acts new regulations Bills (both new Bills introduced to the House and subsequent versions of Bills) SOPs reprints of Acts and regulations (versions of Acts and regulations that incorporate all amendments made to them as at the date of publication). Through the NZL system, these documents are published online in HTML and PDF formats to the NZL website. They are also published in hard copy, and made available at specified bookshops and to subscribers. During the reporting period, the PCO also set the 2012/13 reprints programme. A total of 19 titles (17 Acts and two sets of Statutory Regulations) were scheduled for printing in hard copy. Over 730 Acts and Statutory Regulations are now subject to amendment as of 1 July 2013, which affected all of the reprints scheduled to be published in 2012/13. Those 19 titles will now be published in the 2013/14 financial year to include those 1 July amendments. The Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force as at 1 January 2013 were published in April 2013. Officialisation Officialisation of the NZL website content continued to be an important focus for the PCO. Officialisation of 360 items of legislation from 1971 to 1931 (307 Acts, including two Imperial Acts, and 53 Statutory Regulations) was completed, comprising a total of 14,552 pages. This means that, as at 30 June 2013, the officialisation programme 16 Parliamentary Counsel Office Annual Report 2012/13...

S T R A T E G I C O B J E C T I V E S has been completed, as planned, in the 2012/13 financial year. The PCO is now reviewing the audits of those files to assess the legal effect (if any) of any errors in those files, with a view to declaring the database an official source of legislation under the Legislation Act 2012. The results of auditing carried out to date have given a high level of confidence in the officialised database. Progress of officialisation 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 00 30 June 2009 30 June 2010 30 June 2011 30 June 2012 30 June 2013 Actual page numbers completed Page numbers required to meet 30/06/2013 deadline... Parliamentary Counsel Office Annual Report 2012/13 17

S T R A T E G I C O B J E C T I V E S Organisational health and capability Progress towards achieving the key deliverables identified in the Statement of Intent for 1 July 2012 to 30 June 2017 was made during the 2012/13 year as follows: Recruitment and retention of skilled and experienced staff Staff turnover in the past four years compared with the maximum target turnover rates set in the 2012/17 SOI was as follows: 2012/13 Maximum target turnover 2012/13 Actual 2011/12 Actual 2010/11 Actual 2009/10 Actual Parliamentary Counsel and Associate Parliamentary Counsel 7% 19%* 6% 0% 0% Technical staff 12% 0% 3% 0% 10% Corporate staff 10% 6% 12% 17% 10% * Of the six Parliamentary Counsel who left the PCO in the 2012/13 year, three retired, one resigned to relocate overseas, and two resigned to pursue other opportunities. The PCO does not regard the turnover rate for 2012/13 as an issue. Training (enhanced leadership and staff capability) Management continued to develop their leadership skills by participating in management seminars and conferences. Over the year, third tier managers have progressively been attending the Leadership in Practice programme provided by the Leadership Development Centre. Training and development for all PCO staff continued in accordance with individual annual training plans. Three staff acted in senior roles in the 2012/13 year and gained higher level management skills. In addition, a number of staff have undertaken secondments outside the PCO to gain experience and to develop additional skills. A number of managers also had mentors outside of the PCO. Staff engagement In December 2012, the PCO undertook a Kenexa staff engagement survey. The results show that the PCO is one of the leading organisations within the state sector in terms of employee engagement and performance enablement. The PCO s Senior Management Team continues to investigate further opportunities to increase staff engagement. Performance management The performance management system is fully operational with managers and staff agreeing on annual objectives at the beginning of the cycle year, reviewing progress throughout the year, and summarising achievements at the end of the year. 18 Parliamentary Counsel Office Annual Report 2012/13...

S T R A T E G I C O B J E C T I V E S HR processes and administrative systems HR policies are reviewed and made available to staff via the PCO intranet to ensure up-to-date policies and procedures are maintained. Following the passing of the Legislation Act 2012, the PCO has established an appointment review procedure, and all staff are now on individual employment agreements. The PCO s flexible work arrangements have been utilised by staff. 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 apply EEO principles including by ensuring that remuneration adjustments are equitable. As at 30 June 2013, the staff gender breakdown is: Male Female Total Total staff 37 46 83 Parliamentary Counsel 14 17 31 Other Drafting Services staff 4 4 8 Access to Legislation staff 16 11 27 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 five fixed-term staff and one staff member currently on secondment to another department. Performance Improvement Framework The PCO is currently carrying out a Performance Improvement Framework (PIF) selfreview and intends to undergo a formal PIF review in the 2013/14 year. Organisational structure See page 58 for the PCO s organisational structure. Risk management The PCO maintains a risk register that is reviewed throughout the year. 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.... Parliamentary Counsel Office Annual Report 2012/13 19

S T R A T E G I C O B J E C T I V E S Audit and Risk Committee The PCO s Audit and Risk Committee met four times during the 2012/13 year. The committee consists of two external independent members (including the chair) and two internal members. 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. 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. Disaster recovery The PCO is in the process of replacing its disaster recovery plan for the NZL system, which will be fully operational 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. Government procurement reform The PCO has signed up to use the all-of-government contract (arising from the Ministry of Business, Innovation and Employment government procurement reform programme) for travel management services. 20 Parliamentary Counsel Office Annual Report 2012/13...

FINANCIAL STATEMENTS FINANCIAL STATEMENTS OF THE PARLIAMENTARY COUNSEL OFFICE For the year ended 30 June 2013 Introduction to the Financial Statements The Parliamentary Counsel Office (PCO) is responsible for discharging the functions set out in the Statutes Drafting and Compilation Act 1920, and certain functions set out in the Acts and Regulations Publication Act 1989. The PCO is funded by appropriation of money by Parliament. The financial statements of the PCO for the year ended 30 June 2013, including the Statement of Service Performance, now follow. Statement of Responsibility For the year ended 30 June 2013 In terms of the Public Finance Act 1989, I, David Noble, Chief Parliamentary Counsel, accept responsibility for the preparation of the financial statements and Statement of Service Performance, and for the judgements made 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. In my opinion, these financial statements and Statement of Service Performance fairly reflect the financial position and operations of the PCO for the year ended 30 June 2013. Countersigned by: David Noble Noel Lee Chief Parliamentary Counsel Corporate Services Manager 16 September 2013 Parliamentary Counsel Office 16 September 2013... Parliamentary Counsel Office Annual Report 2012/13 21

STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2013 30/06/12 30/06/13 30/06/13 30/06/13 Actual Actual Main Supp. Estimates Estimates $000 Notes $000 $000 $000 Income 20,532 Crown 20,509 20,509 20,509 590 Other 2 226 167 167 21,122 Total income 20,735 20,676 20,676 Expenses 8,847 Personnel 3 8,643 9,704 9,029 5,305 Operating 4 6,647 5,865 7,227 3,787 Depreciation and amortisation 5 3,176 3,878 3,213 1,207 Capital charge 6 1,207 1,229 1,207 19,146 Total expenses 19,673 20,676 20,676 1,976 Net surplus 1,062 0 0 1,976 Total comprehensive income 1,062 0 0 STATEMENT OF CHANGES IN TAXPAYERS FUNDS For the year ended 30 June 2013 30/06/12 30/06/13 30/06/13 30/06/13 Actual Actual Main Supp. Estimates Estimates $000 $000 $000 $000 15,091 Balance as at 1 July 15,091 15,091 15,091 1,976 Total comprehensive income 1,062 0 0 Provision for repayment of (1,976) surplus to the Crown (1,062) 0 0 15,091 Balance as at 30 June 15,091 15,091 15,091 Note: The accompanying Notes to the Financial Statements (pages 28 41) form part of these financial statements. For information on major variances against budget, refer to Note 18. 22 Parliamentary Counsel Office Annual Report 2012/13...

STATEMENT OF FINANCIAL POSITION As at 30 June 2013 30/06/12 30/06/13 30/06/13 30/06/13 Main Supp. Actual Actual Estimates Estimates $000 Notes $000 $000 $000 Taxpayers funds 15,091 Taxpayers funds 15,091 15,091 15,091 15,091 Total taxpayers funds 15,091 15,091 15,091 Represented by: Current assets 9,634 Cash and cash equivalents 5,887 10,486 8,527 183 Debtors and other receivables 7 8 40 0 286 Prepayments 293 150 285 0 Debtor Crown 4,288 0 0 10,103 Total current assets 10,476 10,676 8,812 Non-current assets 411 Property, plant, and equipment 8 260 419 506 8,655 Intangible assets 9 7,732 5,199 7,697 9,066 Total non-current assets 7,992 5,618 8,203 19,169 TOTAL ASSETS 18,468 16,294 17,015 Current liabilities 1,248 Creditors and other payables 10 1,576 417 1,070 1,976 Provision for payment of net surplus 1,062 0 0 650 Provision for employee entitlements 11 626 667 650 3,874 Total current liabilities 3,264 1,084 1,720 Non-current liabilities 204 Provision for employee entitlements 11 113 119 204 4,078 TOTAL LIABILITIES 3,377 1,203 1,924 15,091 Net assets 15,091 15,091 15,091 Note: The accompanying Notes to the Financial Statements (pages 28 41) form part of these financial statements. For information on major variances against budget, refer to Note 18.... Parliamentary Counsel Office Annual Report 2012/13 23

STATEMENT OF CASH FLOWS For the year ended 30 June 2013 30/06/12 30/06/13 30/06/13 30/06/13 Actual Actual Main Supp. Estimates Estimates $000 Notes $000 $000 $000 Cash flows from operating activities Cash was provided from: Supply of outputs 20,532 Crown 16,221 20,509 20,509 613 Departments 226 132 132 5 Other 20 35 35 21,150 Subtotal 16,467 20,676 20,676 Cash was disbursed to: Produce outputs (8,809) Personnel (8,453) (9,655) (9,029) (5,115) Operating (6,328) (5,897) (7,221) 0 Net GST paid 10 (149) 0 0 (1,207) Capital charge (1,207) (1,229) (1,207) (15,131) Subtotal (16,137) (16,781) (17,457) 6,019 Net cash flows from operating activities 330 3,895 3,219 Cash flows from investing activities Cash was disbursed to: (373) Purchase of property, plant, and equipment (56) (350) (350) (3,129) Purchase of intangible assets (2,046) (2,000) (2,000) (3,502) Net cash flows from investing activities (2,102) (2,350) (2,350) Cash flows from financing activities Cash was disbursed to: (1,557) Payment of net surplus to Crown (1,975) (1,540) (1,976) (1,557) Net cash flows from financing activities (1,975) (1,540) (1,976) 960 Net increase/(decrease) in cash held (3,747) 5 (1,107) 8,674 Add opening cash brought forward 9,634 10,481 9,634 9,634 Closing cash to carry forward 5,887 10,486 8,527 Note: The accompanying Notes to the Financial Statements (pages 28 41) form part of these financial statements. For information on major variances against budget, refer to Note 18. 24 Parliamentary Counsel Office Annual Report 2012/13...

RECONCILIATION OF NET SURPLUS TO NET CASH FLOWS FROM OPERATING ACTIVITIES For the year ended 30 June 2013 30/06/12 30/06/13 30/06/13 30/06/13 Actual Actual Main Supp. Estimates Estimates $000 $000 $000 $000 1,976 Net surplus/(deficit) 1,062 0 0 Add/(less) non-cash items: 3,787 Depreciation and amortisation 3,175 3,878 3,213 Increase/(decrease) in non-current 81 employee entitlements (91) 0 0 3,868 Total non-cash items 3,084 3,878 3,213 Add/(less) working capital movements: (Increase)/decrease in debtors (133) and prepayments 168 0 0 0 (Increase)/decrease in Debtor-Crown (4,288) 0 0 Increase/(decrease) in creditors 351 and payables 328 17 6 Increase/(decrease) in current (43) employee entitlements (24) 0 0 175 Working capital movements net (3,816) 17 6 6,019 Net cash flow from operating activities 330 3,895 3,219 Note: The accompanying Notes to the Financial Statements (pages 28 41) form part of these financial statements. For information on major variances against budget, refer to Note 18.... Parliamentary Counsel Office Annual Report 2012/13 25

STATEMENT OF COMMITMENTS As at 30 June 2013 30/06/12 30/06/13 Actual Actual $000 $000 Non-cancellable operating lease commitments 506 Less than one year 678 0 One to two years 665 0 Two to five years 525 506 Total non-cancellable operating lease commitments 1,868 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. STATEMENT OF CONTINGENT ASSETS AND LIABILITIES As at 30 June 2013 As at 30 June 2013, there are no contingent assets (30 June 2012: nil). As at 30 June 2013, there are no contingent liabilities (30 June 2012: nil). As at 30 June 2013, there are no guarantees or indemnities given under the Public Finance Act 1989 in respect of the activities of the PCO (30 June 2012: nil). STATEMENT OF UNAPPROPRIATED EXPENSES AND CAPITAL EXPENDITURE For the year ended 30 June 2013 For the year ended 30 June 2013, there are no instances of unappropriated expenses and capital expenditure (30 June 2012: nil). Note: The accompanying Notes to the Financial Statements (pages 28-41) form part of these financial statements 26 Parliamentary Counsel Office Annual Report 2012/13...

STATEMENT OF DEPARTMENTAL EXPENSES AND CAPITAL EXPENDITURE AGAINST APPROPRIATIONS For the year ended 30 June 2013 30/06/12 30/06/13 30/06/13 Expenditure Expenditure Appropriation Actual Actual Voted $000 $000 $000 VOTE: PARLIAMENTARY COUNSEL Appropriations for output expenses 8,659 Law Drafting Services 9,026 9,451 10,487 Access to Legislation 10,647 11,225 19,146 Total appropriations for output expenses 19,673 20,676 Appropriation for capital expenditure 3,502 Capital appropriations to PCO Permanent Legislative Authority 2,102 2,350 3,502 Total capital appropriations 2,102 2,350 TRANSFERS UNDER SECTION 26A OF THE PUBLIC FINANCE ACT 1989 For the year ended 30 June 2013 The appropriation voted includes adjustments made in the Supplementary Estimates and the following transfers under section 26A of the Public Finance Act 1989: Supp. Section 26A Appropriation Estimates Transfers Voted 2013 2013 2013 $000 $000 $000 VOTE: PARLIAMENTARY COUNSEL Appropriations for output expenses Law Drafting Services 9,051 400 9,451 Access to Legislation 11,625 (400) 11,225 Total appropriations for output expenses 20,676 0 20,676 Note: The accompanying Notes to the Financial Statements (pages 28-41) form part of these financial statements... Parliamentary Counsel Office Annual Report 2012/13 27

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2013 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 2013, 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 16 September 2013 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 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. Changes in accounting policies There have been no changes in accounting policies during the financial year. Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted There is one standard, amendment, or interpretation issued but not yet effective that has not been early adopted, and that is relevant to the PCO. NZ IFRS 9 Financial Instruments will eventually replace NZ IAS 39 Financial Instruments: Recognition and Measurement. NZ IAS 39 is being replaced through the following three main phases: Phase 1 Classification and Measurement, Phase 2 Impairment Methodology, and Phase 3 Hedge Accounting. Phase 1 has been completed and has been published in the new financial instrument standard NZ IFRS 9. NZ IFRS 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the many different rules in NZ IAS 39. The approach in NZ IFRS 9 is based on how an entity manages its financial assets (its business model) and the contractual cash flow characteristics of the financial assets. The financial liability requirements are the same as those of NZ IAS 39, except for when an entity elects to designate a financial liability at fair value through the surplus/deficit. The new standard is required to be adopted for the year ended 30 June 2016. However, as a new Accounting Standards Framework will apply before this date, there is no certainty when an equivalent standard to NZ IFRS 9 will be applied by public benefit entities. 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 28 Parliamentary Counsel Office Annual Report 2012/13...

Public Benefit Entity Accounting Standards. The effective date for the new standards for public sector entities is 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. 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 figures The budget figures are those presented in the Information Supporting the Estimates of Appropriations for the Government of New Zealand for the year ended 30 June 2013 (Main Estimates) and those amended by the Supplementary Estimates and any transfer made by Order in Council under the Public Finance Act 1989. The budget figures have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted in preparing these financial statements. 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.... Parliamentary Counsel Office Annual Report 2012/13 29

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 $1,000 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. 30 Parliamentary Counsel Office Annual Report 2012/13...