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Notes to and Forming Part of the Financial Statements - People and Relationships

10. Employee Provisions

2020

2019

$'000

$'000

10A Employee provisions

Annual leave

48,586

44,008

Long service leave

(a)

88,458

88,626

Salaries and wages

(b)

6,489

22,984

Superannuation

(b)

2,322

3,806

Redundancy

31,848

371

Total employee provisions

177,703

159,795

Employee provisions are expected to be settled in:

no more than 12 months

163,469

144,562

more than 12 months

14,234

15,233

Total employee provisions

177,703

159,795

(a) The settlement of employee provisions is based on the individual employee’s entitlement to leave. Where an employee has a current entitlement to leave (i.e. is presently entitled to take the leave), the value of that entitlement is included in the employee provisions expected to settle in no more than 12 months. Where the Corporation expects that an employee will be entitled to leave in the future but is not yetentitled to that leave, the value of the leave is included in the employee provision expected to settle in more than 12 months.

(b) A provision is made for estimated historical salary and wages and superannuation entitlements owed to certain employees. This estimate is based on an extrapolation of entitlements calculated for a portion of potentially affected employees and factors-in risks and uncertainties associated with the settlement of the liability. The provision for superannuation also includes an amount in respect of an outstanding employer contribution to a defined benefit superannuation scheme.

Recognition and measurement

Liabilities for short-term employee benefits and termination benefits expected within twelve months of the end of reporting period are measured at their nominal amounts. Other long-term employee benefits are measured as the net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave

Leave liabilities are calculated based on employees’ remuneration at the estimated salary rates that will apply at the time the leave is taken, including the employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. The calculation is based on the anticipated length of time taken for an employee to fully settle his/her leave entitlement.

The liability for long service leave has been determined by reference to the work of an actuary, PricewaterhouseCoopers Securities Ltd. The liability for long service leave is the present value of the estimated future cash outflows to be made by the Corporation resulting from employees’ services provided up to 30 June 2020.

The estimate of the present value of the liability as at March 2020 considers attrition rates and pay increases through promotion and inflation. A discount rate of 0.6% per annum was applied to calculate the present value of the liability (2019 1.2%).

This discount rate is based on the Commonwealth Government bond yield for a bond with a similar term to the liability.

Redundancy

A provision is made for separation and redundancy benefit payments. The ABC recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

ABC employees are members of the Commonwealth Superannuation Scheme (CSS), Public Sector Superannuation Scheme (PSS), the Public Sector Superannuation Accumulation Plan Scheme (PSSap) or another non-Commonwealth Superannuation fund.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and other non-Commonwealth funds are defined contribution schemes.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

The Corporation makes employer contributions to the employee defined benefit superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government of the superannuation entitlements of the Corporation’s employees. The Corporation accounts for the contributions in the same manner as contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June 2020 represents outstanding contributions at the end of the period.

Expenses

Expenses attributable to the aforementioned employee benefits and provisions are reported in Note 3A Employee benefits.

Assumptions surrounding uncertainty – Measurement of leave liabilities

The discount rates used in valuing leave liabilities are based on Australian government bond rates with maturities that closely align with the length of the liability. The ABC regularly reviews leave liabilities and impact of any adjustment to bond rates on these balances.

Leave liabilities are also impacted by assumptions surrounding future salary inflation. The ABC regularly monitors factors that are likely to impact future salary inflation.

11. Key Management Personnel Remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of the Corporation.

The Corporation determined key management personnel as the members of the Board, the Managing Director, Content Team Directors and the Chief Financial Officer. Remuneration of key management personnel is reported below with prior year remuneration of those individuals no longer considered key management personnel included in “Other”.

Details of the remuneration of key management personnel for the year ended 30 June 2020

2020

2019

$

$

Short term employee benefits

Post employment benefits: super- annuation

Other long term employee benefits: long service leave

Termination benefits

Total

Short term employee benefits

Post employment benefits: super- annuation

Other long term employee benefits: long service leave

Termination benefits

Total

Executive management

David Anderson (Managing Director)

938,034

126,514

(66,534)

-

998,014

799,136

73,310

265,933

-

1,138,380

Michael Carrington

432,683

21,003

15,008

-

468,694

297,179

15,399

9,679

-

322,257

Melanie Kleyn

423,155

21,003

6,941

-

451,099

202,256

10,318

2,623

-

215,197

Gaven Morris

443,974

70,196

(18,740)

-

495,430

504,462

64,473

31,211

-

600,146

Judith Whelan

398,161

21,003

10,632

-

429,796

284,214

13,511

10,779

-

308,504

Other

-

-

-

-

-

786,284

71,635

4,128

1,990,668

2,852,715

Board

Ita Buttrose (Chair)

178,190

27,441

-

-

205,631

53,863

8,295

-

-

62,158

Jane Connors

58,670

10,209

-

-

68,879

57,510

10,007

-

-

67,517

Kirstin Ferguson

87,970

8,357

-

-

96,327

115,916

11,012

-

-

126,928

Joseph Gersh

58,670

5,574

-

-

64,244

57,510

5,463

-

-

62,973

Vanessa Guthrie

58,670

5,574

-

-

64,244

57,563

5,469

-

-

63,032

Peter Lewis

58,670

9,035

-

-

67,705

57,510

8,857

-

-

66,367

Georgina Somerset

58,670

5,574

-

-

64,244

58,972

5,602

-

-

64,574

Donny Walford

58,670

5,574

-

-

64,244

57,510

5,463

-

-

62,973

Other

-

-

-

-

-

43,673

4,149

-

-

47,821

Total

3,254,187

337,057

(52,693)

-

3,538,551

3,433,557

312,963

324,353

1,990,668

6,061,541

Total number included above

13

17

Notes on remuneration

a. All Executive Managers and Board members served for the full financial year. Executive Managers Michael Carrington, Melanie Kleyn and Judith Whelan all served in their roles for part of the financial year in the prior year.

b. “Other” comprises prior year remuneration of those individuals who departed the Corporation in 2019.

c. The above table is prepared on an accrual basis, including remuneration at risk. Remuneration at risk is recognised in the period in which the decision to pay the entitlement is made.

Other long-term employee benefits: Long Service Leave reflects the estimated entitlement to long service leave that was accrued during the period, calculated in accordance with the methodology explained in Note 10 Employee Provisions. This includes changes to the value of an employee's accrued leave entitlement that resulted from a change in their salary during the period.

d. The above key management personnel remuneration excludes the remuneration and other

benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set

by the Remuneration Tribunal and are not paid by the Corporation.

e. Remuneration of the Chair and Directors of the Board is determined by the Remuneration Tribunal. In addition to the remuneration of the Chair and Directors of the Board disclosed above, the Board incurred travel and other expenses of $311,228 (2019 $324,678).

f. The aggregate remuneration of other Senior Executives and Other Highly Paid Employees is

published in the ABC's Annual Report.

12. Related Party Disclosures

Related party relationships

The Corporation is an Australian Government controlled entity. Related parties to the Corporation include Key Management Personnel, the Portfolio Minister and other Australian Government entities as well as those entities controlled, or jointly operated, by the Corporation.

Directors of the Corporation

The Directors of the Corporation during the year were:

  • Ita Buttrose (AO OBE) (Chair)
  • Dr Kirstin Ferguson;
  • Peter Lewis;
  • Donny Walford;
  • Dr Vanessa Guthrie;
  • Georgina Somerset;
  • Dr Jane Connors (staff elected);
  • Joseph Gersh (AM);
  • David Anderson (Managing Director)

Transactions with entities controlled by the Corporation

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Transactions with related parties

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. These transactions have not been separately disclosed in this note.

Considering relationships with related parties, and transactions entered into during the year by the Corporation, it has been determined that there are no additional related party transactions to be separately disclosed.

Controlled Entities

Country of incorporation

Beneficial percentage held by ABC

Beneficial percentage held by ABC

2020

2019

Ultimate parent entity:

Australian Broadcasting Corporation

Controlled entities of Australian Broadcasting Corporation:

Music Choice Australia Pty Ltd

Australia

100%

100%

The News Channel Pty Limited

Australia

100%

100%

ABC AustraliaPlus (Shanghai) Cultural Development Co., Ltd

People's Republic of China

100%

100%

Music Choice Australia Pty Ltd and The News Channel Pty Limited

These companies are wholly owned subsidiaries of the Corporation that did not trade during the year ended 30 June 2020 and have been dormant since 2000.

ABC AustraliaPlus (Shanghai) Cultural Development Co., Ltd (AustraliaPlus)

This company is a wholly owned subsidiary of the Corporation, incorporated in the People’s Republic of China. This company did not operate during the year ended 30 June 2020.

Related Parties

The Corporation is involved in the following joint arrangements

Ownership Share

2020

2019

Party to the joint operation

Principal activity

MediaHub Australia Pty Limited

Operating facility for television presentation

50%

50%

Freeview Australia Limited

Promote adoption of free-to-air digital television

16%

16%

National DAB Licence Company Limited

Operates the digital radio multiplex licence

50%

50%

Relationships and transactions with parties to Joint Operations

The Corporation has commercial relationships determined at reporting date to be joint operations. The Corporation’s interests in these entities are accounted for applying proportionate consolidation in accordance with AASB 11 Joint Arrangements.

The Corporation’s interest in MediaHub is included in the Corporation’s financial statements under their respective categories. Interests in Freeview Australia Limited (Freeview) and National DAB Licence Company Limited (DAB) are not material.

ABC employees who are directors of the aforementioned entities are neither remunerated nor receive any other benefits from these entities.

All transactions with parties to Joint Arrangements were at arm’s length. No dividends were received from any of these entities in 2020 (2019 nil).

Summarised financial information of MediaHub Australia Pty Limited

2020

2019

$'000

$'000

Statement of financial position

Financial assets

11,624

8,422

Non-financial assets

30,568

35,005

Financial liabilities

(7,919)

(10,332)

Net assets

34,273

33,095

Statement of comprehensive income

Income

22,439

22,076

Expense

20,820

21,454

Profit/(loss) before tax

1,619

622

Share of surplus/(deficit) attributable to joint arrangements

Share of net profit/(loss) before tax

810

311

Share of income tax (benefit)/expense

(73)

28

Share of surplus/(deficit) attributable to joint arrangements after tax

883

283

MediaHub Australia Pty Limited

MediaHub is a joint operation between the Corporation and WIN Television Network Pty Ltd (WIN) to operate a custom designed play-out facility for television presentation.

Both the ABC and WIN own an equal number of ordinary shares in MediaHub. The ABC also owns Class B shares in MediaHub which do not confer an ownership interest. The ABC has made a cumulative net capital contribution of $19,928,793 (2019 $19,044,703) to MediaHub.

Two ABC employees are directors of MediaHub.

Freeview Australia Limited

Freeview is a joint operation between many of Australia’s free-to-air national and commercial television broadcasters to promote consumer adoption of free-to-air digital television within Australia.

The ABC jointly controls Freeview and holds 160 $0.10 shares at 30 June 2020 (2019 160 $0.10 shares) equating to a 16% (2019 16%) share. At 30 June 2020, two ABC employees (2019 two) are directors of Freeview.

The Corporation contributes towards the operational costs of Freeview in proportion to its shareholding and may also provide other operational services to Freeview as required.

The Corporation did not receive any material income from Freeview. The ABC paid $527,027 in 2020 (2019 $772,592) towards the operational costs of Freeview. These costs did not constitute a capital contribution and were recognised directly in the Corporation’s Statement of Comprehensive Income.

National DAB Licence Company Limited

DAB is a joint operation between the ABC and Special Broadcasting Service (SBS) to hold the digital multiplex licence. The ABC and SBS each hold one $1 share in DAB at 30 June 2020 (2019 one $1 share each). Two ABC employees are directors of DAB.

DAB is not a party to any service contracts for the provision of digital radio and does not receive the funds for digital radio operations/broadcast from the Government as these are paid directly to the ABC and SBS.

The ABC made contributions of $7,250 towards the operational costs of DAB in 2020 of which $250 related to 2019 (2019 $6,126). The amounts paid were recognised directly in the ABC’s Statement of Comprehensive Income.