Economic Performance

The Department’s sustainable development framework will enable it to measure and report on the economic impact of, and economic issues arising from, its operations, as opposed to solely reporting its financial performance.

Personnel and operational expenditure remain the principal economic contribution made by the Department to communities that are local to its facilities or where its staff reside.

Work completed for the Regional Prisons Development Project and the findings of economic impact reports have assisted the Department to better understand the economic impacts of corrections facilities on communities local to existing and proposed facilities.

Summary of Performance Within the Economic Dimension

• In 2004/05, $265.6 million was expended on personnel and a further $169.4 million on operating costs, including facilities maintenance, offender management and administering the Department’s resources.

• Economic impact reports conclude that positive economic effects will flow to communities hosting corrections facilities and staff residences.

• Retirement and long service leave for 2004/05 decreased due to a change in the discount rates of employee entitlements.

ECONOMIC INDICATORS USED IN THIS REPORT

Economic Performance
Table 21 illustrates the categories, aspects and indicators of the economic dimension included within this sustainable development report.

TABLE 21: Economic Performance Indicators

Category	Aspect	Indicator
Direct economic impacts	Providers of Capital	Statement of Movement in Taxpayers’ Funds
	Expenditures	Service performance – output class statements
	Suppliers	Personnel and operational expenditure
Public sector	Revenue	Statement of Financial Performance
Indirect economic impacts	Externalities Associated with Services Creating Impacts on Communities	Economic benefits of proposed facilities

Key Financial Performance
Table 22 references the key financial performance within the economic dimension of this sustainable development report for the 2004/05 financial year to the Department’s financial statements in Part 2 of this annual report.

TABLE 22: Key Financial Performance Indicators

	Annual report page reference
Statement of Movement in Taxpayers’ Funds	Page 71
Revenue by Source	Page 70 — Statement of Financial Performance Page 73 — Statement of Cash Flows
Service Performance — Output Class Statements	Pages 87–144

Total Output Expenditure
The economic impact of the Department’s activities principally arises from the management of its physical and human resources including prison facilities, offices, land and staff. Total output expenditure of $537.7 million was incurred in the 2004/05 financial year in order to manage the Department’s resources and offenders. Operational and personnel expenditure ($169.4 million and $265.6 million respectively) included salaries and wages, facilities maintenance, offender management and administering the Department’s resources.

The expenditure also benefited local businesses and communities through prison demand for goods and services and the resulting increase in employment opportunities as businesses sought to satisfy this demand. The Department received capital approvals to spend $728 million for the construction of corrections facilities at Otago, Waikato, Auckland and Northland, and for deferred maintenance and prison security.

Economic Benefits of Proposed Facilities
Analysis performed for the Regional Prisons Development Project assisted the Department to determine the location of proposed facilities and, consequently, the communities that have benefited economically from its activities. Independent economic impact reports commissioned on proposed facilities have concluded that a positive economic effect will flow to communities hosting corrections facilities and staff residences.

These positive impacts will occur principally as a result of direct and indirect employment, general expenditure incurred by staff in communities local to the facility, and the purchase of goods and services by prison facilities.