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Department of Agriculture Annual Report 2018–19

Notes to and forming part of the Financial Statements: Notes 16–27

Note 16: Administered – Expenses

	2019	2018
	$'000	$'000
Note 16A: Levy Disbursements and Commonwealth Contributions
Levy disbursements
Corporate Commonwealth entities	181 918	188 129
Other	367 271	374 224
Commonwealth Contributions
Corporate Commonwealth entities	120 410	121 832
Other	197 770	191 531
Total levy disbursements and Commonwealth contributions	867 369	875 716

Note 16B: Grants
Non-profit organisations	65 462	71 312
Australian Government entities (related parties)	24 220	17 989
Local Governments	15 038	90
For profit organisations	10 844	163 025
State and Territory Governments	9 588	15 032
Other	770	148
Total grants	125 922	267 596

Accounting policy

The department administers a number of grant and subsidy schemes on behalf of the Government. Grant and subsidy liabilities are recognised to the extent that (i) the services required to be performed by the grantee have been performed or (ii) the grant eligibility criteria have been satisfied, but payments due have not been made.

When the Government enters into an agreement to make these grants and subsidies but services have not been performed or criteria satisfied, this is considered a commitment.

Note 16C: Payments to Corporate Commonwealth Entities
Murray-Darling Basin Authority	106 206	90 611
Australian Pesticides and Veterinary Medicines Authority	25 532	6 190
Wine Australia	15 924	16 014
Regional Investment Corporation	12 555	0
AgriFutures Australia	12 479	10 342
Fisheries Research and Development Corporation	1 015	3 905
Total payments to corporate Commonwealth entities	173 711	127 062

Accounting policy

Payments to corporate Commonwealth entities from amounts appropriated for that purpose are classified as administered expenses, equity injections or loans of the department. The appropriation to the department is disclosed in Note 25.

	2019	2018
	$'000	$'000
Note 16D: Suppliers
Goods and services supplied or rendered
Membership fees	18 517	16 548
Administration charge - loans	4 871	4 853
Contractors	4 866	4 258
Consultants	906	2 072
Other	3 532	2 768
Total goods and services supplied or rendered	32 692	30 499

Goods supplied	750	723
Services rendered	31 942	29 776
Total goods and services supplied or rendered	32 692	30 499

Total supplier expenses	32 692	30 499

Note 16E: Impairment Loss Allowance on Financial Instruments
Impairment on loans	1 139	410
Impairment on trade and other receivables	264	280
Total impairment loss allowance on financial instruments	1 403	690

Note 16F: Write-down and Impairment of Assets
Impairment on financial assets	1 668	2 110
Debt waiver of personal benefits receivable	792	4 109
Debt waiver - under Primary Industries Levies and Charges Collection Act 1991	575	463
Write-off of non-financial assets	120	213
Total write-down and impairment of other assets	3 155	6 895

Note 17: Administered – Income

	2019	2018
	$'000	$'000
Revenue

Taxation Revenue

Note 17A: Levies, Fees and Charges
Primary industry levies	549 871	553 062
Primary industry charges	14 193	12 869
Total levies, fees and charges	564 064	565 931

Figure 1: Levy revenue by industry for 2018-19

The department operated 12 cost recovery arrangements in 2018-19. Their balances ranged from a surplus of $39 million for the Import Clearance Arrangement to a deficit of $18.2 million for the Live Animal Exports Arrangement.

Non-Taxation Revenue

Note 17B: Interest
Loans	23 483	21 993
Unwinding of concessional loan discount	475	1 632
Other	18	294
Total interest	23 976	23 919

	2019	2018
	$'000	$'000

Note 17C: Other Revenue
Refunds of prior year payments	7 931	17 667
Registration Fees	1 620	1 570
Funds from the Natural Heritage Trust	0	889
Other	2 901	2 328
Total other revenue	12 452	22 454

Note 17D: Other Gains
Resources received free of charge - water entitlements	247 665	92 915
Joint operation gains	8 200	3 343
Change in fair value through profit or loss	432	0
Other	119	128
Total other gains	256 416	96 386

Accounting policy

All administered revenues relate to ordinary activities performed by the department on behalf of the Australian Government. As such, administered appropriations are not revenues of the department, who oversees distribution, or expenditure of the funds as directed.

Revenue also includes contributions from State and Territory governments in connection with the performance of the Water Efficiency Labelling and Standards (WELS) Regulator, Lake Eyre Basin Community Advisory Committee and the Great Artesian Basin Coordinating Committee.

Levies, Fees and Other Charges

Levies are collected by the department on behalf of industry and are disbursed, in conjunction with any relevant Commonwealth contribution, to special accounts, statutory marketing authorities, Commonwealth research and development corporations, and other industry boards and authorities.

The levels of levy revenue and disbursement during the year are monitored by the department with reference to production forecasts prepared by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), the Australian Bureau of Statistics (ABS) and field based data supplied by the department’s regional office compliance officers.

Levies are recognised on an accrual basis when the following conditions apply:

the levy payer/commodity group can be reliably identified;
the amount of levy payable can be reliably measured; and
it is probable that the levy payable will be collected.

The value of the accrual recognised ( 2019: $75 184 000, 2018: $69 313 000) relies on the estimation of the volume and value of probable future levy return lodgements, which relate to leviable commodity transactions that have occurred in the current financial year.

Also forming part of the department’s other charges are Biosecurity penalties, fines and forestry import charges collected by the Department of Home Affairs. As reporting is the responsibility of the principal department, these collections are recognised in the department's financial statements as administered items.

Resources Received Free of Charge

Contributions of assets at no cost or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements. Water entitlement assets valued at
$247 665 000 were acquired in 2019 (2018: $92 915 000) for no cost under the Sustainable Rural Water Use and Infrastructure Program (SRWUIP) grant program and are included in asset additions in Note 19.

Note 18: Administered – Financial Assets

	2019	2018
	$'000	$'000
Note 18A: Cash and Cash Equivalents
Cash in special accounts	901 073	589 698
Cash on hand or on deposit	1 032	0
Total cash and cash equivalents	902 105	589 698

Note 18B: Trade, Taxation and Other receivables
Goods and services receivables
Goods and services	1 975	736
Total goods and services receivables	1 975	736

Taxation receivables
Levies, fees and charges	11 670	12 283
Total taxation receivables	11 670	12 283

Loans
State and Territory Governments	706 177	804 949
Farm businesses	23 570	0
Total loans	729 747	804 949

Other receivables
Statutory receivables	51 407	16 486
Personal benefits	7 538	7 394
Emergency response receivables	6 469	10 801
Interest receivable from loans	5 565	3 982
Total other receivables	70 979	38 663
Total trade, taxation and other receivables (gross)	814 371	856 631

Less impairment loss allowance
Goods and services receivables	( 811)	( 277)
Taxation receivables	( 1 739)	( 1 858)
Loans	( 8 256)	( 410)
Other receivables	( 1 744)	( 1 623)
Total impairment loss allowance	( 12 550)	( 4 168)
Total trade, taxation and other receivables (net)	801 821	852 463

Loans to State and Territory Governments

At 30 June 2019, five loan schemes were in place for loans to State and Territory Governments. Loans to State and Territory Governments were made under the Farm Finance and Drought loan schemes for periods up to 5 years and the Dairy Recovery, Drought Recovery and Farm Business loan schemes for up to 10 years.

Loans are subject to biannual impairment assessments. No security is required on these loans to government agencies, but a charge over assets is registered by jurisdictions issuing the loans to farmers. If a State or Territory Government is unable to recover loans provided to program recipients, the respective liability to the Commonwealth will be reviewed in accordance with the applicable loan agreements.

Principal is repaid in full at maturity for the 5 year loans, and is partially amortised during years 6 – 10 of the 10 year loans (with balance paid at maturity). Interest rates were fixed with a 6 monthly review period. Effective interest rates averaged 3.71% (2018: 3.53%) for Farm Finance loans, 3.20% (2018: 3.01%) for Drought loans, 2.73% (2018: 2.67%) for Dairy Recovery and Drought Recovery loans, and 3.14% (2018: 3.08%) for Farm Business loans. Interest payments to the Commonwealth are due on the 10th day of the month following collection.

Loans to Farm Businesses

At 30 June 2019, two loan schemes were in place for loans provided to farm businesses managed through the Regional Investment Corporation (RIC). Loans were made under the Farm Investment and the Drought loan schemes for periods up to 10 years.

Loans are subject to biannual impairment assessments. Farm businesses must provide security on these loans. If the RIC are unable to recover loans provided to program recipients, the respective liability to the Commonwealth will be reviewed in accordance with section 11 of the Regional Investment Corporation Operating Mandate Direction 2018.

Principal is partially amortised during years 6 – 10 (with balance paid at maturity). Interest rates were fixed with a 6 monthly review period. Effective interest rates averaged 3.64% (2018:N/A) for Farm Investment and Drought loans. Interest payments are due on the 10th day of the month following collection.

Accounting Judgements and Estimates

Loans to State and Territory Governments and Farm Businesses

The impairment provision for the loans provided to State and Territory Governments and farm businesses has been calculated using a 12-month Expected Credit Loss (ECL) methodology and represents a best estimate of the potential loss that may arise in the event of loan default. The ECL calculation is a result of three key parameters:

Probability of default (PD) - the likelihood of a loan recipient defaulting on repayment commitments,
Loss given default (LGD) - the financial loss to the Commonwealth if a loan defaults; and
Risk overlay - the uncertainty inherent in the loan portfolio.

The value of the provision varies from year to year due to changes in loan recipient’s ability to repay which, in turn, may be impacted by macroeconomic factors, commodity prices, interest rates, and input prices. The department engaged an independent expert to ensure the provision is consistent with commercial practices and appropriate loan provisioning parameters.

Emergency response receivables

Emergency response receivables relate to arrangements where the Commonwealth initially funds an affected industry’s share of the response to emergency plant pest or animal disease incursions. The industry must ensure that the Commonwealth is repaid within a reasonable period (usually defined as within 10 years). These receivables are usually repaid through statutory biosecurity levies. As there are no fixed repayment amounts, and only a maximum period of time in which to repay, these receivables are held at fair value through profit or loss. To estimate the fair value of the receivable balance, the department uses a discounted cash flow approach to adjust the receivable to the net present value of the anticipated cash flows.

	2019	2018
	$'000	$'000
Note 18C: Investments in Corporate Commonwealth Entities
AgriFutures Australia	26 643	22 555
Australian Pesticides and Veterinary Medicines Authority	16 826	7 203
Cotton Research and Development Corporation	38 784	37 704
Fisheries Research and Development Corporation	28 671	24 335
Grains Research and Development Corporation	258 844	199 363
Murray-Darling Basin Authority	102 848	79 394
Regional Investment Corporation	8 016	6 793
Wine Australia	20 913	22 875
Total investments in corporate Commonwealth entities	501 545	400 222

Accounting policy

Administered Investments

Administered investments in subsidiaries, joint ventures and associates are not consolidated because their consolidation is relevant only at the Whole of Government level.

Administered investments are not held for sale and are measured at fair value as at 30 June 2019. Fair value has been taken to be the Australian Government’s proportional interest in the net assets of the investment as at the end of reporting period.

	2019	2018
	$'000	$'000
Note 18D: Other Financial Assets
Accrued primary industry levies	72 618	67 322
Accrued primary industry charges	2 566	1 991
Total other financial assets	75 184	69 313

Note 19: Administered – Non-Financial Assets

Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles

	Land	Infrastructure	Plant & equipment	Flooding easements	Water entitlements	Total
	$’000	$’000	$’000	$’000	$’000	$’000
As at 1 July 2018
Gross book value	1 467	860 027	4 345	814	139 227	1 005 880
Accumulated depreciation and impairment	0	( 335 486)	( 2 630)	0	( 12 707)	( 350 823)
Total as at 1 July 2018	1 467	524 541	1 715	814	126 520	655 057

Additions	0	713	534	0	407 610	408 857
Revaluations recognised in other comprehensive income	0	9 229	0	0	0	9 229
Reversal of impairments recognised in the operating result	0	0	0	0	6 955	6 955
Depreciation expense	0	( 7 454)	( 293)	0	0	( 7 747)
Disposals:
Transferred to related entities	0	0	0	0	( 407 243)	( 407 243)
Write-off	0	0	( 120)	0	0	( 120)
Total as at 30 June 2019	1 467	527 029	1 836	814	133 842	664 988

Total as at 30 June 2019 represented by:
Gross book value	1 467	876 133	4 607	814	139 594	1 022 615
Accumulated depreciation and impairment	0	( 349 104)	( 2 771)	0	( 5 752)	( 357 627)
Total as at 30 June 2019	1 467	527 029	1 836	814	133 842	664 988

Disposal of non-financial assets

No property, plant and equipment is expected to be sold or disposed of within the next 12 months. Water entitlements acquired as part of the department’s responsibilities under Water Act 2007 will be transferred to the Department of the Environment and Energy upon finalisation.

Revaluations of non-financial assets

Revaluations are conducted in accordance with the revaluation policy.

Infrastructure assets held by the River Murray Operation (RMO) joint operation are revalued by an independent, external valuer on a three year cycle. For the year ended 30 June 2019 an internal management valuation, using the relevant Rawlinson’s Building Price Index, was performed by the Murray-Darling Basin Authority (MDBA). Refer to the Joint Operations section below for more information on joint operation arrangements. A revaluation increment of $9 229 000 was recognised by the department.

All increments and decrements were credited to the asset revaluation surplus by asset class and included in the other comprehensive income section of the Administered Schedule of Comprehensive Income. No decrements were expensed.

Contractual commitments for the acquisition of property, plant, equipment and intangible assets

There were no contractual commitments for the acquisition of water entitlements as at 30 June 2019
(2018: $90 680 000).

There were no contractual commitments for the acquisition of property, plant and equipment as at 30 June 2019.

Joint operations

The Australian Government is a joint operator in the following jointly controlled operations and assets:
		Share of Output
	Principal	2019	2018
	activity	%	%
River Murray Operations joint operation	Asset Management	20	20
Living Murray Initiative joint operation	Asset Management	20	20

The Australian Government’s interest, as a joint operator, in assets employed in the above joint operations is detailed below. The amounts are included in the financial statements under their respective asset categories:

		2019	2018
		$'000	$'000
Joint Operations
Non-current assets
Land
River Murray Operations		1 467	1 467
Infrastructure
River Murray Operations		527 029	524 541
Plant & equipment
River Murray Operations		1 836	1 715
Flooding easements
River Murray Operations		814	814
Water entitlements
Living Murray Initiative		133 435	126 481
Total non-current assets		664 581	655 018
Total assets		664 581	655 018

Accounting policy

Joint Operations

The Australian Government is an operator of jointly controlled assets held in the RMO and Living Murray Initiative (LMI) joint operations. The Australian Government has control over its share of future economic benefits through its 20% share of the jointly controlled assets. The Australian Government recognises its share of the jointly controlled assets in its financial statements, classified according to the nature of the assets, its share of any liabilities incurred in respect of the joint operation and any income from the sale or use of its share of the output of the joint operation, together with its share of any expenses incurred by the joint operation.

Land, plant and equipment and flooding easements

Land, plant and equipment, and flooding easements assets recognised by the department represent the Commonwealth Government's share in the RMO.

RMO land, plant and equipment, and flooding easements are carried at cost, consistent with the FRR.

Infrastructure

Infrastructure assets recognised by the department represent the Commonwealth Government's share in the RMO.

RMO infrastructure assets are recorded at fair value in accordance with AASB 116 Property, Plant and Equipment, and AASB 13 Fair Value Measurement. Infrastructure assets are valued by an independent external valuer on behalf of the RMO every three years. In the intervening two years of the revaluation cycle, values are assessed by means of an internal management valuation. The latter is an indexation based valuation using the relevant Building Price Index.

Impairment

Administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Depreciation

Depreciable infrastructure and plant and equipment assets are written-down over their estimated useful lives using the straight-line method of depreciation.

	2019	2018
Infrastructure	7 to 400 years	7 to 400 years
Plant and equipment	3 to 80 years	3 to 80 years

Water Entitlements

The department acquires water entitlements in the Murray Darling Basin to achieve the Government's environmental policy objectives under the Water Act 2007. Water entitlements are acquired in two ways, by direct purchase or ‘free of charge’.

Under the Federal Financial Relations Framework, National Partnership Payments are processed centrally by the Department of the Treasury and paid directly to each state treasury for delivery of services, including water efficiency projects that generate water savings.

State Treasuries are responsible for distributing the funding within their jurisdiction. In the Commonwealth, the Treasurer is accountable for the appropriations, estimates and payments under the framework. For National Partnership agreements, the primary responsibility for policy is with the relevant portfolio Minister. The department receives water entitlements 'free of charge' in accordance with the terms and conditions of payments made by the Treasury under the National Partnership on Water for the Future (refer to Note 17D).

Under the various water-related programs, there are a number of projects which improve the efficiency of irrigation infrastructure and generate savings in the use of water. As part of these arrangements, the Australian Government will receive a share of that water saving in the form of water entitlements for use in delivering the Government's environmental watering objectives.

Water entitlements received ‘free of charge’ are recognised as gains at their fair value using a valuation hierarchy. The valuation hierarchy prioritises recent comparable Commonwealth water purchases, followed by recent comparable prices on State registers, and may then require a cost-benefit analysis before an external or in-house valuation is undertaken. Comparable prices may include water entitlements for the equivalent category of entitlement (trading zone and security type) and excludes non-market or low value trades.

Once the department has finalised water entitlements as an asset in use, the Water Act 2007 requires the department to transfer the entitlements to the Commonwealth Environmental Water Holder. The department recognises the transfer of the asset as an expense in accordance with the FRR.

The department's remaining water entitlement holdings are as a result of the LMI joint operation and entitlements that are not yet classified as in use.

The department values water entitlements at cost, in the absence of an active market, in accordance with AASB 138 Intangible Assets. Water entitlements are classified as indefinite life intangible assets as there is no foreseeable limit to the period over which the assets are expected to generate future economic benefits. Consistent with AASB 136 Impairment of Assets and the FRR, they are subject to annual impairment testing.

Under AASB 136, the impairment test is carried out by comparing the carrying amount (per the department's asset register) to the recoverable amount of the water entitlements. The recoverable amount of the water entitlements is the higher of fair value less costs to sell and value in use. The recoverable amount calculation is performed at the lowest practical level, taking into account the quality and availability of data.

The department's valuation methodology calculates the recoverable amount of the water entitlements based on the best information available to reflect the amount that the department could obtain from the disposal of the water entitlements in an arm's length transaction between knowledgeable, willing parties. This approach is consistent with AASB 136.

The determination of impairment and impairment reversals is conducted annually by an independent expert, using the volume-weighted average price on publicly reported market information on State registers reported from 1 July 2018 to 31 May 2019.

An impairment loss recognised in prior periods will be reversed if there is any indication that the impairment may no longer exist or may have decreased. The increased carrying amount attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

Data from State registers has been relied upon to determine the impairment and the fair value of the water entitlements received ‘free of charge’ as required by the valuation hierarchy. As noted in a recent audit of trade prices published by MDBA this data contains uncertainties over its accuracy. The department has addressed this by excluding non-market or low value trades. To ensure the validity of the impairment and fair value of the water entitlements received ‘free of charge’ the department undertook additional reviews using broker data from an independent consultant. The broker data was sourced from surveys of water brokers and trading exchanges and supports the department’s calculations.

Note 20: Administered – Payables

	2019	2018
	$'000	$'000
Note 20A: Levy Disbursements and Commonwealth Contributions
Levy disbursements	52 113	34 891
Commonwealth contributions	101 235	66 305
Total levy disbursements and Commonwealth contributions	153 348	101 196

Note 20B: Grants
Non-profit organisations	3 244	2 385
State and Territory Governments	92	754
Australian Government entities (related parties)	50	150
For profit organisations	164	79
Total grants	3 550	3 368

Note 21: Administered – Provisions

Note 21A: Loan Commitments to Farm Businesses

	Loans to Farm Businesses
As at 1 July 2018	0
Additional commitments made	17 881
Total as at 30 June 2019	17 881

Accounting policy

Concessional loan commitments represent the concessional cost of commitments to provide loan advances at a below-market interest rate. Commitments to Farm Businesses reflect the concessional cost of loan advances that were committed, but not paid, by the Regional Investment Corporation on behalf of the Department of Agriculture as at 30 June 2019. All advances are expected to be paid in the 2019-20 financial year.

Accounting Judgements and Estimates

Concessional loan commitments are initially measured at their fair value, calculated as the present value of cash flows associated with loan advances committed, but not paid, at the time the commitment is made, discounted at the commercial market interest rate. The provision is subsequently measured at amortised cost and reduced for the concessional component as each loan is advanced.

Note 22: Administered - Aggregate Assets and Liabilities

	2019	2018
	$'000	$'000
Note 22A: Administered Aggregate Assets and Liabilities

Assets to be recovered in:
No more than 12 months	1 218 523	840 573
More than 12 months	1 738 346	1 741 845
Total assets	2 956 869	2 582 418

Liabilities to be settled in:
No more than 12 months	178 021	107 541
More than 12 months	0	0
Total liabilities	178 021	107 541

Note 23: Administered – Contingent Assets and Liabilities

Quantifiable Contingencies
There were no quantifiable contingent assets or contingent liabilities as at 30 June 2019 (2018: Nil).
Unquantifiable Contingencies
The Australian Government encourages expenditure on research and development to increase the competitiveness and sustainability of industries within Australia. Under several Acts, the Commonwealth provides contributions to a number of nominated entities responsible for undertaking research and development activities in respect of portfolio industries. These contributions are typically made on a matching basis. Under legislation, entities are eligible for matching contributions which are subject to annual “caps” based on the total cumulative amount of levies collected, amounts spent on qualifying research and development and the annual level of the determined gross value of production. The operation of these annual caps can result in annual entitlements being limited to less than full cumulative levy collections and/or cumulative qualifying research and development expenditure. However, unpaid balances may still be claimable, depending on the level of the caps determined in future years and are therefore carried forward from year to year.
At 30 June 2019, the Commonwealth had a maximum potential liability in respect of matching payments of approximately $659 million (30 June 2018: $599 million). The Commonwealth's actual future liability is contingent on a combination of several currently indeterminable independent factors which are beyond the control of both the department and the recipient entities, in particular the future annual levels of levy collections and determined gross values of production. The likelihood of meeting the eligibility requirements and the amount of future payments is uncertain. Hence, the total liability is considered unquantifiable.

Accounting policy

Indemnities

At the time of completion of the financial statements, there was no reason to believe that the indemnities would be called upon, and no liability has been recognised.

Note 24: Administered – Financial Instruments

	2019	2018
	$'000	$'000
Note 24A: Categories of Financial Instruments
Financial Assets under AASB 139
Loans and receivables
Cash and cash equivalents		589 698
Goods and services		459
Loans		804 539
Interest receivable from loans		3 982
Emergency response receivables		10 801
Total loans and receivables		1 409 479

Available-for-sale financial assets
Investments in corporate Commonwealth entities		400 222
Total available-for-sale financial assets		400 222

Financial Assets under AASB 9
Financial assets at amortised cost^{1, 2}
Cash and cash equivalents	902 105
Goods and services	1 164
Loans	721 491
Interest receivable from loans	5 565
Total financial assets at amortised cost	1 630 325

Financial assets at fair value through profit or loss³
Emergency response receivables	6 469
Total financial assets at fair value through profit or loss	6 469

Financial assets at fair value through other comprehensive income⁴
Investments in corporate Commonwealth entities	501 545
Total financial assets at fair value through other comprehensive income	501 545

Total financial assets	2 138 339	1 809 701

Financial Liabilities
Financial liabilities measured at amortised cost
Trade creditors	718	298
Grants payable	3 550	3 368
Total financial liabilities at amortised cost	4 268	3 666

Total financial liabilities	4 268	3 666

1. The net income from interest revenue for loans and receivables in 2019 is $23 976 000 (2018: $23 919 000).

2. The impairment recognised in the comprehensive income statement for financial assets at amortised cost in 2019 is $1 403 000 (2018: $690 000).

3. The net fair value gain in the administered comprehensive income statement for financial assets at fair value through profit or loss in 2019 is $432 000 (2018: nil).

4. The net fair value gain recognised in the administered comprehensive income statement for financial assets at fair value through other comprehensive in 2019 is $101 323 000 (2018: $30 709 000).

Classification of financial assets on the date of initial application of AASB 9
Financial assets class	Notes	AASB 139 original classification	AASB 9 new classification	AASB 139 carrying amount at 1 July 2018	AASB 9 carrying amount at 1 July 2018
Financial assets class				$'000	$'000
Cash and cash equivalents	18A	Loans and receivable	Amortised Cost	589 698	589 698
Goods and services	18B	Loans and receivable	Amortised Cost	459	189
Loans	18B	Loans and receivable	Amortised Cost	804 539	797 832
Interest receivable from loans	18B	Loans and receivable	Amortised Cost	3 982	3 982
Emergency response receivables	18B	Loans and receivable	FVTPL	10 801	10 236
Investments in corporate Commonwealth entities	18C	Available-for-sale financial assets	FVOCI	400 222	400 222
Total financial assets				1 809 701	1 802 159

Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9
	AASB 139 carrying amount at 1 July 2018	Re-classification	Re-measurement	AASB 9 carrying amount at 1 July 2018
	$'000	$'000	$'000	$'000
Financial assets at amortised cost
Loans and receivable
Cash and cash equivalents	589 698	0	0	589 698
Goods and services	459	0	( 270)	189
Loans	804 539	0	( 6 707)	797 832
Interest receivable from loans	3 982	0	0	3 982
Emergency response receivables	10 801	( 10 801)	0	0
Total amortised cost	1 409 479	( 10 801)	( 6 977)	1 391 701

Financial assets at fair value through profit or loss
Loans and receivable
Emergency response receivables	0	10 801	( 565)	10 236
Financial assets at fair value through profit or loss	0	10 801	( 565)	10 236

Financial assets at fair value through other comprehensive income
Available-for-sale financial assets
Investments in corporate Commonwealth entities	400 222	0	0	400 222
Total fair value through other comprehensive income	400 222	0	0	400 222

Total financial assets	1 809 701	0	( 7 542)	1 802 159

These tables reflect the transition from AASB 139 to AASB 9 whereby classifications of financial assets and the impairment methodology have changed from the ‘incurred loss’ model to the ‘expected credit loss’ model, which means that a loss event will no longer need to occur before an impairment allowance is recognised.

The emergency response receivables were reclassified from loans and receivable to fair value through profit or loss as it does not meet the requirements of basic lending arrangements and therefore cannot be recognised at amortised cost.

Note 25: Administered – Appropriations

Note 25A: Annual and Unspent Appropriations ('Recoverable GST exclusive')
	2019	2018
	$'000	$'000
Ordinary annual services
Opening unspent appropriation balance	136 951	71 254
Annual Appropriation - Operating¹	587 848	548 867
PGPA Act section 74 receipts¹	15 408	1 181
PGPA Act section 75 transfers	0	( 3 000)
PGPA Act section 51 determinations	( 14 766)	( 56 394)
Prior years Appropriation Acts repealed	0	( 5 755)
Total available appropriation	725 441	556 153
Appropriation applied (current and prior years)¹	( 334 493)	( 419 202)
Closing unspent appropriation balance	390 948	136 951
Balance comprises appropriations as follows:
Appropriation Act (No.1) 2016-17²	23 250	23 250
Supply Act (No.1) 2016-17²	1 750	1 750
Appropriation Act (No.1) 2017-18	65 531	70 257
Appropriation Act (No.3) 2017-18	40 698	41 644
Appropriation Act (No.5) 2017-18	50	50
Appropriation Act (No.1) 2018-19	202 816	0
Appropriation Act (No.3) 2018-19	56 797	0
Cash on hand - Appropriation Act (No.1) 2018-19	56	0
Total unspent appropriation - ordinary annual services	390 948	136 951

¹ The variance between amounts appropriated in 2019 and appropriation applied is $268 763 000. This is due to unspent current year appropriations ($259 669 000) which is predominantly due to delays to the implementation of the Murray-Darling Basin Plan, PGPA Act section 51 determinations made in the current year ($14 766 000) offset by prior years appropriation applied in 2019 ($5 672 000).
² Appropriation Act (No.1) 2016-17 and Supply Act (No.1) 2016-17 were administratively quarantined and self-repealed on 1 July 2019.

Other services
Opening unspent appropriation balance	446 039	504 968
Annual appropriation - Administered assets and liabilities³	715 478	671 000
PGPA Act section 75 transfers	0	( 50 000)
Prior year PGPA Act section 75 transfers	0	( 50 000)
PGPA Act section 51 determinations	0	( 140 127)
Prior years Appropriation Acts repealed⁴	( 69 103)	( 182 780)
Total available appropriation	1 092 414	753 061
Appropriation applied (current and prior years)³	( 194 012)	( 307 022)
Closing unspent appropriation balance	898 402	446 039
Balance comprises appropriations as follows:
Appropriation Act (No.2) 2015-16⁴	0	69 103
Appropriation Act (No.2) 2016-17⁵	25 000	134 104
Supply Act (No.2) 2016-17⁵	15 000	68 851
Appropriation Act (No.2) 2017-18	177 492	173 981
Appropriation Act (No.2) 2018-19	659 977	0
Appropriation Act (No.4) 2018-19	20 000	0
Cash on hand - Appropriation Act (No.2) 2018-19	933	0
Total unspent appropriation - other services	898 402	446 039

³ The variance between amounts appropriated in 2019 and appropriation applied is $521 466 000. This is comprised of unspent current year appropriations ($680 910 000) offset by prior years appropriation applied in 2019 ($159 444 000). The variance is due to lower than anticipated loan advances ($465 431 000) and lower than anticipated water entitlement purchases ($56 035 000).
⁴ Appropriation Act (No.2) 2015-16 self-repealed on 1 July 2018.
⁵ Appropriation Act (No.2) 2016-17 and Supply Act (No.2) 2016-17 self-repealed on 1 July 2019.
Total unspent appropriation	1 289 350	582 990

Note 25B: Special Appropriations ('Recoverable GST exclusive')

Authority	Appropriation applied
	2019	2018
	$'000	$'000
Agricultural and Veterinary Chemicals (Administration) Act 1992	( 28 500)	( 32 400)
Australian Animal Health Council (Live-stock Industries) Funding Act 1996	( 7 787)	( 7 568)
Australian Meat and Live-stock Industry Act 1997	( 216 985)	( 198 911)
Dairy Produce Act 1986	( 54 884)	( 49 149)
Egg Industry Service Provision Act 2002	( 11 428)	( 10 357)
Farm Household Support Act 2014¹	( 112 381)	( 34 752)
Forestry Marketing and Research and Development Services Act 2007	( 11 947)	( 12 456)
Horticulture Marketing and Research and Development Services Act 2000	( 107 020)	( 107 675)
Pig Industry Act 2001	( 23 362)	( 22 906)
Plant Health Australia (Plant Industries) Funding Act 2002	( 9 849)	( 9 135)
Primary Industries Research and Development Act 1989	( 228 792)	( 257 778)
Public Governance, Performance and Accountability Act 2013	( 657)	( 1 899)
Sugar Research and Development Services Act 2013	( 29 406)	( 31 709)
Wine Australia Act 2013	( 32 812)	( 35 802)
Wool Services Privatisation Act 2000	( 96 406)	( 85 977)
Total special appropriations applied	( 972 216)	( 898 474)

¹ The amount of $112 381 000 (2018: $34 752 000) was transferred to the Department of Human Services.

The following special appropriations had no transactions and budgets during the reporting and comparative years:

Australian Meat and Live-stock Industry (Repeals and Consequential Provisions) Act 1997
Dairy Industry Service Reform Act 2003
Egg Industry Service Provision (Transitional and Consequential Provisions) Act 2002
Horticulture Marketing and Research and Development Services (Repeals and Consequential Provisions) Act 2000
Public Governance, Performance and Accountability (Consequential and Transitional Provisions) Act 2014
Sewerage Agreements Act 1973
Sewerage Agreements Act 1974
Water Act 2007

Note 26: Administered – Special accounts

	Natural Resources Management¹		Water for the Environment Special Account²
	2019	2018	2019	2018
	$'000	$'000	$'000	$'000
Balance brought forward from previous period	2 590	2 777	581 846	158 805
Increases	400	889	320 000	430 000
Total increases	400	889	320 000	430 000
Available for payments	2 990	3 666	901 846	588 805
Decreases	( 2 990)	( 1 076)	( 6 324)	( 6 959)
Total decreases	( 2 990)	( 1 076)	( 6 324)	( 6 959)
Total balance carried to the next period	0	2 590	895 522	581 846
Balance made up of:
Cash held in the Official Public Account	0	2 590	895 522	581 846
Total balance carried to the next period	0	2 590	895 522	581 846

¹ Appropriation: Public Governance, Performance and Accountability Act 2013 section 80.

Establishing Instrument: Natural Resources Management (Financial Assistance) Act 1992 section 11.

Purpose: For the purposes of granting financial assistance in connection with projects relating to natural resources management.

² Appropriation: Public Governance, Performance and Accountability Act 2013 section 80.

Establishing Instrument: Water Act 2007 section 86AB.

Purpose: For the purpose of improving the water efficiency of irrigation infrastructure and improving delivery and storage of environmental water supply within the Murray Darling Basin.

The Water for the Environment Special Account increases related to statutory credits in Water Act 2007 section 86AG.


	Water Efficiency Labelling Scheme Account¹		Water Resources Special Account 2016²
	2019	2018	2019	2018
	$'000	$'000	$'000	$'000
Balance brought forward from previous period	4 272	3 844	975	994
Increases	1 901	1 922	183	394
Total increases	1 901	1 922	183	394
Available for payments	6 173	5 766	1 158	1 388
Decreases	( 1 584)	( 1 494)	( 211)	( 413)
Total decreases	( 1 584)	( 1 494)	( 211)	( 413)
Total balance carried to the next period	4 589	4 272	947	975
Balance made up of:
Cash held in the Official Public Account	4 589	4 272	947	975
Total balance carried to the next period	4 589	4 272	947	975

¹Appropriation: Public Governance, Performance and Accountability Act 2013 section 80.

Establishing Instrument: Water Efficiency Labelling and Standards Act 2005 section 64.

Purpose: For the purpose of conserving water by reducing demand through the provision of water efficiency information about water-using products and promoting the adoption of efficient water-saving techniques.

² Appropriation: Public Governance, Performance and Accountability Act 2013 section 78.

Establishing Instrument: PGPA Act (Water Resources Special Account 2016 - Establishment) Determination 2016/01.

Purpose: For the purpose of supporting inter-governmental activities relating to water.

The department has responsibility for the National Cattle Disease Eradication Account. For the year ended 30 June 2019, the total balance carried to the next period was $15 161 (2018: $15 161). There were no transactions debited or credited to the account during the current or prior reporting period.

Appropriation: Public Governance, Performance and Accountability Act 2013 section 80.

Establishing Instrument: National Cattle Disease Eradication Act 1991 section 4.

Purpose: For the purpose of the eradication of any disease of cattle that is endemic in Australia.

The department has responsibility for the Building Australia Fund Water Portfolio Special Account. For the year ended 30 June 2019, the account had a nil balance and there were no transactions debited or credited to it during the current or prior reporting period.

Appropriation: Public Governance, Performance and Accountability Act 2013 section 80.

Establishing Instrument: Nation-building Funds Act 2008 section 82.

Purpose: For the purpose of creating and developing water infrastructure.

Note 27: Interest in Cooperative Research Centre

The Cooperative Research Centres Program, launched in 1990 by the Commonwealth Government, was established to assist two or more collaborators to carry out research contributing to the development of internationally competitive industry sectors. The program supported long term high quality research, improved links between research and application, and stimulation of education and training. The original agreement, that expired on 1 July 2012, for the Cooperative Research Centre for National Plant Biosecurity, was for seven years.

The subsequent five year agreement amended the name to the Plant Biosecurity Cooperative Research Centres (PBCRC) ended on 30 June 2018. The department’s interest in the PBCRC for the year ending 30 June 2019 was nil (2018: 1.6%).

During the financial year the department made no cash and in kind contributions to the PBCRC from its own resources (2018 actual: $309 425).

The department’s made no contributions and recognised no expenses during 2019 in the Statement of Comprehensive Income. The department’s total contribution for the life of the Cooperative Research Centres listed above was $2 552 621 (2018 actual: $2 552 621).

The department now facilitates plant biosecurity research, development and extension through the Plant Biosecurity Research Initiative (PBRI).

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Department of Agriculture Annual Report 2018–19

Notes to and forming part of the Financial Statements: Notes 16–27

Note 16: Administered – Expenses

Note 17: Administered – Income

Note 18: Administered – Financial Assets

Note 19: Administered – Non-Financial Assets

Note 20: Administered – Payables

Note 21: Administered – Provisions

Note 22: Administered - Aggregate Assets and Liabilities

Note 23: Administered – Contingent Assets and Liabilities

Note 24: Administered – Financial Instruments

Note 25: Administered – Appropriations

Note 26: Administered – Special accounts

Note 27: Interest in Cooperative Research Centre

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