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Te Tari Taiwhenua
Department of Internal Affairs
Memo: Film and Video Labelling Body funding
To
Phillipa Guthrey
Cc
Suzanne Doig
From
Cathy Nijman
Date
30 July 2021
Subject
Film and Video Labelling Body funding
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Purpose
1. This memo responds to your request for information on short- to medium term funding
Act
options for the Films and Video Labelling Body (FVLB), including a possible Budget bid.
Recommendation
2. This memo recommends you
a)
note the FVLB’s financial situation does not meet the very high threshold for funding
from the between-Budget contingency (BBC);
b)
note, in the absence of a relaxation in Treasury’s assessment criteria for new funding
initiatives (and an increase in available funding) a Budget bid to support the FVLB faces
Information
considerable uncertainty;
c)
note, the Office of Film and Literature Classification (OFLC) could not assume the FVLB’s
cross-rating and labelling functions without changes to the Films, Videos and
Publications Act 1993 (1993 Act) (and an increase in baseline funding); and
d)
discuss with next steps with the General Manager, Policy including briefing the Minister
Official
of Internal Affairs on:
i.
the FVLB’s financial situation;
the
ii.
the implications for the classification system if the FVLB is unable to fulfil its
statutory role;
iii.
providing short-term financial relief to the FVLB, pending a Budget bid in 2022 (see
(e) below); and
iv.
necessary amendments to the 1993 Act to enable the OFLC to undertake the FVLB’s
under
cross-rating and labelling functions.
e)
discuss with Ministerial Monitoring and Capability (MMC) management the option of a
further transfer of outyear funding from the Non-Departmental Appropriation for
Classification of Films, Videos and Publications to support the FVLB on an interim basis.
Background
What the FVLB does and how it is funded
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3. The FVLB is a non-governmental body. It is one of three entities with a statutory role within
the classification framework established by the 1993 Act.1 The FVLB rates unrestricted films
and videos/DVDs, and issues the labels all films and videos/DVDs must display before they
1 The others are the Office of Film and Literature Classification, and the Film and Literature Board of Review.
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are supplied to the public. The FVLB’s activities are funded by third party fees for the labels it
issues; it does not receive direct government funding (but see the discussion of the 2020
grant below).
4. While the FVLB has a distinct role, there is a high degree of interdependence between it and
the OFLC, which rates restricted films including those the FVLB refers.
The impact of the changing media landscape and the decline of physical media on the FVLB’s
ongoing financial viability
5. In June 2019, the FVLB and the OFLC met with the previous Minister of Internal Affairs to 1982
discuss concerns about the FVLB’s financial position caused by the decline in physical media
distributions (and the corresponding increase in digital media, including commercial video
on-demand (CVoD)). The FVLB advised it had been recording deficits since 2016, which had
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been covered by accumulated cash reserves. Without a boost in funding, the FVLB advised it
would be insolvent by mid-2020.
6. While the FVLB could have increased fees, the estimated 310 per cent increase for
theatrical releases needed to cover the budget shortfall was considered unsustainable. The
impracticality of such an increase has been further reinforced by the economic and social
impacts of COVID-19.
A Budget 2020 bid for FVLB funding was declined, …
Information
7. The Department’s MMC team is responsible for preparing the OFLC budget bid.2 In 2020,
MMC proposed a one-off appropriation of $0.376m for the FVLB (for the 2020/21 financial
year) as part of the OFLC bid. However, the overall OFLC bid was supported at 50 per cent
only, and no provision was made for FVLB support.
… but was covered in part through a grant covered by transferring OFLC outyear funding
Official
8. In recognition of the essential role the FVLB fulfils, and the immediate risk to its financial
viability, MMC proposed to support the FVLB by:
the
• transferring $209,000 of approved OFLC funding from outyears to the 2020/21 financial
year; and
• providing the $209,000 to the FVLB in the form of a grant.3
9. Budget 2020, Vote Internal Affairs, recorded the grant as a non-departmental other expense
under
related to the OFLC.4
Budget criteria: New spending initiatives
10. Treasury guidance on the Budget process, and the outcome of the 2020 FVLB Budget bid,
confirms (a) the FVLB’s financial situation does not meet the very high threshold for BBC
funding, and (b) a 2022 Budget bid for FVLB funding faces considerable uncertainty.
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2 The OFLC has a mixed funding model. Around 60% of its costs (for activities that primarily benefit the
community) are met by an appropriation (non-departmental output expense) as part of Vote Internal Affairs.
3 The Department and the FVLB signed a grant agreement on 21 September 2020. It provides how the grant can
be spent, and includes reporting requirements.
4 The Estimates of Appropriations 2020/21 – Finance and Government Administration Sector B.5 Vol 5, p107.
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Between-budget and emerging priorities contingency
11. Budget 2021 established the BBC at $45m per annum. Treasury (and the Minister of
Finance) will only consider proposals for funding from the BBC when:
• the initiative relates to an urgent issue that cannot be deferred until Budget 2022, and
could not have been foreseen;5 and
• Minister/s can demonstrate they have investigated and exhausted all opportunities to
fund the initiative through reprioritisation of lower-value activities (ie, the initiative
cannot be funded from baselines).
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12. The BBC guidance reflects Treasury’s 2020 Briefing to the Incoming Minister of Finance,
which noted the need to increase both the scrutiny and control of out-of-cycle new funding,
and the quality of new funding initiatives.
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Budget guidance for Departments
13. Treasury’s December 2020 guidance for Budget 2021 notes the Government’s focus on
“strengthened fiscal management expectations for Budget 2021 and beyond”, including
aligning existing baseline expenditure to priorities and delivering value for money. Critical
cost pressure initiatives would only be considered “when other sources of funding,
including non-spending options, have been explored and exhausted.”6 Alternatives
required to be investigated included third party charges (for services provided), and moving
resources between appropriations or years (as happened with the 2020 grant to the FVLB).
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14. Like BBC funding, critical cost pressure initiatives needed to demonstrate the relevant
department could not deliver the same level or quality of service within existing baselines.
Among other things, submissions had to demonstrate:
• the high risk of not meeting the funding pressure (eg, service failure, or not meeting
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legislative requirements);
• time critical cost pressure required immediate Budget funding; and
• why previous funding was insufficient.
the
15. A renewed bid for FVLB funding as part of Budget 2022 would need a strong evidence base to
succeed.
FVLB’s ongoing financial viability concerns
under
16. In October 2020, the FVLB advised, based on current and predicted costs, fee income and
reserves would be sufficient to cover their operating costs for 2021, and potentially some of
2022. However, the FVLB’s financial situation has continued to deteriorate, and it has
approached the Department for additional financial support.
17. The dramatic decline in physical media means the FVLB cannot generate enough fee income
to cover its costs. Revenue from theatrical releases (which have been severely impacted by
COVID-19) cannot cover the shortfall. The situation has been exacerbated by The
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Warehouse’s recent decision to stop selling DVDs and Blu-ray discs.
5 Examples from previous Budget cycles include the emergency response to the 2019 Christchurch terror attacks,
by-elections in 2017 and 2018, and fruit fly surveillance in Auckland in 2015.
6 The 2021 guidance included provision for new (invited) funding initiatives related to Labour Party Manifesto
commitments, but FVLB funding did not (would not) qualify under this head.
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18. We understand the FVLB is concerned Increasing fees could actually decrease income from
a sector hard-hit by COVID-19. Higher fees may make it unprofitable for distributors to
import new material. For completeness, it is noted the FVLB will not benefit from the new
CVoD levy regime, which comes into effect on 1 August 2021.7
19. The Departmental Priorities Team has contacted the FVLB for further information, and we
anticipate meeting (over Zoom) in the week beginning 2 August 2021. However, if the FVLB
is at serious risk of being unable to fulfil its statutory role without further financial support,
decisions may need to be made quickly (and before the Budget’s October baseline update).1982
Interim financial support for the FVLB
Repeating the process that resulted in the 2020 grant of $209,000 to the FVLB …
Act
20. The 2020 grant involved a transfer of OFLC outyear funding to the 2020/21 financial year. It
was approved was approved pursuant to Cabinet Office Circular CO (18) 2, which enables
joint Ministers (of Finance, and the portfolio Minister) to approve some front-loading of
spending (FLoS), with some restrictions and conditions.8
21. Finance advise a similar FLoS application could be made as part of the October baseline
update, but it would be subject to careful Treasury scrutiny. Absent a successful Budget
bid, the Department would need to demonstrate the FLoS transfer would not impact the
OFLC’s activities in the period covered by existing outyear funding (up to the 2024/25
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financial year). FLoS applications that do not meet requirements for joint Minister approval
must be referred to Cabinet.
… in the absence of a viable alternative …
22. Notwithstanding the potential difficulties, an application to transfer OFLC outyear funding
to the 2021/22 financial year appears to be the only viable option for providing the FVLB
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with interim financial support. The strict Budget separation of departmental and non-
departmental expenses precludes direct Departmental support for external agencies such
as the FVLB (and OFLC). The absence of any statutory obligation to support the FVLB (which
the
is essentially a voluntary body) reinforces the lack of alternatives.
… can be justified because the FVLB is an integral part of the classification system …
23. If the FVLB ceases operations there would be no-one undertaking the labelling function, and
under
the cross-rating of unrestricted films. In practice, this means this material would no longer
be available for public sale and distribution, including through theatrical release.
24. In theory, the Minister could approve another independent body to fulfil the FVLB’s
functions, but this is not a practicable consideration. The FVLB has the necessary
experience and expertise, and the FVLB and the OFLC have had a close 25-year working
relationship. Even if an alternative to the FVLB could be identified (unlikely) and was willing
to undertake the role (also unlikely), this would not address the underlying issue (ie, the
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financial model based on labelling physical media is unsustainable).
7 Films, Videos, and Publications Classification (Commercial Video on-Demand) Amendment Act 2020, s 7, which
inserts new Part 3A into the 1993 Act. Approved providers will pay levies to the OFLC.
8 As FLoS reduces the funding available in outyears, the cost must be met from future savings, or (less likely) a
future budget bid.
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… and amendments to the 1993 Act and related regulations to transfer the FVLB’s classification
and labelling functions to the OFLC cannot be implemented in time for Budget 2022
25. The transfer of the FVLB’s functions to the OFLC would appear to be the only viable long-
term solution to maintain the integrity of the classification system, including protecting
minors from harmful content and providing guidance to parents. Even if work on an
amendment Bill commenced now, it is unlikely to be enacted before the end of 2022 (and
after Budget 2022).
26. The likely timeline for legislative reform indicates the 2022 OFLC Budget bid will need to seek
support for the FVLB, even if the outcome is uncertain. A Budget bid could emphasise, eg, 1982
• the need to take a “whole of system” approach to the classification system;
• the public good aspects of the FVLB’s work;
Act
• the consequences of not having a body fulfilling the cross-rating and labelling function;
and
• the work underway to transfer the FVLB’s functions to the OFLC would require an
increase in the OFLC’s annual appropriation in any event (ie, there will be a direct costs
whichever body is undertaking the FVLB’s current role).
Next steps
27. We will meet with the FVLB at the earliest opportunity to confirm details of their current
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financial situation in anticipation of briefing the Minister of Internal Affairs on:
• a FLoS application from the OFLC’s outyear funding to support the FVLB on an interim
basis (liaise in support of MMC); and
• amending the 1993 Act and related regulations to transfer the FVLB’s functions to the
OFLC.
Official
Recommendations
28. The recommendations are that you:
the
a)
note the contents of this memo;
b)
discuss next steps with the General Manager, Policy, including briefing the
Yes/No
Minister of Internal Affairs on:
under
i.
the FVLB’s financial situation;
ii.
the implications for the classification system if the FVLB is unable
to fulfil its statutory role;
iii.
providing short-term financial relief to the FVLB, pending a Budget
bid in 2022 (see (c) below); and
iv.
necessary amendments to the 1993 Act to enable the OFLC to
undertake the FVLB’s cross-rating and labelling functions; and
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c)
discuss with Ministerial Monitoring and Capability (MMC) management the
Yes/No
option of a further transfer of outyear funding from the Non-Departmental
Appropriation for Classification of Films, Videos and Publications to support
the FVLB on an interim basis.
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Te Tari Taiwhenua
Department of Internal Affairs
Memo: Disestablishing the Film and Video Labelling Body
To
Phillipa Guthrey
Cc
Suzanne Doig
From
Cathy Nijman
Date
6 August 2021
Subject
Disestablishing the Film and Video Labelling Body
1982
Purpose
1. This memo discusses disestablishing the Films and Video Labelling Body (FVLB), and
transferring its classification and labelling functions to the Office of Film and Literature
Act
Classification (OFLC). This memo should be read in conjunction with my 30 July 2021 memo:
Films and Video Labelling Body funding.
Recommendation
2. This memo recommends you
a)
note the preliminary list of amendments to the Films, Videos and Publications Act 1993
(1993 Act) and related regulations required to disestablish the FVLB and transfer its
functions to the OFLC (see
Appendix A) indicates the reform will not be straightforward,
or a simple technical fix;
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b)
note the complexity of the legislative reform required may raise questions over which
Policy team (Departmental Priorities, or Gambling, Racing, and Media Content) should
lead the legislation project;
c)
note passing amendment legislation by the end of 2022 (which would require
Government support to prioritise the reform/s) would not remove the need for interim
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support to the FVLB, either through the October baseline update or a Budget bid in
2022; and
d)
discuss with next steps with the General Manager, Policy, including briefing the Minister
the
of Internal Affairs on the issues raised in this briefing, and the 30 July briefing
concerning the FVLB’s financial situation.
The FVLB has been an integral part of the classification system since 1987
under
3. Since 1987,1 the FVLB has been responsible for classifying unrestricted films and videos/DVDs,
and issuing the labels all films and videos/DVDs must display before they are supplied to the
public. The FVLB does not receive direct government funding. However, in 2020, the FVLB
received a $209,000 grant (funded from OFLC outyear funding) to ensure its short-term
financial viability. The grant recognised:
• the integral role the FVLB plays in New Zealand’s classification system;
• the financial model underpinning the FVLB’s operations (ie, labels for physical media)
was unsustainable; and
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• it would take time to work through future funding options and/or amendments to the
1993 Act.
1 The FVLB has been the only body approved to undertake the classification and labelling function since the role was
established by the Video Recordings Act 1987. The relevant provisions were transferred to the 2013 Act, which
consolidated three related Acts: the Indecent Publications Act 1963, the Films Act 1983, and the 1987 Act.
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Amending the 1993 Act and related regulations to disestablish the FVLB
4. Ministerial Monitoring and Capability (MMC) material from early- to mid-2019 indicates the
OFLC would not be averse to assuming the FVLB’s functions, but the OFLC has indicated
clearly (and understandably) it could not do so without an increase in funding.
5. A preliminary analysis of the amendments to the 1993 Act and related regulations needed to
disestablish the FVLB and transfer its functions to the OFLC (see
Appendix A) indicates the
reform will not be straightforward, or a simple technical fix. The complexity of the reforms
may raise questions over which Policy team (Departmental Priorities or Gambling, Racing,
and Media Content) should lead the legislation project.
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Indicative timeline for legislative reform
6. The indicative timeline below is a best-case scenario. It assumes the team leading the
Act
legislation project has sufficient people resources, and the project is a ministerial and
departmental priority.
7. The timeline does not include action on interim funding for the FVLB, which the 30 July 2021
memo recommends MMC should consider as part of the October baseline update, or steps
related to Budget 2022.
Action
When
Meet with FVLB to confirm details of their current financial situation, and to
By 13 August 2021
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seek their views on amending the 1993 Act
Meet with the OFLC to discuss amendments to the 2013 Act to disestablish
By 27 August 2021
the FVLB and transfer its functions to the OFLC
Preliminary briefing to the Minister of Internal Affairs
1 September 2021
Brief Minister of Internal Affairs on proposed amendments to the 1993 Act
30 September 2021
Official
and related regulations
Draft Cabinet paper seeking policy approvals
29 October 2021
Ministerial and stakeholder consultation
By 11 November
the
2021
Cabinet consideration
22 November 2021
Draft 2022 Legislation Bid
December 2021
Drafting instructions to PCO, including liaising with DIA Legal
December 2021
under
Cabinet Legislation Committee approval for introduction
March 2022
Amendment legislation introduced
April 2022
Select Committee
April-October 2022
Second reading
October 2022
Committee stage and third reading
November 2022
Amendments to 1993 Act and related regulations enacted
December 2022
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Previous consideration of the FVLB’s financial situation, and its continued involvement
in the classification system
January 2019–June 2019
8. The OFLC and the FVLB raised concerns about the FVLB’s financial situation, and the FVLB’s
ability to continue to fulfil its statutory functions in early 2019. Discussions with MMC were
followed by a joint OFLC/FVLB briefing to the then Minister of Internal Affairs, Hon Tracey
Martin, on 11 March 2019.
9. In April 2019, and again in June 2019, MMC advised Minister Martin work was continuing to
find a solution to sustain the FVLB’s operations. However, MMC noted a review of fees
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payable under the 1993 Act was underway, and the impact of the fees review (if any) on the
FVLB was unknown.2
Act
[Note: The relevance of the 2019/20 fees review to the FVLB is unclear. The Films, Videos,
and Publications, Classification (Fees) Regulations 1994 (Fees Regulations) do not include any
fees related to the FVLB’s functions. The FVLB sets its own fees under the authority of s
9(3)(b) of the 1993 Act.]
A holding pattern: June 2019–August 2021
10. The impact of COVID-19, and the prioritisation of the new commercial video on demand
(CVoD) regulatory and funding regime, means no substantive work on the FVLB’s long-term
future and financial viability has been undertaken since June 2019.
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11. In mid-2019, during the early stages of the CVoD review, the FVLB raised the possibility of a
new revenue stream issuing labels for CVoD providers. However, this did not eventuate.
New regulations (which came into force on 31 May 2021) provide for levies payable to the
OFLC (but nothing for the FVLB).3
12. MMC raised the issue of the FLB’s long-term future with the Gambling, Racing, and Media
Official
Content policy team in November 2020. The matter has now been referred to the
Departmental Priorities Team.
the
Options for interim measures to support the FVLB are limited
13. The current legislative framework limits what the Department and the OFLC can do to
support the FVLB, financially and otherwise. One option canvassed previously is co-locating
the OFLC and the FVLB to reduce overheads, and increase efficiencies. This remains a
possibility, provided the OFLC and FVLB remain functionally separate. Revisiting this option
under
could provide further evidence in support of an interim Budget bid to support the FVLB; it
would help demonstrate all practicable steps have been taken to reduce costs.
Next steps
14. We will meet with the FVLB to confirm details of their current financial situation, and to seek
their views on amending the 1993 Act to transfer the FVLB’s functions to the OFLC at the
earliest opportunity. A preliminary meeting was held earlier this week, but more detailed
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financial information is required.
15. We will liaise with MMC, as required, concerning interim funding to support the FVLB.
2 In June 2020, in response to the economic and social impacts of COVID-19, Cabinet agreed to hold fees at their
current [1998] level [CBC-20-MIN-0061]. The Cabinet minute notes the Minister’s intention to introduce new
charges for commercial video on demand (CVoD) providers to help support the OFLC’s activities.
3 Films, Videos, and Publications Classification Commercial Video on-Demand Levy Regulations 2021.
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Recommendations
16. The recommendations are that you:
a)
note the contents of this memo;
b)
note the complexity of the legislative reform required to disestablish the
FVLB and transfer its functions to the OFLC;
c)
discuss with the General Manager, Policy, which Policy team (Departmental
Yes/No
Priorities, or Gambling, Racing, and Media Content) should lead the
legislation project to amend the Films, Videos and Publications Act 1993
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and related regulations; and
d)
discuss next steps with the General Manager, Policy, including briefing the
Yes/No
Minister of Internal Affairs on:
Act
i.
the FVLB’s financial situation;
ii.
the implications for the classification system if the FVLB is unable
to fulfil its statutory role;
iii.
providing short-term financial relief to the FVLB, pending a Budget
bid in 2022;
iv.
necessary amendments to the 2013 Act to enable the OFLC to
undertake the FVLB’s cross-rating classification and labelling
functions; and
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v.
preparing a legislation bid for the Government’s 2022 Legislation
Programme.
Official
the
under
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Appendix A: Amending the 1993 Act and related regulations to disestablish the FVLB
Films, Videos and Publications Classification Act 2013
Note: The amendments noted below are essentially a “find and replace” transfer of the
FVLB’s functions to the OFLC, or they remove redundant provisions. However, the 1994
Classification Regulations prescribe, in detail, the what and the how of the FVLB’s
classification and labelling functions, including FVLB/OFLC interactions. Amendments to the
principal Act and the Regulations will require careful (re)alignment.
Part 1—Preliminary provisions
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Section
Action
2
Interpretation
Repeal
Definition of labelling body
Act
Part 2—Labelling of films
8(2)
Films exempt from labelling
Amend
Remove/replace reference to s 9
requirements
(referral to labelling body)
8(3)(b)
Repeal
Cross-reference to s 8(2)
9(1),
Applications for issue of label
Amend
Remove/replace references to
(3)(b), (4)
labelling body; OFLC will issue the
label; Consider the extent to which
transfer of FVLB’s function to the
Information
OFLC affects this section as it
relates to the OFLC
Note: s 3(b) authorises the FVLB to
charge fees (how much, and for
what is at the FVLB’s discretion).
Official Transfer of the FVLB’s classification
and labelling functions to the OFLC
would require a new fee in the
the
1994 Fees Regulations
10(1),
Issue of labels
Amend
Remove/replace references to
(2)(a)
labelling body
10(3)
Repeal
The OFLC wouldn’t issue a label for
under
a publication it has classified as
objectionable
Part 3—Classification of publications
12
Submission of films by labelling
Repeal
Relates to FVLB’s referral of films
body
to the OFLC for examination and
classification
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27(4)(a)(i) Conditions relating to display of
Repeal
Cross-reference to OFLC direction
restricted publications
to FVLB under s 36A(2)
34(b)
Classification to apply only if
Repeal
Relates to OFLC direction to FVLB
excisions and alterations actually
made
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Films, Videos and Publications Classification Act 2013
36(1),
Issue of labels in respect of films
Amend
Remove/replace references to
(2)(b)
labelling body; OFLC will issue the
label
36(4), (5)
Amend
Remove references to labelling
body
36A(2)
Issue of labels in respect of other
Repeal
Relates to OFLC direction to FVLB
publications that are classified as
36A(3)
restricted publications
Amend
Relates to cancellation of previous 1982
labels
38(2)(d)
Decisions of Classification Office
Amend
Remove references to labelling
body
Act
38(2)(e)
Amend
Remove/replace references to
labelling body, and cross-reference
to s 36A(2); OFLC will issue the
label
Part 3A—Labelling requirements for specified CVoD providers’ commercial video on-
demand content
46E(1)(b) Content not previously labelled or
Amend
Replace references to labelling
classified
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body; OFLC will issue the label
Part 4—Review of classification decisions
47(2)(b)
Right of review
Repeal
Cross-reference to s 12; relates to
FVLB’s referral of films to the OFLC
for examination and classification
Official
55(1)(d),
Decisions of Board
Amend
Replace references to labelling
(da)
body; OFLC will issue the label
the
Part 6—Bodies
71
Functions of labelling body
Repeal
FVLB’s classification and labelling
functions will need to be
transferred to the OFLC
under
72
Approval of labelling body
Repeal
Transfer of the FVLB’s classification
and labelling functions to the OFLC
removes the need for ministerial
approval of a NGO
73
Application for approval as
Repeal
labelling body
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Films, Videos and Publications Classification Act 2013
74
Community representatives
Repeal
But consider whether a
compensatory amendment
requiring the OFLC to consider the
public’s and industry stakeholder
views when making classification
decisions would be
desirable/practicable. [Section 21
is a generic “other assistance”
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provision that enables the OFLC to
show a publication to any person
(to assist the OFLC form an
Act
opinion) and/or invite written
submissions, and/or obtain
information, and/or undertake
other inquiries.]
75
Revocation of approval
Repeal
77(1)
Functions of Classification Office
Amend
Include FVLB’s labelling function
Part 8—Offences
121
Unlawful issue of labels
Amend
Replace reference to labelling
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body with Classification Office
131(4)(f)
Offence to possess objectionable
Repeal
publication
149(f)(i),
Regulations
Repeal
(h), (ha),
Official
(n)
149(k)
Amend
Remove reference to labelling
the
body
162
Videos before labelling body
Repeal
Spent; transitional provision
related to the labelling body
established by the Video
Recordings Act 1987
under
In addition, transitional and savings provisions will be required
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Films, Videos and Publications Classification Regulations 1994
Note: These Regulations Significant require more than a simple “find and replace” rewrite.
Careful consideration concerning the degree of prescription would be essential; what is
appropriate for a NGO undertaking a statutory function may be unnecessary (and potentially
inappropriate) for the OFLC. Briefly, the Regulations prescribe the what and the how of the
FVLB’s classification and labelling functions, including FVLB/OFLC interactions. Regulations
5–11D relate to the FVLB’s labelling function (with recent amendments related to CVoD
approved self-rating); 12–15 relate to FVLB’s assignment of ratings and descriptions; 16–18,
18AA relate to label issuance; and 21–26 relate to approval of film posters. Other regulations 1982
govern, eg, FVLB’s submission of material to the OFLC.
Part 1—Preliminary provisions
Act
(2)
Interpretation
Amend
Definition of issue of label: replace
reference to labelling body with
Classification Office
4(2)
Overseas classification
Amend
Replace references to labelling
authorities
body; OFLC will handle functions
related to overseas classifications
Part 2—Labelling
7
Examination of film by labelling
Amend
Remove/replace references to
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body
labelling body, and consultation
with the OFLC; OFLC will assess
films
8(1)
Films with main feature identical
Repeal
Cross-reference to s 12(1) in the
in content with main feature on
Act; relates to FVLB’s referral of
film with rating or classification
films to the OFLC for examination
Official and classification
8(2)
Amend
Replace references to labelling
the
body with Classification Office;
remove reference to r 11 (labelling
body referral to OFLC)
8(3)
Amend
Replace references to labelling
body with Classification Office;
under
consider impact of changes on
CVoD material
8(4)
Requires detailed consideration of
OFLC’s role re CVoD material vis-à-
vis approved CVoD self-rating
9(1), (2),
Films with main feature not
Amend
Replace references to labelling
(4)
identical in content with main
body with Classification Office
Released feature on film with rating or
9(3)
Repeal
Cross-reference to s 12(1); relates
classification
to FVLB’s referral of films to the
OFLC for examination and
classification
Page 8 of 11
Document 2
Films, Videos and Publications Classification Regulations 1994
10(1), (2), Films not identical in content
Amend
Replace reference to labelling
(4)
with films classified by overseas
body with Classification Office
classification authority
10(3)
Repeal
Relates to FVLB’s seeking the
OFLC’s advice on specified
considerations
10(5)
Repeal
Cross-reference to s 12(1); relates
to FVLB’s referral of films to the
1982
OFLC for examination and
classification
11
Labelling body must submit film
Repeal
Act
to Classification Office if film’s
trailer is inconsistent with its
main feature
11A
Steps referred to in regulation
Repeal
11(3)
12
Assigning of ratings
Amend
Replace references to labelling
body with Classification Office
14
Assigning of descriptions
Amend
Replace references to labelling
Information
body with Classification Office
15
Films already classified by
Repeal
Classification Office
16(1), (2)
Issue of labels by labelling body
Amend
Replace references to labelling
body with Classification Office
Official
16(3)
Repeal
Relates to FVLB notifying details to
the OFLC for inclusion in the films
the
database
17
Labels issued at direction of
Amend
Limit to FLBR direction to OFLC
Classification Office or Board of
related to Part 4 submission (FLBR
Review
review of OFLC decision)
under
18
Issue of additional labels
Amend
Replace references to labelling
body with Classification Office
18AA
Issue of label by labelling body by Amend
Replace references to labelling
notification to specified CVoD
body with Classification Office
provider
18AAC
Labelling of commercial video on- Amend
Replace references to labelling
demand content previously
body with Classification Office
Released labelled
18A
Labels issued at direction of
Repeal
Unclear what role, if any, the FLBR
Classification Office or Board of
has under s 36A(2); FBLR direction
Review under section 36A(2) of
to OFLC covered by r 17, 18
Act
Page 9 of 11
Document 2
Films, Videos and Publications Classification Regulations 1994
18B
Additional copies of label issued
Repeal
See comment re r 18A
under regulation 18A
Part 3—Film posters
21–26
Approval of film poster by
Amend
Remove redundant labelling body
labelling body
or
provisions and redraft into a single
repeal
Part that sets out the OFLC’s roles
27–33
Approval of film posters by
and responsibilities re film posters
Classification Office
1982
Part 4—Classification decisions
35(1)(b)
Register of Classification
Repeal
Cross-reference to s 12; relates to
Act
Decisions
FVLB’s referral of films to the OFLC
for examination and classification
35C
Cancellation and replacement of
Amend
Replace references to labelling
label
body with Classification Office;
remove provisions related to OFLC
direction to FVLB
Part 7—Miscellaneous provisions
48
Labelling body to disseminate
Repeal Information
information
58
Issue of label in respect of film to Amend Replace references to labelling
which this Part applies
body with Classification Office
59
Assignment of rating or
Amend
Replace references to labelling
classification where conflicting
body with Classification Office
Official
decisions
60
Assignment of description
Amend
Replace references to labelling
the
body with Classification Office
61
Labelling body must submit film
Repeal
But consider need for a
to Classification Office if film
corresponding provision setting
includes inconsistent new
out the steps the OFLC must take if
material
films previously rated under the
under
Films Act 1983 and/or the Video
Recordings Act 1987 (see rr 59, 60)
contain new material
61A
Steps referred to in regulation
Repeal
61(4)
62
Old labels to be obscured
Amend
Replace reference to labelling
body with Classification Office
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63
Film posters approved under
Amend
Replace references to labelling
Films Act 1983
body with Classification Office
Sch 1
Labels for films
Amend
Remove reference to labelling
body
Page 10 of 11
Document 2
Films, Videos and Publications Classification (Fees) Regulations 1994
6(1)(a)(i)
Reduced fees for charitable
Amend
Remove reference to labelling
organisations, etc
body
7(4)(b)(i)
Waiver of fees in special
Amend
Remove reference to labelling
circumstances
body
Sch 1
Part 1–Standard fees
New fee/s for the classification and labelling
functions transferred from the FVLB to the
Part 2– Fees payable by persons
OFLC
and organisations with special
1982
interests
Act
Information
Official
the
under
Released
Page 11 of 11
Document 3
BUDGET SENSITIVE
Budget 2022 Initiative Summary –
Main Budget Process
Note to agencies: delete any sections that are not applicable before submitting this
template.
Where a CFISnet character limit is specified, this applies to entry in the CFISnet
field only. There are no character or word limits for the Word version of this template.
Ensuring the viability of the labelling body function under 1982
the Films, Videos and Publications Classification Act 1983
Section 1: Overview
Act
This section must be completed for all initiatives.
Section 1A: Basic Initiative Information
Lead Minister
Minister of Internal Af airs
Department
Department of Internal Af airs
What type of initiative is this?
Critical cost pressure
✓
Manifesto commitment
Health and Disability
initiative
initiative
System Reform initiative
Climate Emergency
Savings initiative
Non-Spending initiative
Response Fund initiative
Information
Initiative description [max 800
This initiative wil provide funding to ensure the Film and Video Label ing Body (the FVLB) is financial y viable in
Characters]
the medium term, and able to carry out its statutory functions of rating and label ing DVDs and cinematic release
movies under the Films, Videos and Publications Classification Act 1993 (the Classification Act). The FVLB is no
longer financial y viable because of declining third-party revenue as media consumption changes and requires
$375,000 over three years to continue its operations. The impact of not funding this wil be that the organisation
wil enter a deficit. This funding is considered the minimum viable increase in Crown funding to enable it to
continue to operate until the statutory function can be reviewed.
Official
Is this a Cross-Vote initiative? Y/N
N
Department contact
Phil ipa Guthrey, Manager Departmental Priorities, Department of Internal Af airs
Ph: 027 310 2758
the
Email: Phil [email address]
Treasury contact
Ben Quilter
Section 1B: Total Funding Sought
under
Operating
funding
2025/26
sought ($m)
2021/22
2022/23
2023/24
2024/25
& outyears
Total
0.150
0.150
0.150
0.450
Capital
funding
sought ($m)
21/22
22/23
23/24
24/25
25/26
26/27
27/28
28/29
29/30
30/31
Total
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BUDGET SENSITIVE
1
Document 3
BUDGET SENSITIVE
Section 1C: Initiative Classifications
Is this initiative seeking
N
funding from the Climate
Emergency Response
Fund (CERF)? [max 300
characters in CFISnet].
Is this initiative climate-
N
related, but not seeking
funding from the CERF?
[max 300 characters in
CFISnet].
1982
Does this initiative align
N
with the Crown’s
obligations under the
Treaty of Waitangi?
Act
Specify if this initiative wil
No impact
help reduce child poverty
and describe the impact
[max 300 characters in
CFISnet].
Does this initiative align
N
with the Child and Youth
Wel being Strategy?
Does the initiative include
Y
The FVLB is a registered charity. It exercises a statutory function on behalf of government but
funding to procure from
is not part of the public service.
NGOs?
Information
Does the initiative include
N
funding to support digital
and data related
investments?
Is this a regulatory or
N
legislative initiative
(according to the guidance
provided)?
Official
Is this a significant
N
If yes, please specify the type of significant initiative below
the
investment initiative per
the definition at section 4.8
Data / Digital /
Physical
Organisational
Specialised
of the Budget 2022
ICT
Infrastructure
Transformation
Equipment
guidance?
See Annex A for further questions – mandatory to complete for al significant initiatives
under
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BUDGET SENSITIVE
2
Document 3
BUDGET-SENSITIVE
Section 2: Cost pressure information
This section must be completed for all cost pressure initiatives. Skip this section for Manifesto Commitment,
Savings, Non-Spending, Health and Disability System Reform (HDSR), Climate Emergency Response Fund
(CERF) and Pre-Commitment initiatives.
See section 4.2 of the Budget 2022 guidance for more information on cost pressure initiatives.
Answers must not exceed 1-2 paragraphs per section.
Cost pressure driver
✓
Volume
Price
Personnel (driven by
volume/price)
1982
Cost pressure description
The FVLB’s revenue has been declining for some years. Income has declined from over $800,000 in 2015, to
under $300,000 in 2020. Accumulated funds have dropped from over $1 mil ion in 2015 to under $200,000 in
2020. This is due to a steady decline in DVD sales, and a trend towards film streaming services. COVID-19
has exacerbated this trend as fewer films are being brought to market.
Act
The FVLB was established under the Classification Act as a completely fee funded independent body. The
Body sets its own fees, which were last raised in 2020.
The cost pressure is critical: the FVLB and its functions are critical to the operation of New Zealand’s
classification system. Its reserves are nearly exhausted, and if the Body becomes insolvent, there wil be no
mechanism to rate or label films, nor to submit films to the Office of Film and Literature Classification (the
Classification Office) for classification.
Cost pressure management
The FVLB has responded to the decrease in revenue by taking measures to cut expenditure, including reducing
staf ing to skeleton levels and taking on a cheaper lease. Expenditure has dropped from just under $800,000 in
2015 to under $500,000 in 2020. Despite these measures, in 2020 expenditure was $200,000 greater than income.
The Body received $209,000 funding as part Budget 2019 to ensure it remained viable in the short term. Joint
Ministers have agreed to al ocate $150,000 from the Department of Internal Af airs’ (the Department) baselines in
2021/22 to support the Body to ensure it remains solvent in 2021/22.
Information
The Department is continual y assessing options to ensure appropriations are used ef ectively and deliver of
the greatest public benefits. However, the Department is facing increasing costs pressures across its functions
with limited opportunities for reprioritisation in 2022/23 and outyears without impacting service delivery.
The statutory functions of the FVLB are under active consideration as part of the broader Content Regulatory
Review agreed to by Cabinet in mid-2021, which is aiming for policy decisions by the end of 2022. The review
proposes a more coherent approach across dif erent types of content and so the statutory function exercised
by the FVLB is likely to be either disestablished, merged with other responsibilities of a new entity or moved to
Official
industry self-regulation. The cost pressure is therefore expected to be resolved in the medium term by the
FVLB’s disestablishment. This initiative seeks operating funding until 2024/25. It is expected that any residual
costs associated with the FVLB’s functions from 2025/26 wil be dealt with during transition to a new regime.
Case for funding
The FVLB is an integral part of New Zealand’s classification system. This funding wil ensure the Body remains
the
financial y viable in the medium term and enable the FVLB to carry out its designated functions under the
Classification Act. These functions include:
•
assigning ratings to unrestricted films;
•
cross-rating films already rated in Australia or the UK;
•
issuing labels; and,
•
submit ing films to the Classification Office for classification.
under
Without the FVLB, the New Zealand classification system wil be unable to function. Film importers and
distributors wil be unable to obtain the ratings, classifications and labels required to sel and screen movies
legal y. This wil af ect their revenue streams and have flow-on implications for cinemas and sel ers of films and
DVDs. The audit report to the 2020 annual financial report contains a qualification for the material uncertainty
associated with the ongoing concern/assumption.
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BUDGET-SENSITIVE
3
Document 3
BUDGET-SENSITIVE
Section 5: Delivery
Section 5 must be completed for all initiatives. Further information on the questions in this
section can be found at Annex Two of the Budget 2022 guidance.
Section 5A: Fit with existing activity
The answer must not exceed 1-2 paragraphs.
How does the initiative link The initiative is intended to fund the existing statutory responsibilities of the FVLB.
with existing initiatives
1982
with similar objectives?
Is the initiative an
Y
The initiative wil maintain existing services provided by the FVLB.
expansion or a cost
pressure for an existing
Act
initiative?
Provide an overview of existing funding levels for this initiative, and/or initiatives with similar objectives, in the two tables below.
Operating Funding profile ($m)
2025/26
2021/22
2022/23
2023/24
2024/25
& outyears
Total
Existing funding for
0.150
0
0
0
0.150
this/similar
initiatives
Total funding
0.150
0.150
0.150
0.450
Information
sought
for this initiative
% change between
0%
0%
0%
300%
existing funding
and funding sought
Comments (optional) $0.209m was given to the FLVB in 2020 as a one-of payment, drawn from the Classification Office appropriation.
Capital Funding profile ($m)
Official
21/22
22/23
23/24
24/25
25/26
26/27
27/28
28/29
29/30
30/31
Total
Existing funding
the
for this/similar
initiatives
Total funding
sought for this
initiative
% change between under
existing funding
and funding sought
Comments (optional) Provide explanatory comments to help interpretation of the above baseline figures.
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BUDGET-SENSITIVE
4
Document 3
BUDGET-SENSITIVE
Section 5B: Funding sought by input
Provide a breakdown of what the requested funding wil purchase. Briefly explain the formula used, or key assumptions made, to calculate the cost
of each output. Add additional rows to the table as needed to capture each output separately. Please include which Vote(s) wil be impacted by each
component.
Formula and
Based on current FLVB forecast revenue and associated expenses.
assumptions
underlying costings
Funding profile ($m)
Total
Number values
Input – Operating
1982
only, i.e. 15 or
[Enter one number
100000. Do not
value per field only
2025/26 enter any text, $
into CFISnet]
2021/22
2022/23
2023/24
2024/25
& outyears signs or % signs.
Act
Input Information
Grant to the FVLB
-
0.150
0.150
0.150
-
0.450
Funding profile ($m)
Total
Input – Capital
21/22
22/23
23/24
24/25
25/26
26/27
27/28
28/29
29/30
30/31
Total
Appropriations
This funding wil be appropriated to an existing appropriation: Miscel aneous Grants – Internal Af airs
Section 5C: Options analysis
Information
The answer must not exceed 1-2 paragraphs.
Options analysis
Other options considered were:
•
The Department to continue to fund as an internal cost pressure. This is not considered viable due to growing
pressures on the Department’s baselines, and it does not provide the FVLB with the certainty it needs to continue
operating.
•
FVLB to increase fees – discounted as an option as the amount fees would need to be raised by to cover operating
Official
costs would be so large they could instigate a barrier to film importers and distributors.
•
Changing the legislation to al ow a government department or Crown entity to deliver the function until the Content
Regulatory Review is complete. This was discounted due to potential conflicts of interest, pressures on policy
capacity and House time to draft the changes (medium complexity), and the function would probably stil not be ful y
the
cost-recovered even in a larger entity.
Counter-factual
If the funding is not approved, the FVLB is likely to become insolvent during 2022/23. This wil lead to the failure of a
question
non-discretionary statutory function within the New Zealand classification system. DVD and movie importers, retailers
and cinemas wil be unable to operate legal y.
under
Section 5D: Scaled option
The answer must not exceed 1-2 paragraphs.
Option overview
The $150,000 amount bid has already been scaled to the minimum viable funding.
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BUDGET-SENSITIVE
5
Document 3
BUDGET-SENSITIVE
Provide a breakdown of what the minimum viable option would purchase. If the formula used or key assumptions made dif er from those used for
the primary option, briefly explain these. Add additional rows to the table as needed to capture each output separately.
Formula and
Explain if dif erent from primary option.
Assumptions
Operating Funding profile ($m)
2025/26
Input - Operating
2021/22
2022/23
2023/24
2024/25
& outyears
Total
Total
1982
Capital Funding profile ($m)
Input - Capital
21/22
22/23
23/24
24/25
25/26
26/27
27/28
28/29
29/30
30/31
Total
Act
Total
Appropriations
Indicate whether this funding would increase existing appropriations, establish any new appropriations, or alter the
scope of an existing appropriation with ef ect from 1 July 2022.
Section 5E: Monitoring and Evaluation
The answer must not exceed 1-2 paragraphs.
The FVLB wil be required to report quarterly on expenditure, outlining how funding is being applied, and reporting actual spend of funding against
expenditure rate and budgeting.
Information
Section 5F: Implementation readiness
The answer to each question must not exceed 1-2 paragraphs.
Workforce: Are
N
additional FTEs or
contractors
required?
Official
Workforce:
The FVLB is an existing entity and this initiative creates no new staffing requirements. More certainty of funding is
Resourcing
expected to assist with retention of existing staf .
considerations
the
Timeframes
Ongoing.
Delivery Risks
There is a risk that revenue may be lower than forecast, resulting in the FVLB requiring more funding than of ered. The
Department wil work with the FVLB to minimise the risk of this occurring.
Market capacity
The FVLB’s income streams are dependent on external pressures such as existing trends away from physical media
under
towards online streaming, and COVID-19 outbreaks limiting the availability or demand for films.
Previous delivery
The FVLB has been delivering its functions since it was established by the Classification Act, preceded by the Video
experience
Recordings Act 1987.
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BUDGET-SENSITIVE
6
Document 4
Te Tari Taiwhenua
Department of Internal Affairs
Memo
To
Marilyn Little, DCE Toi Hiranga
From
Phillipa Guthrey, Manager Departmental Priorities
Date
1 March 2023
Subject
Grant agreement with the Film and Video Labelling Body 2023
1982
Act
Purpose
1.
This memo provides background information on the grant agreement with the Film
and Video Labelling Body 2023.
Recommendations
2.
It is recommended that you:
a)
note the contents of this memo; and
Information
b)
sign the attached grant agreement with the Film and Video Labelling Body 2023;
Background
3.
The Film and Video Labelling Body (FVLB) has experienced a sustained downturn of
Official
revenue which has resulted in the need for financial support. This decline in revenue
can be attributed to number of factors including the closure of movie theatres during
COVID-19 lockdowns and decreased demand for physical media such as DVDs.
the
4.
The FVLB has received financial support from the Department over the last few years
to remain financially viable. In 2020 you signed a previous funding agreement, when
DIA agreed to allocate $209,000 (plus GST) from its appropriation to the FVB to ensure
its ongoing viability.
under
5.
In 2021 the Department concluded additional funding from the Government was
necessary and a budget bid was submitted and accepted as part of the Vote: Internal
Affairs for budget 2022. This secured $0.450 million to ensure the FVLB is able to carry
out its statutory function over the three-year period of 2023-2025.
Grant agreement
6.
Finance has reviewed and approved the grant agreement (the agreement). The
Released
agreement provides for the release of funding to FVLB subject to the following
conditions:
a) Funding will only be paid where it is available and requests comply with the
Public Finance Act 1989;
Document 4
b) An invoice must be submitted with accompanying information relating to the
need for funding;
c) The funding must be applied for the sole purpose of covering the FVLB’s
operating costs to fulfil its statutory function (authorised costs).
d) The FVLB will draw funding in the period of 1 January to 1 April for reporting
purposes.
7.
In addition, the FVLB is subject to ongoing warranties which include:
a) Continuing to use funding solely for authorised costs;
1982
b) Keeping financial records;
c) Cooperating with the Department’s monitoring activities; and
Act
d) Complying with any of the Department’s reporting requirements
8.
Funding of up to $0.450 million will be made available in three instalments of $0.150
million per year over a three-year period.
9.
If the FVLB fails to fulfil, or breaches any of its obligations under the agreement, the
agreement may be terminated. Otherwise, the agreement expires on 30 June 2025.
Next steps
10.
The agreement falls within Financial delegation B, making you the appropriate
Information
signatory. Once you have approved and signed the attached grant agreement, the
Department will forward it to the FVLB for signing.
Official
the
under
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IN-CONFIDENCE
Page 2 of 2
Document 5
Funding Agreement
1982
FOR
Film and Video Labelling Body
Act
DATED the 30th day of November 2021
between
The Sovereign in right of New Zealand acting by and through the Chief Executive of the
Department of Internal Affairs (“
DIA”),
Information
and
the Film and Video Labelling Body Incorporated,
an incorporated society (No: 632310) and
registered charity
(No: CC20715) (“
Recipient”).
Official
1)
Background
the
a) In 2020 the Recipient approached DIA seeking financial support. This resulted in
funding of $209,000 being provided to the Recipient in 2020/21. Despite this
additional funding the Recipient has expressed a concern that without further
financial support, the Recipient will enter insolvency.
under
b) The financial data provided by the Recipient clearly illustrates that the Recipient has
experienced a sustained downturn of revenue which has resulted in the need for
financial support. This decline in revenue can be seen as the result of a number of
factors including:
a. The COVID-19 pandemic
b. Decreased demand for physical media such as DVDs.
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c) As part of the 2021 October Baseline Update, DIA is seeking agreement from Joint
Ministers to reprioritise up to $150,000 plus GST to meet the Recipient operating
funding shortfall.
Page 1 of 10
Document 5
2)
Agreement
a) This Agreement provides for the release of funding to the Recipient by DIA on the
terms and conditions set out in this Agreement (the “
Agreement”).
3)
Definitions
a) In this Agreement, unless the context requires otherwise, capitalised terms have the
meanings given in bold and brackets.
1982
4)
Funding
Act
a) The total Funding available to be paid by DIA under this Agreement is a conditional
funding of up to $150,000 plus GST.
b) The Funding will be used subject to the conditions under Clause 7.
c) DIA will pay the conditional Funding to the Recipient (the “
Funding”), and the
Recipient will accept the Funding in accordance with the terms and conditions of this
Agreement. The Funding will be made available in a number of instalments at the
sole discretion of DIA. DIA will seek agreement from the Recipient to ensure that
Information
each instalment includes sufficient funding for the continuation of its statutory
functions.
5)
Term
Official
a) The term of this Agreement starts on the Commencement Date and ends on 30 June
2022. (“
Expiry Date”). the
6)
Payment Terms
a) Following the date this Agreement is signed by the last party (“
Commencement
Date”), and subject to satisfactions of the Conditions in clause 7, the Funding will be
under
paid by DIA to the Recipient:
i) to the credit of a bank account to be in the name of the Recipient and designated
in writing by the Recipient (“
Bank Account”);
ii) through instalments to be paid by the 20th day of the month following receipt by
DIA of a valid GST invoice from the Recipient (“
Invoice”); and
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iii) is inclusive of all taxation and DIA will be entitled to deduct any withholding tax
required to be withdrawn by law from payments made to the Recipient and will
not be required to gross-up or increase any such payments in respect of such
amounts withheld.
Page 2 of 10
Document 5
7)
Conditions of payment
a) Payment of the Funding is subject to satisfaction of the following Conditions (the
“
Conditions”):
i) Joint Ministers agreeing, as part of the 2021 October Baseline Update, to
reprioritise funding to meet the Recipient’s funding shortfall. This condition is
expected to be satisfied by 30 November 2021;
1982
ii) Confirmation of the Bank Account and submission of the Invoice as described in
clause 6(a); and
Act
iii) When the Invoice is submitted it is accompanied by:
(1) written confirmation from the Representative of the Recipient that the
Funding is still required and the Funding will be used solely for the operating
costs of the Recipient (the “
Authorised Costs”); and
(2) written advice illustrating the actual and immediate need for funding to be
drawn down from the Agreement; and
Information
(3) written advice detailing the forecast expenditure rate of the funding made
available through the Agreement
iv) The funding must be applied solely by the Recipient to its operating costs related
to the rating of unrestricted material and the issue of labels for media content
Official
under the Films, Videos, Publications and Classification Act 1993.
the
v) The Conditions are for the benefit of DIA and may be waived at DIA’s sole
discretion.
8)
Ongoing warranties
under
a) The Recipient provides the following warranties (“
Ongoing Warranties”) at the
Commencement Date and continuously throughout the Term (as relevant):
i) It has the authority to enter into this Agreement and that all information
provided in relation to this Agreement is true, complete and accurate;
ii) It has obtained all the decisions and/or authority that it needs to obtain from the
Released Committee of the Recipient or any other party in order to perform the
obligations, and provide the assurances it provides in this Agreement;
iii) It will continue to use the Funding solely for the Authorised Costs and will not
apply it to capital costs of the Recipient or any other cost that is not expressly
authorised by this Agreement;
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Document 5
iv) It will keep financial records in accordance with generally accepted accounting
principles and to a high standard that demonstrate appropriate use of public
funds and provide clear evidence about use of the Funding by the Recipient;
v) It will cooperate and participate in a timely manner in all monitoring activities
undertaken by DIA or its agents in relation to this Funding or for related
purposes; and
vi) Provide the reports as provided for in the Schedule 1 (“
Reports”) and provide
1982
any other reporting that DIA may require from time to time in respect of this
Agreement and the Funding.
Act
9)
Claw-back of Funding
a) The parties agree that if, following payment of the Funding:
i) the Agreement is terminated prior to the Expiry Date;
ii) the Funding is not applied to Authorised Costs; and/or
iii) the Recipient breaches any of the Ongoing Warranties,
Information
DIA may choose to recover the Funding in part or in full from the Recipient, and may
advise other government agencies and other Recipient funders (both actual and
potential) of the recovery of the Funding and the reasons for that action.
Official
b) Any surplus Funding that has not been allocated to an Authorised Cost may be
recovered by DIA in full or in part at its absolute discretion. The
Recipient must pay such surplus to DIA on demand prior to the Expiry Date.
the
10)
DIA warranty
a) DIA warrants that it has the authority to enter into this Agreement and pay the
Funding to the Recipient, and that all information provided in relation to this
under
Agreement is true, complete and accurate.
11)
Termination
a) This Agreement ends on the Expiry Date unless ended earlier.
b) DIA may terminate this agreement immediately prior to the Expiry Date if the
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Recipient:
i) does not meet the Conditions by 30 April 2022;
ii) breaches any of the Ongoing Warranties;
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Document 5
iii) fails to fulfil, or breaches any of its obligations under this Agreement;
iv) where there is a change of government policy that limits the availability of the
Funding for the remaining term of this Agreement. If this situation does arise,
DIA will give the Recipient as much notice of the proposed change as soon as
possible, to the extent that DIA is able to do so;
v) in respect of a remediable issue in relation to clauses 11(b)(ii) and (iii) above, fails
to satisfactorily respond to, address or remedy any issues identified by DIA within 1982
10 days of DIA notice being sent; or
vi) becomes insolvent, bankrupt, subject to any form of insolvency action or Act
administration, or wound up on a voluntary basis or otherwise.
c) The Recipient agrees that if this Agreement expires or is terminated:
i) the Recipient must continue to fulfil its obligations and comply with any
reporting or audit requirements as required;
ii) DIA may recover any surplus Funding that has not been allocated to an
Authorised Cost in full or in part at its absolute discretion. The Recipient must
Information
pay such surplus to DIA on demand and acknowledges that this will constitute a
liability that the Recipient must satisfy on wind up; and
iii) provisions that by their nature are intended to survive expiry or termination will
do so.
Official
12)
Information and information sharing
the
a) The Recipient will keep full and accurate records (including accounting records) of
the Funding acquired through this agreement. This will be used to provide clear
evidence about use of the Funding by the Recipient for seven years after the Expiry
Date.
under
b) The Recipient recognises that DIA may be required to release information under the
Official Information Act 1982, or in response to a parliamentary question or other
parliamentary process. DIA will advise the Recipient of such release as soon as
practicable prior to the release.
c) The Recipient agrees that DIA may publish the fact of the Funding being authorised,
made, or not made in any forum at DIA’s discretion.
Released
13)
Representatives
a) The parties will communicate about the Agreement and the Funding (including the
provision of notices under this Agreement) by way of the following Representatives:
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Document 5
DIA
Name: Phillipa Guthrey
Phone: 027 310 2758
Email: [email address]
Recipient
Name: Sharon Walling
Phone: 09 300 4860
1982
Em
ail: [email address]
14)
Notices
Act
a) Any notice given under or in relation to this Agreement shall be in writing and sent
by electronic mail or delivered to the recipient Party’s relevant address in clause 12
above.
15)
Variation
Information
a) Any change to this Agreement is called a Variation. A Variation must be agreed by
both parties and recorded in writing and signed by both parties.
16)
Dispute Resolution
Official
a) The parties agree that they will attempt to resolve any disputes and disagreements
in relation to this Agreement and the Funding amicably and in good faith. The
following process will apply to disputes:
the
i. A party must notify the other if it considers a matter is in dispute;
ii. the Representatives will attempt to resolve the dispute through direct
negotiation;
under
iii. if the Representatives have not resolved the dispute within 10 working
days of notification, they will refer it to the parties' senior managers for
resolution; and
iv. if the senior managers have not resolved the dispute within 10 working
days of it being referred to them, the parties shall refer the dispute to
Released mediation or some other form of alternative dispute resolution.
b) If a dispute is referred to mediation, the mediation will be conducted:
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Document 5
i. by a single mediator agreed by the parties or, if they cannot agree,
appointed by the Chair for the time being of the Resolution Institute;
ii. on the terms of the Resolution Institute’s standard Mediation
Agreement (NZ version); and
iii. at a fee to be agreed by the parties or, if they cannot agree, at a fee
determined by the Chair for the time being of the Resolution Institute. 1982
c) If a dispute is not resolved through mediation, the dispute will be referred for
arbitration under the Arbitration Act 1996.
Act
d) Each Party will pay its own costs of mediation or alternative dispute resolution under
this clause.
e) During a dispute, each party will continue to perform its obligations under this
Agreement as far as practical given the nature of the dispute.
f) Each party agrees not to start any court action in relation to a dispute until it has
complied with the process described in this clause, unless court action is necessary to
Information
preserve a party's rights.
17)
Severability
a) If any term or provision of this Agreement is held to be illegal, invalid or
Official
unenforceable it will be severed from the Agreement without affecting the legality,
validity or enforceability of the remaining provisions.
the
18)
Assignment
a) The Recipient must not assign, delegate, subcontract or transfer any or all of its
rights and obligations under this Agreement.
under
19)
Relationship
a) Nothing in this Agreement creates a legal relationship between the Recipient and DIA
of partnership, joint venture, agency or employment.
20)
Entire Agreement
Released
a) This Agreement, including any Variations, constitutes the entire Agreement and
overrides all prior oral and written understandings, arrangements and statements
that have been made.
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Document 5
21)
Governing Law and Jurisdiction
a) This MOU is governed by, and will be construed in accordance with, the laws of New
Zealand.
1982
Act
Information
Official
the
under
Released
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Document 5
Signed as an agreement
Signed by
The Sovereign in right of New
Zealand acting by and through
the Chief Executive of the Department
of Internal Affairs:
1982
Act
_____________________________
Signature
Marilyn Little
_______________________________
Print Full Name
Deputy Chief Executive
______________________________
Print Title
30 November 2021
Date:__________________________
Information
Signed by the
Film and Video Labelling Body Incorporated:
_______________________________
Signature
Official _______________________________
Print Full Name
the
________________________________
Print Title
Date:__________________________
under
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Document 5
SCHEDULE 1
REPORTING
The Recipient agrees to provide the following reports to DIA at the following times:
REPORTING SCHEDULE
1982
Report Due By
Report Type
31/03/2022
Expenditure report outlining how the Funding is being,
Act
30/06/2022
or has been, applied (receipts from transactions are not
30/09/2022
required).
20/12/2022
31/03/2022
Expenditure report contrasting actual spend of funding
30/06/2022
made available through the Agreement, against the
30/09/2022
expenditure rate and budgeting provided to the
20/12/2022
Department alongside the Invoice.
Information
Official
the
under
Released
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Document 6
Funding Agreement
1982
FOR
Film and Video Labelling Body
Act
8 March 2023
between
The Sovereign in right of New Zealand acting by and through the Chief Executive of the
Department of Internal Affairs (“
DIA”),
Information
and
the Film and Video Labelling Body Incorporated,
an incorporated society (No: 632310) and
registered charity
(No: CC20715) (“
Recipient”).
Official
1)
Background
the
a) In 2020, the Recipient approached DIA seeking financial support. This resulted in
funding of $209,000 being provided to the Recipient in 2020/21. This was followed by
a similar request in 2021, where the Recipient expressed that without further financial
support, the Recipient will enter insolvency resulting in a further agreement of
$150,00 being provided to the recipient in May 2022.
under
b) This 2021 request resulted in DIA performing an investigation into the financial
viability of the Recipient. The outcome of this investigation has seen DIA reach the
conclusion that the Recipient is no longer financially viable without financial
subsidisation from the Government. As a result, a budget bid was submitted to secure
additional funding from the government to be used by the recipient to cover
Authorised Costs (the “
Authorised Costs”). This budget bid was submitted and
accepted as part of the Vote: Internal Affairs for budget 2022. This secured $0.450
Released
million to ensure the Recipient is able to carry out its statutory function over the
three-year period of 2023-2025.
c) The financial data provided by the Recipient clearly illustrates that the Recipient has
experienced a sustained downturn of revenue which has resulted in the need for
financial support. This decline in revenue can be seen as the result of a number of
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Document 6
factors including the COVID-19 pandemic and decreased demand for physical media
such as DVDs.
d) As part of the Vote Internal Affairs budget bid, DIA secured funding that will provide
financial support to the Recipient to ensure that the Recipient is able to continue to
meet their statutory obligations.
2)
Agreement
1982
a) This Agreement provides for the release of funding to the Recipient by DIA on the
terms and conditions set out in this Agreement (“
Agreement”).
Act
3)
Definitions
a) In this Agreement, unless the context requires otherwise, capitalised terms have the
meanings given in bold and brackets.
4)
Funding
Information
a) The conditional Funding to the Recipient (the “
Funding”) available to be paid by DIA
under this Agreement is a conditional funding of up to $0.450 million plus GST.
b) The Funding will be used subject to the conditions under Clause 7.
c) The Recipient will accept the Funding in accordance with the terms and conditions of
Official
this Agreement. The Funding will be made available in three instalments at the sole
discretion of DIA. Funding will be made available in instalments of $0.150 million per
annum over a three-year period.
the
5)
Term
a) The term of this Agreement starts on the Commencement Date and ends on 30 June
under
2025 (“
Expiry Date”).
6)
Payment Terms
a) Following the date this Agreement is signed by the last party (“
Commencement
Date”), and subject to satisfactions of the Conditions in clause 7, the Funding will be
paid by DIA to the Recipient:
Released
i)
to the credit of a bank account to be in the name of the Recipient and designated
in writing by the Recipient (“
Bank Account”);
ii)
through instalments to be paid by the 20th day of the month following receipt by
DIA of a valid GST invoice from the Recipient (“
Invoice”); and
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Document 6
iii) is inclusive of all taxation and DIA will be entitled to deduct any withholding tax
required to be withdrawn by law from payments made to the Recipient and will
not be required to gross-up or increase any such payments in respect of such
amounts withheld.
7)
Conditions of payment
1982
a) Payment of the Funding is subject to satisfaction of the following Conditions (the
“
Conditions”):
Act
i)
Funding will only be paid where funding is available and requests comply with the
Public Finance Act 1989.
ii)
Confirmation of the Bank Account and submission of the Invoice as described in
clause 6(a); and
iii) When the Invoice is submitted it is accompanied by:
(1) written confirmation from the Representative of the Recipient that the
Information
Funding is still required and the Funding will be used solely for the operating
costs of the Recipient;
(2) written advice illustrating the actual and immediate need for funding to be
drawn down from the Agreement; and
Official
(3) written advice detailing the forecast expenditure rate of the funding made
available through the Agreement.
the
iv) The funding must be applied solely by the Recipient to its operating costs related
to the rating of unrestricted material and the issue of labels for media content
under the Films, Videos, Publications and Classification Act 1993.
v)
The Recipient will draw funding against this agreement in the period of 1 January
under
to 1 April this will ensure that each instance of funding is noted separately for
reporting purposes for both the recipient and DIA.
vi) The Conditions are for the benefit of DIA and may be waived at DIA’s sole
discretion.
Released
8)
Ongoing warranties
a) The Recipient provides the following warranties (“
Ongoing Warranties”) at the
Commencement Date and continuously throughout the Term (as relevant):
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Document 6
i)
it has the authority to enter into this Agreement and that all information provided
in relation to this Agreement is true, complete and accurate;
ii)
it has obtained all the decisions and/or authority that it needs to obtain from the
Committee of the Recipient or any other party in order to perform the
obligations, and provide the assurances it provides in this Agreement;
iii) it will continue to use the Funding solely for the Authorised Costs and will not
apply it to capital costs of the Recipient or any other cost that is not expressly
1982
authorised by this Agreement;
iv) it will keep financial records in accordance with generally accepted accounting
Act
principles and to a high standard that demonstrate appropriate use of public
funds and provide clear evidence about use of the Funding by the Recipient;
v)
it will cooperate and participate in a timely manner in all monitoring activities
undertaken by DIA or its agents in relation to this Funding or for related purposes;
and
vi) provide the reports as provided for in the Schedule 1 (“
Reports”) and provide any
other reporting that DIA may require from time to time in respect of this
Information
Agreement and the Funding.
9)
Claw-back of Funding
a) The parties agree that if, following payment of the Funding:
Official
i)
the Agreement is terminated prior to the Expiry Date;
the
ii)
the Funding is not applied to Authorised Costs; and/or
iii) the Recipient breaches any of the Ongoing Warranties,
b) DIA may choose to recover the Funding in part or in full from the Recipient, and may
under
advise other government agencies and other Recipient funders (both actual and
potential) of the recovery of the Funding and the reasons for that action.
c) Any surplus Funding that has not been allocated to an Authorised Cost may be
recovered by DIA in full or in part at its absolute discretion. The Recipient must pay
such surplus to DIA on demand prior to the Expiry Date.
10)
DIA warranty
Released
a) DIA warrants that it has the authority to enter into this Agreement and pay the
Funding to the Recipient. All information provided in relation to this Agreement is
true, complete and accurate.
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Document 6
11)
Termination
a) This Agreement ends on the Expiry Date unless ended earlier.
b) DIA may terminate this agreement immediately prior to the Expiry Date if the
Recipient:
i)
does not meet the Conditions by 30 April 2023;
1982
ii)
breaches any of the Ongoing Warranties;
iii) fails to fulfil, or breaches any of its obligations under this Agreement;
Act
iv) where there is a change of government policy that limits the availability of the
Funding for the remaining term of this Agreement. If this situation does arise, DIA
will give the Recipient as much notice of the proposed change as soon as possible,
to the extent that DIA is able to do so;
v)
in respect of a remediable issue in relation to clauses 11(b)(ii) and (iii) above, fails
to satisfactorily respond to, address or remedy any issues identified by DIA within
10 days of DIA notice being sent; or
Information
vi) becomes insolvent, bankrupt, subject to any form of insolvency action or
administration, or wound up on a voluntary basis or otherwise.
c) The Recipient agrees that if this Agreement expires or is terminated:
Official
i)
the Recipient must continue to fulfil its obligations and comply with any reporting
or audit requirements as required;
the
ii)
DIA may recover any surplus Funding that has not been allocated to an
Authorised Cost in full or in part at its absolute discretion. The Recipient must
pay such surplus to DIA on demand and acknowledges that this will constitute a
liability that the Recipient must satisfy on wind up; and
under
iii) provisions that by their nature are intended to survive expiry or termination will
do so.
12)
Information and information sharing
a) The Recipient will keep full and accurate records (including accounting records) of the
Funding acquired through this agreement. This will be used to provide clear evidence
Released
about use of the Funding by the Recipient for seven years after the Expiry Date.
b) The Recipient recognises that DIA may be required to release information under the
Official Information Act 1982, or in response to a parliamentary question or other
parliamentary process. DIA will advise the Recipient of such release as soon as
practicable prior to the release.
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Document 6
c) The Recipient agrees that DIA may publish the fact of the Funding being authorised,
made, or not made in any forum at DIA’s discretion.
13)
Representatives
a) The parties will communicate about the Agreement and the Funding (including the
provision of notices under this Agreement) by way of the following Representatives:
1982
DIA
Name: Phillipa Guthrey
Act
Phone: 027 310 2758
Email: [email address]
Recipient
Name: Sharon Walling
Phone: 09 300 4860
Em
ail: [email address]
Information
14)
Notices
a) Any notice given under or in relation to this Agreement shall be in writing and sent by
electronic mail or delivered to the recipient Party’s relevant address in clause 12
above.
Official
15)
Variation
the
a) Any change to this Agreement is called a Variation. A Variation must be agreed by
both parties and recorded in writing and signed by both parties.
16)
Dispute Resolution
under
a) The parties agree that they will attempt to resolve any disputes and disagreements in
relation to this Agreement and the Funding amicably and in good faith. The following
process will apply to disputes:
i)
a party must notify the other if it considers a matter is in dispute;
Released
ii) the Representatives will attempt to resolve the dispute through direct
negotiation;
iii) if the Representatives have not resolved the dispute within 10 working days of
notification, they will refer it to the parties' senior managers for resolution; and
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Document 6
iv) if the senior managers have not resolved the dispute within 10 working days of it
being referred to them, the parties shall refer the dispute to mediation or some
other form of alternative dispute resolution.
b) If a dispute is referred to mediation, the mediation will be conducted:
i)
by a single mediator agreed by the parties or, if they cannot agree, appointed by
the Chair for the time being of the Resolution Institute;
1982
ii) on the terms of the Resolution Institute’s standard Mediation Agreement (NZ
version); and
Act
iii) at a fee to be agreed by the parties or, if they cannot agree, at a fee determined
by the Chair for the time being of the Resolution Institute.
c) If a dispute is not resolved through mediation, the dispute will be referred for arbitration
under the Arbitration Act 1996.
d) Each Party will pay its own costs of mediation or alternative dispute resolution under
this clause.
Information
e) During a dispute, each party will continue to perform its obligations under this
Agreement as far as practical given the nature of the dispute.
f) Each party agrees not to start any court action in relation to a dispute until it has
Official
complied with the process described in this clause, unless court action is necessary to
preserve a party's rights.the
17)
Severability
a) If any term or provision of this Agreement is held to be illegal, invalid or
unenforceable it will be severed from the Agreement without affecting the legality,
under
validity or enforceability of the remaining provisions.
18)
Assignment
a) The Recipient must not assign, delegate, subcontract or transfer any or all of its rights
and obligations under this Agreement.
Released
19)
Relationship
a) Nothing in this Agreement creates a legal relationship between the Recipient and DIA of
partnership, joint venture, agency or employment.
Page 7 of 10
Document 6
20)
Entire Agreement
a) This Agreement, including any Variations, constitutes the entire Agreement and
overrides all prior oral and written understandings, arrangements and statements that
have been made.
21)
Governing Law and Jurisdiction
1982
a) This Memorandum of Understanding is governed by, and will be construed in
accordance with, the laws of New Zealand.
Act
Information
Official
the
under
Released
Page 8 of 10
Document 6
Signed as an agreement
Signed by
The Sovereign in right of New
Zealand acting by and through
the Chief Executive of the Department
of Internal Affairs:
1982
Act
_______________________
Signature
Marilyn Little
_______________________________
Print Full Name
Deputy Chief Executive
______________________________
Print Title
2/03/2023
Date:_________________________
Information
Signed by the
Film and Video Labelling Body Incorporated:
_______________________________
Signature
Official _______________________________
Print Full Name
the
________________________________
Print Title
Date:__________________________
under
Released
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Document 6
SCHEDULE 1
REPORTING
The Recipient agrees to provide the following reports to DIA at the following times:
REPORTING SCHEDULE
1982
Report Due By
Report Type
31/03/2023
Expenditure report outlining how the
Act
30/06/2023
Funding is being, or has been, applied
30/09/2023
(receipts from transactions are not
20/12/2023
required).
31/03/2024
30/06/2024
30/09/2024
20/12/2024
31/03/2025
30/06/2025
30/09/2025
Information
31/03/2023
30/06/2023
30/09/2023
20/12/2023
Expenditure report contrasting actual
31/03/2024
spend of funding made available
30/06/2024
Official
through the Agreement, against the
30/09/2024
expenditure rate and budgeting
20/12/2024
provided to DIA alongside the Invoice.
31/03/2025
the
30/06/2025
30/09/2025
20/12/2025
under
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Document 7
PORTFOLIO: INTERNAL AFFAIRS
Table 5: Fiscal y Neutral Adjustments
Amount
Reason
($million)
Regulatory Services MCA
1982
Departmental Output
(0.150)
A transfer of funding to Miscellaneous Grants –
Expense: Regulatory Services
Internal Affairs to ensure the Film and Video
Labelling Body can meet its financial obliga�ons
in 2021/22 following years of revenue decline,
Act
exacerbated by COVID-19 (revenue Crown and
expenditure) [2021/22 only]
Non-Departmental Other Expenses
Non-Departmental Other
0.150
A transfer of funding from the Regulatory
Expense: Miscel aneous
Services MCA to ensure the Film and Video
Grants – Internal Affairs
Labelling Body can meet its financial obliga�ons
in 2021/22 following years of revenue decline,
Information
exacerbated by COVID-19 (expenditure only)
[2021/22 only]
Official
the
under
Released
Page 1 of 1
Document Outline
