Notes to and forming part of the financial statements
1. Departmental Financial Performance
1.1 Expenses
This section analyses the financial performance of the Department of Communications and the Arts for the year ended 2019.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.1A: Employee Benefits |
||
Wages and salaries |
54,060 |
52,202 |
Superannuation |
||
Defined contribution plans |
5,097 |
4,943 |
Defined benefit plans |
5,145 |
5,217 |
Leave and other entitlements |
7,528 |
6,912 |
Separation and redundancies |
490 |
728 |
Other employee expenses |
748 |
1,019 |
Total employee benefits |
73,068 |
71,021 |
Accounting Policy
Accounting policies for employee related expenses are contained in the People and Relationships section at Note 6.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.1B: Suppliers |
||
Goods and services supplied or rendered |
||
Consultants and contractors |
10,096 |
8,827 |
IT services |
8,493 |
7,489 |
Office requisites |
999 |
1,158 |
Property |
1,603 |
2,465 |
Training |
1,259 |
1,458 |
Travel |
2,592 |
2,041 |
Other goods and services |
3,877 |
3,423 |
Total goods and services supplied or rendered |
28,919 |
26,861 |
Goods supplied |
3,009 |
3,177 |
Services rendered |
25,910 |
23,684 |
Total goods and services supplied or rendered |
28,919 |
26,861 |
Other suppliers |
||
Workers compensation expenses |
191 |
323 |
Operating lease rentals |
9,643 |
10,929 |
Total other suppliers |
9,834 |
11,252 |
Total suppliers |
38,753 |
38,113 |
Leasing commitments
The Department in its capacity as lessee for 2 Phillip Law St, Canberra is subject to a 3.5% fixed annual adjustment with a market rent review in April 2023. The lease term expires on 14 December 2027.
The Department in its capacity as lessee for Level 46, 360 Elizabeth Street, Melbourne is subject to a 4% fixed annual adjustment. The lease term expires on 3 April 2022.
The Department in its capacity as lessee for 23-33 Mary Street Level 6, Sydney is subject to a 3% fixed annual adjustment. The lease term expires on 14 May 2021.
The Department in its capacity as lessee for 222 Young Street, Sydney is subject to a 3% fixed annual adjustment. The lease term expires on 31 December 2023.
The Department in its capacity as lessee for 18-24 Down Street, Collingwood is subject to a 3% fixed annual adjustment with a market rent review in January 2025. The lease term expires on 31 December 2026.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: |
||
Within 1 year |
9,844 |
9,355 |
Between 1 to 5 years |
38,903 |
36,304 |
More than 5 years |
35,589 |
45,313 |
Total operating lease commitments |
84,336 |
90,972 |
The above commitment amounts are GST inclusive.
Accounting Policy
Where an asset is acquired by means of a finance lease, the asset is capitalised at the lower of the fair value of the leased property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount.
The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.
Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.1C: Finance Costs |
||
Unwinding of discount |
3 |
19 |
Total finance costs |
3 |
19 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.1D: Impairment Loss Allowance on Financial Instruments |
||
Impairment of financial instruments |
7 |
- |
Total impairment loss allowance on financial instruments |
7 |
- |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.1E: Losses from Asset Sales |
||
Heritage and cultural: |
||
Proceeds from sale |
- |
(721) |
Carrying value of assets sold |
- |
1,126 |
Property, plant and equipment: |
||
Carrying value of assets disposed |
85 |
543 |
Building: |
||
Carrying value of assets transferred |
- |
5,212 |
Intangibles: |
||
Carrying value of assets disposed |
44 |
86 |
Net losses from asset sales |
129 |
6,246 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.1F: Other Expenses |
||
Contributions to corporate Commonwealth entities |
1,270 |
3,551 |
Contributions to State and Territory Governments |
678 |
368 |
Contributions to Non-profit organisations |
370 |
465 |
Contributions to Administered special account |
856 |
786 |
Other contributions |
- |
50 |
Other expenses |
26 |
- |
Total other expenses |
3,200 |
5,220 |
1.2 Own-Source Revenue and Gains
2019 $'000 |
2018 $'000 |
|
---|---|---|
Own-Source Revenue |
||
Note 1.2A: Sale of Goods and Rendering of Services |
||
Rendering of services |
3,625 |
3,788 |
Total sale of goods and rendering of services |
3,625 |
3,788 |
Accounting Policy
Revenue from the sale of goods and rendering of services is recognised when:
a) The risks and rewards of ownership have been transferred to the buyer; and
b) The entity retains no managerial involvement or effective control over the goods.
The stage of completion of contracts at the reporting date is determined by reference to:
a) Surveys of work performed;
b) Services performed to date as a percentage of total services to be performed; or
c) The proportion that costs incurred to date bear to the estimated total costs of the transaction.
Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.2B: Rental Income |
||
Rental reimbursements for car parking |
- |
10 |
Rental Rebates |
37 |
39 |
Operating Lease Rental |
1,954 |
1,837 |
Total rental income |
1,991 |
1,886 |
Subleasing rental income commitments
The Department in its capacity as lessor sublet two floors at 2 Phillip Law St, Canberra as of 1 July 2017. The lease is subject to a 3.5% fixed annual adjustment, with a market rent review in April 2023. The lease term expires on 14 December 2027.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Commitments for sublease rental income receivables are as follows: |
||
Within 1 year |
1,991 |
1,924 |
Between 1 to 5 years |
8,688 |
8,394 |
More than 5 years |
8,538 |
10,823 |
Total sublease rental income commitments |
19,217 |
21,141 |
The above commitment amounts are GST inclusive.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.2C: Other Revenue |
||
Refunds from prior year payments |
- |
2 |
Special account contributions |
1,151 |
1,392 |
Other |
231 |
275 |
Total other revenue |
1,382 |
1,669 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.2D: Other Gains |
||
Resources received free of charge |
415 |
396 |
Reversal of provisions |
- |
1,781 |
Leasehold fitout |
- |
16,498 |
Total other gains |
415 |
18,675 |
Accounting Policy
Resources received free of charge
Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 1.2E: Revenue from Government |
||
Appropriations |
||
Departmental appropriations |
107,763 |
104,179 |
Total revenue from Government |
107,763 |
104,179 |
Accounting Policy
Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the entity gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.
2. Income and Expenses Administered on Behalf of Government
2.1 Administered – Expenses
This section analyses the activities that the Department of Communications and the Arts does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.1A: Suppliers |
||
Goods and services supplied or rendered |
||
Consultants and contractors |
346,194 |
361,220 |
Royalty payments |
21,818 |
22,312 |
Other goods and services |
8,193 |
423 |
Total goods and services supplied or rendered |
376,205 |
383,955 |
Goods supplied |
15 |
33 |
Services rendered |
376,190 |
383,922 |
Total goods and services supplied or rendered |
376,205 |
383,955 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.1B: Grants |
||
Public sector |
||
Australian Government entities (related parties) |
82,418 |
85,088 |
State and Territory Governments |
1,710 |
2,967 |
Local Governments |
2,156 |
2,029 |
Private sector |
||
Not-for-profit organisations |
91,491 |
88,968 |
Commercial entities |
71,805 |
107,650 |
Total grants |
249,580 |
286,702 |
Accounting Policy
The entity 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 grant and subsidy payments but services have not been performed or criteria satisfied, this is considered a commitment.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.1C: Impairment Loss Allowance on Financial Instruments |
||
Impairment on trade and other receivables |
241 |
- |
Total impairment loss allowance on financial instruments |
241 |
- |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.1D: Write-Down and Impairment of Other Assets |
||
Revaluation decrement - Land and Buildings |
- |
1,582 |
Total write-down and impairment of other assets |
- |
1,582 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.1E: Payments to corporate Commonwealth entities |
||
Australian Broadcasting Corporation |
1,045,911 |
1,043,680 |
Special Broadcasting Service Corporation |
281,726 |
280,058 |
Australia Council |
208,186 |
209,393 |
Australian Film, Television and Radio School |
22,584 |
22,683 |
Australian National Maritime Museum |
21,415 |
20,727 |
National Film and Sound Archive of Australia |
23,932 |
24,028 |
National Museum of Australia |
45,164 |
41,444 |
National Library of Australia |
55,557 |
51,836 |
National Portrait Gallery of Australia |
11,685 |
10,809 |
Screen Australia |
11,335 |
11,394 |
National Gallery of Australia |
45,010 |
30,787 |
Old Parliament House |
16,425 |
16,059 |
Total payments to corporate Commonwealth entities |
1,788,930 |
1,762,898 |
Accounting Policy
Payments to corporate Commonwealth entities from amounts appropriated for that purpose are classified as administered expenses, equity injections or loans of the relevant portfolio department. The appropriation to the department is disclosed under the Funding section – Appropriations at Note 5.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.1F: Other Expenses |
||
International membership fees |
7,219 |
7,027 |
Prizes and awards |
600 |
595 |
Entitlements |
4,951 |
4,577 |
Contributions |
855 |
1,071 |
Other expenses |
- |
334 |
Total other expenses |
13,625 |
13,604 |
2.2 Administered – Income
2019 $'000 |
2018 $'000 |
|
---|---|---|
Revenue |
||
Non-Taxation Revenue |
||
Note 2.2A: Sale of Goods and Rendering of Services |
||
Rendering of services |
3,628 |
3,702 |
Total sale of goods and rendering of services |
3,628 |
3,702 |
Accounting Policy
All administered revenues are revenues relating to ordinary activities performed by the entity on behalf of the Australian Government. As such, administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.2B: Interest |
||
Australian Broadcasting Corporation |
1,539 |
2,132 |
NBN Co Limited |
351,835 |
69,730 |
Total interest |
353,374 |
71,862 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.2C: Dividends |
||
Australian Postal Corporation |
42,205 |
78,472 |
Total dividends |
42,205 |
78,472 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.2D: Rental Income |
||
Indefeasible Rights of Use |
1,529 |
1,529 |
Total rental income |
1,529 |
1,529 |
Accounting Policy
Rental Income is recognised over the term of the Indefeasible Rights of Use granted by the Commonwealth to external parties for use of the Administered property, plant and equipment.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.2E: Other Revenue |
||
Grant refunds |
43 |
378 |
Contributions |
856 |
786 |
Other revenue |
43 |
73 |
Total other revenue |
942 |
1,237 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 2.2F: Other Gains |
||
Reversal of prior year payables |
5,527 |
6,406 |
Total other gains |
5,527 |
6,406 |
3. Departmental Financial Position
3.1 Financial Assets
This section analyses the Department of Communications and the Arts assets used to conduct its operations and the operating liabilities incurred as a result. Employee related information is disclosed in the People and Relationships section.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 3.1A: Cash and Cash Equivalents |
||
Cash in special accounts |
300 |
240 |
Cash on hand or on deposit |
844 |
972 |
Cash held in the OPA (special accounts) |
4,448 |
3,454 |
Total cash and cash equivalents |
5,592 |
4,666 |
Accounting Policy
Cash is recognised at its nominal amount. Cash and cash equivalents includes:
- Cash on hand;
- Demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value; and
- Cash in special accounts.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 3.1B: Trade and Other Receivables |
||
Goods and services receivables |
||
Goods and services |
834 |
2,147 |
Total goods and services receivables |
834 |
2,147 |
Appropriations receivable |
||
For existing programs |
17,458 |
17,766 |
Total appropriations receivable |
17,458 |
17,766 |
Other receivables |
||
GST receivable from the Australian Taxation Office |
596 |
444 |
Other |
515 |
847 |
Total other receivables |
1,111 |
1,291 |
Total trade and other receivables (gross) |
19,403 |
21,204 |
Less impairment loss allowance |
||
Other receivables |
(16) |
(9) |
Total impairment loss allowance |
(16) |
(9) |
Total trade and other receivables (net) |
19,387 |
21,195 |
All receivables are expected to be recovered in no more than 12 months.
Credit terms for goods and services were within 30 days (2018: 30 days).
Accounting Policy
Financial assets
Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.
3.2 Non-Financial Assets
Note 3.2A: Reconciliation of the Opening and Closing Balances of Buildings, Property, Plant and Equipment and Intangibles for 2019 |
||||||
---|---|---|---|---|---|---|
Buildings $’000 |
Heritage and cultural $’000 |
Property, Plant and Equipment $’000 |
Computer software internally developed $’000 |
Computer software purchased $’000 |
Total $’000 |
|
As at 1 July 2018 |
||||||
Gross book value |
15,199 |
36,103 |
8,397 |
14,134 |
967 |
74,800 |
Accumulated depreciation, amortisation and impairment |
(1,356) |
(369) |
(379) |
(7,777) |
(761) |
(10,642) |
Total as at 1 July 2018 |
13,843 |
35,734 |
8,018 |
6,357 |
206 |
64,158 |
Additions |
||||||
Purchase |
733 |
468 |
77 |
- |
- |
1,278 |
Internally developed |
- |
- |
- |
4,023 |
- |
4,023 |
Impairments recognised in net cost of services |
- |
- |
- |
- |
- |
- |
Revaluations recognised in net cost of services |
- |
- |
- |
- |
- |
- |
Reclassifications |
(90) |
(40) |
(67) |
- |
(12) |
(209) |
Depreciation and amortisation |
(1,837) |
(140) |
(1,347) |
(1,841) |
(62) |
(5,227) |
Disposals |
||||||
From disposal of obsolete items |
- |
- |
(85) |
(39) |
(5) |
(129) |
Total as at 30 June 2019 |
12,649 |
36,022 |
6,596 |
8,500 |
127 |
63,894 |
Total as at 30 June 2019 represented by |
||||||
Gross book value |
15,842 |
36,531 |
8,272 |
16,340 |
942 |
77,927 |
Accumulated depreciation, amortisation and impairment |
(3,193) |
(509) |
(1,676) |
(7,840) |
(815) |
(14,033) |
Total as at 30 June 2019 |
12,649 |
36,022 |
6,596 |
8,500 |
127 |
63,894 |
Assets under construction are included in the value of property, plant and equipment of nil (2018: $548,002) and computer software internally developed of $4,141,712 (2018: $1,506,274).
All revaluations are conducted in accordance with the revaluation policy stated at Note 7.4. An independent valuer conducted the revaluations as at 30 June 2019.
There were no revaluation decrements recognised in 2019. Revaluation decrements in 2018 of $358,656 for leasehold improvements and $24,653 for property, plant and equipment were debited from the asset revaluation reserve and included in the equity section of the Statement of Financial Position.
As at 30 June 2019 no intangible assets were found to be impaired.
Contractual commitments for the acquisition of property, plant, equipment and intangible assets for 2019 |
|||
---|---|---|---|
Capital Commitments |
Within 1 year $’000 |
Between 1 to 5 years $’000 |
More than 5 years $’000 |
Computer software internally developed |
3,393 |
- |
- |
Total capital commitments |
3,393 |
- |
- |
Contractual commitments for the acquisition of property, plant, equipment and intangible assets for 2018 |
|||
Capital Commitments |
Within 1 year |
Between 1 to 5 years |
More than 5 years |
$’000 |
$’000 |
$’000 |
|
Buildings |
156 |
- |
- |
Property, plant and equipment |
68 |
- |
- |
Computer software internally developed |
300 |
- |
- |
Total capital commitments |
524 |
- |
- |
The above commitment amounts are GST inclusive.
Accounting Policy
Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.
Property, Plant and Equipment
Asset Recognition Threshold
Purchases of property, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items that are significant in total).
The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make-good’ provisions in property leases taken up by the Department where an obligation exists to restore the property to its original condition. These costs are included in the value of the Department’s leasehold improvements with a corresponding provision for the ‘make-good’ recognised.
Revaluations
Fair values for each class of asset are determined as shown below:
Asset Class |
Fair Value measured at: |
---|---|
Land and buildings |
Depreciated replacement cost |
Property, plant and equipment |
Market selling price or depreciated replacement cost |
Heritage and cultural asset |
Active market |
Following initial recognition at cost, property, plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.
Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit, except to the extent that they reverse a previous revaluation increment for that class.
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.
Assets purchased during the financial year are excluded from asset revaluation as they represent fair value.
Depreciation
Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Department using, in all cases, the straight-line method of depreciation. Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.
Depreciation rates applying to each class of depreciable asset are based on the following useful lives:
2019 |
2018 |
|
---|---|---|
Buildings |
||
Leasehold improvements |
Lower of 10 years or lease term |
Lower of 10 years or lease term |
Property, Plant and Equipment |
||
Artworks |
Up to 480 years |
Up to 480 years |
Computer equipment |
3 to 5 years |
3 to 5 years |
Plant, office equipment, furniture and fittings |
5 to 10 years |
5 to 10 years |
Heritage and Cultural
Heritage and cultural items include artworks held by Artbank that are of national, historical or cultural significance. Artbank maintains separate curatorial and preservation policies for heritage and cultural assets: (http://artbank.gov.au/legal/#preservation-policy).
Impairment
All assets were assessed for impairment at 30 June 2019. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the entity were deprived of the asset, its value in use is taken to be its depreciated replacement cost.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.
Intangibles
The Department’s intangibles comprise software externally purchased and internally developed for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses. Software is amortised on a straight-line basis over its anticipated useful life.
The useful lives of the Department’s software are:
2019 |
2018 |
|
---|---|---|
Externally purchased software |
3 to 5 years |
3 to 5 years |
Internally developed software |
3 to 5 years |
3 to 5 years |
All software assets were assessed for indications of impairment as at 30 June 2019.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 3.2B: Other Non-Financial Assets |
||
Operating lease rentals - sublease |
452 |
188 |
Lease incentive - sublease |
593 |
663 |
Prepayments |
3,119 |
1,519 |
Total other non-financial assets |
4,164 |
2,370 |
3.3 Payables
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 3.3A: Suppliers |
||
Trade creditors and accruals |
3,724 |
3,794 |
Operating lease rentals |
1,799 |
740 |
Total suppliers |
5,523 |
4,534 |
The majority of suppliers engaged had 30 day payment terms.
Suppliers are expected to be settled in no more than 12 months.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 3.3B: Other Payables |
||
Salaries and wages |
457 |
569 |
Superannuation |
77 |
81 |
Employee transfers |
1,658 |
1,657 |
Lease incentive |
2,633 |
2,999 |
Prepayments received/unearned income |
2,111 |
2,030 |
Contributions |
106 |
176 |
Other |
450 |
90 |
Total other payables |
7,492 |
7,602 |
3.4 Other Provisions
Provision for make-good1 $’000 |
Total $’000 |
|
---|---|---|
As at 1 July 2018 |
221 |
221 |
Additional provisions made |
250 |
250 |
Amounts used |
(100) |
(100) |
Unwinding of discount or change in discount rate |
3 |
3 |
Total as at 30 June 2019 |
374 |
374 |
1The Department currently has two (2018: two) agreements for the leasing of premises that have provisions requiring the Department to restore the premises to their original condition at the conclusion of the lease. The Department has made a provision to reflect the present value of this obligation.
4. Assets and Liabilities Administered on Behalf of Government
4.1 Administered – Financial Assets
This section analyses assets used to conduct operations and the operating liabilities incurred that therefore the Department of Communications and the Arts does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 4.1A: Cash and Cash Equivalents |
||
Cash held in the OPA (special accounts) |
98 |
47 |
Total cash and cash equivalents |
98 |
47 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 4.1B: Trade and Other Receivables |
||
Advances and loans |
||
Loans to corporate Commonwealth entities |
||
Australian Broadcasting Corporation1 |
29,619 |
49,021 |
NBN Co Limited2 |
13,053,335 |
5,531,000 |
Total advances and loans |
13,082,954 |
5,580,021 |
Other receivables |
||
GST receivable from the Australian Taxation Office |
33,158 |
36,083 |
Grants receivable |
264 |
264 |
Other |
- |
1 |
Total other receivables |
33,422 |
36,348 |
Total trade and other receivables (gross) |
13,116,376 |
5,616,369 |
Less impairment loss allowance |
||
Loans to corporate Commonwealth entities3 |
(1,600) |
- |
Grants receivable |
(264) |
(1) |
Total impairment loss allowance |
(1,864) |
(1) |
Total trade and other receivables (net) |
13,114,512 |
5,616,368 |
1Loans to Australian Broadcasting Corporation were made under financial assistance legislation. No security isrequired. Interest rates are fixed. Principal and interest are repaid annually in arrears. Effective interest rates average 1.95% per annum (2018: 1.88% per annum).
2The Government has provided a loan to NBN Co Limited (NBN Co) on commercial terms of up to $19.5 billion with drawings available on a monthly basis. The loan was established in December 2016 and must be repaid in full by 30 June 2024. The loan has a fixed interest rate of 3.96% per annum with interest payable monthly over the life of the facility.
3The Department has assessed the loan to NBN Co on transition to AASB 9 Financial Instruments. In accordance with the requirements of AASB 9, the Department has determined that there has not been a significant increase in credit risk of the loan since inception and the probability of default has been assessed as extremely low. The impairment allowance has been calculated with reference to the probability of default. The allowance recognised by the Department is not indicative of an identified loss event for the NBN Co loan.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 4.1C: Other Investments |
||
Corporate Commonwealth entities: |
||
Australian Broadcasting Corporation |
1,071,656 |
1,033,352 |
Australian Postal Corporation |
2,224,649 |
2,582,229 |
Special Broadcasting Service Corporation |
222,626 |
215,544 |
Australia Council |
14,725 |
14,340 |
Australian Film, Television and Radio School |
11,105 |
11,122 |
Australian National Maritime Museum |
263,063 |
256,668 |
National Film and Sound Archive of Australia |
353,384 |
292,051 |
National Gallery of Australia |
6,333,026 |
6,314,864 |
National Library of Australia |
1,695,104 |
1,691,970 |
National Museum of Australia |
459,315 |
471,444 |
National Portrait Gallery of Australia |
146,170 |
143,798 |
Screen Australia |
17,749 |
17,743 |
Old Parliament House |
112,629 |
93,924 |
12,925,201 |
13,139,049 |
|
Commonwealth companies: |
||
NBN Co Limited1 |
8,682,301 |
13,247,377 |
Bundanon Trust |
59,196 |
58,729 |
Creative Partnerships Australia |
5,473 |
2,922 |
8,746,970 |
13,309,028 |
|
Total other investments |
21,672,171 |
26,448,077 |
For full details of the corporate Commonwealth entities and the Commonwealth companies please refer to each entity's individual financial statements.
1The Government’s loan to NBN Co is disclosed in Note 4.1B.
Accounting Policy
Administered investments in subsidiaries, joint ventures and associates are not consolidated because their consolidation is relevant only at the Whole of Australian Government level.
In accordance with AASB 13 Fair Value Measurement, the following techniques are used to value Administered Investments:
(a) Discounted Cash Flows – this method needs to be considered when an entity invests in another entity that generates significant non-government cash inflows; and
(b) Net Assets – this method needs to be considered when an entity invests in another entity that does not generate significant non-government cash inflows.
A review of all administered investments is performed on an annual basis to ensure the appropriate valuation method is used.
Administered investments, other than those held for sale, are classified as 'financial assets of fair value through other comprehensive income’ and are measured at their fair value as at 30 June 2019. Apart from Australian Postal Corporation, fair value has been taken to be the Australian Government's proportional interest in the net assets of the entities as at the end of reporting period.
Australian Postal Corporation’s fair value estimates are based on a Discounted Cash Flow valuation calculated using cash flow forecasts extracted from the Australia Post Corporate Plan 2019-20 to 2022-23. The forecasts use management estimates to determine volume and price growth rates, and the weighted average cost of capital. Actual results may differ from these estimates under different assumptions and conditions and may materially affect the financial position reported in future periods.
In accordance with AASB 9 Financial Instruments and AASB 13 Fair Value Measurement, the Department has determined that the appropriate valuation method for the investment in NBN Co as at 30 June 2019 is the net assets approach. NBN Co is still in the build phase of construction and its cash flows are predominately from government.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 4.1D: Other Financial Assets |
||
Assets forfeited under the Protection of Movable Cultural Heritage Act 19961 |
- |
19 |
Total other financial assets |
- |
19 |
1Items forfeited to the Commonwealth under subsection 14(1) of the Protection of Movable Cultural Heritage Act 1996.
4.2 Administered – Non-Financial Assets
Note 4.2A: Reconciliation of the Opening and Closing Balances of Buildings, Property, Plant and Equipment for 2019 |
|||
---|---|---|---|
Buildings $’000 |
Property plant and equipment $’000 |
Total $’000 |
|
As at 1 July 2018 |
|||
Gross book value |
56,377 |
148,012 |
204,389 |
Accumulated depreciation, amortisation and impairment |
- |
- |
- |
Total as at 1 July 2018 |
56,377 |
148,012 |
204,389 |
Additions |
|||
Purchase |
1,608 |
- |
1,608 |
Revaluations recognised in other comprehensive income |
- |
(1,841) |
(1,841) |
Revaluations recognised in comprehensive income |
- |
- |
- |
Depreciation and amortisation |
(2,416) |
(8,031) |
(10,447) |
Total as at 30 June 2019 |
55,569 |
138,140 |
193,709 |
Total as at 30 June 2019 represented by |
|||
Gross book value |
57,985 |
138,140 |
196,125 |
Accumulated depreciation, amortisation and impairment |
(2,416) |
- |
(2,416) |
Total as at 30 June 2019 |
55,569 |
138,140 |
193,709 |
No indicators of impairment were found for buildings or property, plant and equipment.
No buildings or property, plant or equipment is expected to be sold or disposed of within the next 12 months.
All revaluations were conducted in accordance with the revaluation policy stated at Note 7.5. An independent valuer conducted the revaluations as at 30 June 2019 for property, plant and equipment and buildings.
Revaluation decrements of $1,840,540 for property, plant and equipment (2018: $87,961) were debited to the asset revaluation reserve and included in the Statement of Other Comprehensive Income. There were no building decrements in 2019 (2018: $1,582,048).
Contractual commitments for the acquisition of property, plant, equipment assets for 2019 |
|||
---|---|---|---|
Within 1 year $’000 |
Between 1 to 5 years $’000 |
More than 5 years $’000 |
|
Buildings |
1,763 |
3,555 |
- |
Total capital commitments |
1,763 |
3,555 |
- |
Contractual commitments for the acquisition of property, plant, equipment assets for 2018 |
|||
Within 1 year $'000 |
Between 1 to 5 years $'000 |
More than 5 years $'000 |
|
Buildings |
1,769 |
5,319 |
- |
Total capital commitments |
1,769 |
5,319 |
- |
The above commitment amounts are GST inclusive.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 4.2B: Other Non-Financial Assets |
||
Other prepayments |
2,965 |
2,917 |
Total other non-financial assets |
2,965 |
2,917 |
4.3 Administered - Payables
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 4.3A: Suppliers |
||
Trade creditors and accruals |
330,215 |
340,653 |
Total suppliers |
330,215 |
340,653 |
Settlement is usually made within 30 days.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 4.3B: Grants |
||
Australian Government entities |
431 |
323 |
Local Governments |
166 |
53 |
Non-profit organisations |
1,397 |
197 |
Commercial entities |
11,261 |
29,059 |
Total grants |
13,255 |
29,632 |
All grant payables are expected to be settled in no more than 12 months. Settlement is usually made according to the terms and conditions of each grant within 30 days of performance or eligibility.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 4.3C: Other Payables |
||
GST payable to the Official Public Account |
5,410 |
5,643 |
Lease income received in advance1 |
11,347 |
12,876 |
Classification income received in advance |
449 |
523 |
Forfeited assets2 |
- |
19 |
Total other payables |
17,206 |
19,061 |
1Lease income received in advance relates to the indefeasible rights of use (IRUs) issued by the Commonwealth in relation to network infrastructure assets. As part of the arrangement for the construction of assets and the issue of IRUs, the Commonwealth has provided a lease incentive to the contractor in the form of a reduction of lease payments that would otherwise be payable to the Commonwealth for the IRUs. The lease incentive was recognised as a lease prepayment and lease income received in advance.
2Items forfeited to the Commonwealth under subsection 14(1) of the Protection of Movable Cultural Heritage Act 1996.
4.4 Administered – Provisions
Note 4.4A: Other Provisions |
||
---|---|---|
Provision for grants $'000 |
Total $'000 |
|
As at 1st July 2018 |
1,173 |
1,173 |
New provisions made |
- |
- |
Amounts used |
(1,173) |
(1,173) |
Amounts reversed |
- |
- |
Total as at 30 June 2019 |
- |
- |
5. Funding
5.1 Appropriations
This section identifies the Department of Communications and the Arts funding structure.
Note 5.1A: Annual Appropriations ('Recoverable GST exclusive') |
|||||
---|---|---|---|---|---|
Annual Appropriations for 2019 |
|||||
Annual appropriation $'000 |
Adjustments to appropriation1 $'000 |
Total appropriation $'000 |
Appropriation applied in 2019 (current and prior years) $'000 |
Variance2 $'000 |
|
Departmental |
|||||
Ordinary annual services |
107,763 |
8,706 |
116,469 |
115,904 |
565 |
Capital budget3 |
3,547 |
- |
3,547 |
4,269 |
(722) |
Other services |
|||||
Equity injections |
- |
- |
- |
150 |
(150) |
Total departmental |
111,310 |
8,706 |
120,016 |
120,323 |
(307) |
Administered |
|||||
Ordinary annual services |
|||||
Administered items |
417,246 |
- |
417,246 |
404,472 |
12,774 |
Capital budget3 |
1,608 |
- |
1,608 |
1,608 |
- |
Payments to corporate Commonwealth entities |
1,788,930 |
- |
1,788,930 |
1,788,930 |
- |
Other services |
|||||
Administered assets and liabilities |
5,055,869 |
- |
5,055,869 |
7,170,499 |
(2,114,630) |
Payments to corporate Commonwealth entities |
55,240 |
- |
55,240 |
55,240 |
- |
Total administered |
7,318,893 |
- |
7,318,893 |
9,420,749 |
(2,101,856) |
1 Departmental adjustments are PGPA Act Section 74 receipts.
2 Departmental variances relate to funds required to cover accruals and prior year funds expended in the current year. Administered variances relate to funds required to cover accruals, and the assets and liabilities variance relates to funding required by NBN Co in 2018-19 due to revised expenditure forecasts that reflect changes in the deployment profile and other payments.
3 Departmental and Administered Capital Budgets are appropriated through Appropriation Acts (No.1,3,5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.
Annual appropriations for 2018 |
|||||
---|---|---|---|---|---|
Annual $'000 |
Adjustments to appropriation2 $'000 |
Total appropriation $'000 |
Appropriation applied in 2018 (current and prior years) $'000 |
Variance3 $'000 |
|
Departmental |
|||||
Ordinary annual services |
104,179 |
11,030 |
115,209 |
116,145 |
(936) |
Capital budget4 |
3,558 |
- |
3,558 |
5,551 |
(1,993) |
Other services |
|||||
Equity injections |
- |
- |
- |
- |
- |
Total departmental |
107,737 |
11,030 |
118,767 |
121,696 |
(2,929) |
Administered |
|||||
Ordinary annual services |
|||||
Administered items |
450,885 |
- |
450,885 |
426,060 |
24,825 |
Capital budget4 |
1,636 |
- |
1,636 |
1,636 |
- |
Payments to corporate Commonwealth entities |
1,762,898 |
- |
1,762,898 |
1,762,898 |
- |
Other services |
|||||
Administered assets and liabilities |
9,158,817 |
- |
9,158,817 |
7,495,825 |
1,662,992 |
Payments to corporate Commonwealth entities |
40,601 |
- |
40,601 |
40,601 |
- |
Total administered |
11,414,837 |
- |
11,414,837 |
9,727,020 |
1,687,817 |
1 Administered Appropriation Act (No. 1) 2017-18 of $14,035,000 was withheld (Section 51 of the PGPA Act) on 26 June 2018 and quarantined for administrative purposes.
2 Departmental adjustments are PGPA Act Section 74 receipts.
3 Departmental variances relate to prior year funds expended in the current year. Administered variances relate to funds required to cover accruals, and the assets and liabilities variance relates to funding not required by NBN Co in 2017-18 due to revised expenditure forecasts that reflect changes in the deployment profile and other payments.
4 Departmental and Administered Capital Budgets are appropriated through Appropriation Acts (No.1,3,5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Departmental |
||
Cash on hand or on deposit |
844 |
972 |
Appropriation Act (No.1) 2018-2019 (Capital Budget) |
454 |
- |
Appropriation Act (No.1) 2018-2019 |
15,453 |
- |
Appropriation Act (No.3) 2018-2019 |
1,551 |
- |
Appropriation Act (No.1) 2017-2018 |
- |
15,571 |
Supply Act (No.1) 2017-2018 (Capital Budget - DCB) |
- |
1,177 |
Appropriation Act (No.3) 2016-2017 |
- |
868 |
Appropriation Act (No.2) 2016-2017 |
- |
150 |
Total Departmental |
18,302 |
18,738 |
Administered |
||
Appropriation Act (No.1) 2018-2019 |
44,031 |
- |
Appropriation Act (No.3) 2018-2019 |
13,115 |
- |
Appropriation Act (No.2) 2018-2019 |
1,582,916 |
- |
Appropriation Act (No.1) 2017-20181 |
14,196 |
49,813 |
Appropriation Act (No.3) 2017-2018 |
2,041 |
2,041 |
Appropriation Act (No.2) 2017-2018 |
- |
3,252,992 |
Appropriation Act (No.1) 2016-20171 |
4,172 |
12,927 |
Appropriation Act (No.3) 2016-2017 |
928 |
928 |
Appropriation Act (No.2) 2016-2017 |
- |
444,555 |
Appropriation Act (No.1) 2015-20162 |
- |
545 |
Appropriation Act (No.3) 2015-20162 |
- |
697 |
Total Administered |
1,661,399 |
3,764,498 |
1Administered appropriations have been permanently withheld under section 51 of the PGPA Act amounting to $36,411,000 (2016-17) and $14,035,000 (2017-18) for unspent appropriation no longer required.
2Administered appropriations for 2015-16 were repealed on 1 July 2018.
Note 5.1C: Special Appropriations ('Recoverable GST exclusive') |
||
---|---|---|
Authority |
Appropriation applied |
|
2019 $'000 |
2018 $'000 |
|
Telstra Corporation Act 1991, section 8BA(3). |
- |
- |
Public Governance, Performance and Accountability Act 2013 , section 77. |
47 |
70 |
Classification (Publications, Films and Computer Games) Act 1995. |
- |
- |
Total special appropriations applied |
47 |
70 |
5.2 Special Accounts
Note 5.2A: Special Accounts ('Recoverable GST exclusive') |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Art Rental Special Account 20161 |
Public Interest Telecommunications Services |
Cultural |
Indigenous Repatriation |
National Cultural Heritage |
||||||
2019 $'000 |
2018 $'000 |
2019 $'000 |
2018 $'000 |
2019 $'000 |
2018 $'000 |
2019 $'000 |
2018 $'000 |
2019 $'000 |
2018 $'000 |
|
Balance brought forward from previous period |
725 |
986 |
44 |
26,711 |
380 |
203 |
2,589 |
1,542 |
3 |
- |
Increases |
||||||||||
Departmental |
||||||||||
Appropriation credited to special account |
- |
1,350 |
4,046 |
4,007 |
167 |
135 |
660 |
800 |
- |
- |
Receipts |
5,552 |
4,192 |
- |
- |
543 |
610 |
782 |
992 |
- |
- |
Total departmental |
5,552 |
5,542 |
4,046 |
4,007 |
710 |
745 |
1,442 |
1,792 |
- |
- |
Administered |
||||||||||
Contribution received |
- |
- |
856 |
786 |
- |
- |
- |
- |
497 |
500 |
Telecommunication Industry Levy receipts |
- |
- |
253,887 |
227,220 |
- |
- |
- |
- |
- |
- |
Appropriation credited to special account |
- |
- |
95,954 |
95,993 |
- |
- |
- |
- |
- |
- |
Total administered |
- |
- |
350,697 |
323,999 |
- |
- |
- |
- |
497 |
500 |
Total increases |
5,552 |
5,542 |
354,743 |
328,006 |
710 |
745 |
1,442 |
1,792 |
497 |
500 |
Available for payments |
6,277 |
6,528 |
354,787 |
354,717 |
1,090 |
948 |
4,031 |
3,334 |
500 |
500 |
Decreases |
||||||||||
Departmental |
||||||||||
Payments made |
(5,092) |
(5,803) |
(3,190) |
(3,221) |
(356) |
(568) |
(1,202) |
(745) |
- |
- |
Contribution made |
- |
- |
(856) |
(786) |
- |
- |
- |
- |
- |
- |
Total departmental |
(5,092) |
(5,803) |
(4,046) |
(4,007) |
(356) |
(568) |
(1,202) |
(745) |
- |
- |
Administered |
||||||||||
Payments made |
- |
- |
(350,673) |
(350,666) |
- |
- |
- |
- |
(470) |
(497) |
Total administered |
- |
- |
(350,673) |
(350,666) |
- |
- |
- |
- |
(470) |
(497) |
Total decreases |
(5,092) |
(5,803) |
(354,719) |
(354,673) |
(356) |
(568) |
(1,202) |
(745) |
(470) |
(497) |
Total balance carried to the next period |
1,185 |
725 |
68 |
44 |
734 |
380 |
2,829 |
2,589 |
30 |
3 |
Balance represented by: |
||||||||||
Cash held in entity bank accounts |
300 |
240 |
- |
- |
- |
- |
- |
- |
- |
- |
Cash held in the Official Public Account |
885 |
485 |
68 |
44 |
734 |
380 |
2,829 |
2,589 |
30 |
3 |
Total balance carried to the next period |
1,185 |
725 |
68 |
44 |
734 |
380 |
2,829 |
2,589 |
30 |
3 |
1Appropriation: Public Governance, Performance and Accountability Act 2013, section 78.
Establishing Instrument: PGPA Act Determination (Art Rental Special Account 2016).
Purpose: Amounts may be debited from the special account to:
a. acquire, deaccession, lease, promote, develop, exhibit, lend, conserve and undertake any other activities in relation to managing an art rental collection for the Commonwealth;
b. activities that are incidental to the purposes mentioned in paragraph (a);
c. to reduce the balance of the special account without making a real or notional payment; and
d. to repay, as required by law, amounts that have been credited to the special account.
2Appropriation: Public Governance, Performance and Accountability Act 2013, section 80.
Establishing Instrument: Telecommunications (Consumer Protection and Service Standards) Act 1999, Division 5, section 37.
Purpose: Support the delivery of Universal Service Obligation, National Relay Service and other public interest telecommunications services for all Australians.
The Australian Communications and Media Authority collects a levy imposed on carriers under the Telecommunications (Industry Levy) Act 2012 and the Telecommunications (Consumer Protection and Service Standards) Act 1999. These levy receipts are credited to the special account, and along with Government funding, are used to pay contractors and grant recipients and to contribute to administrative costs.
3Appropriation: Public Governance, Performance and Accountability Act 2013, section 78.
Establishing Instrument: Financial Management and Accountability (Establishment of Cultural Special Account) Determination 2011/18.
Purpose: Supporting the performance or administration of cultural activities.
4Appropriation: Public Governance, Performance and Accountability Act 2013 section 78.
Establishing Instrument: PGPA Act Determination (Indigenous Repatriation Special Account 2016).
Purpose: Developing and conducting projects, programs and strategies associated with the repatriation of Indigenous ancestral remains and secret sacred objects.
5Appropriation: Public Governance, Performance and Accountability Act 2013, section 80.
Establishing Instrument: Protection of Moveable Cultural Heritage Act 1986, section 25.
Purpose: Amounts standing to the credit of the National Cultural Heritage Account may be expended for the purpose of facilitating the acquisition of the Australian protected objects for display or self-keeping.
This account is non-interest bearing and the balance is held in the Official Public Account.
The Department has a BAF Communications Portfolio Special Account as a part of the Nations Building Funds Act 2008. The account was established under section 80 of the Public Governance, Performance and Accountability Act 2013.
Purpose: To make payments in relation to the creation or development of communications infrastructure; and eligible national broadband network matters.
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.
5.3 Regulatory Charging Summary
2019 $'000 |
2018 $'000 |
|
---|---|---|
Amounts applied |
||
Departmental |
||
Annual appropriations |
6,223 |
6,424 |
Own source revenue |
32 |
26 |
Administered |
||
Annual appropriations |
- |
- |
Total amounts applied |
6,255 |
6,450 |
Expenses |
||
Departmental |
6,255 |
6,450 |
Administered |
- |
- |
Total expenses |
6,255 |
6,450 |
External revenue |
||
Departmental |
32 |
26 |
Administered |
3,628 |
3,702 |
Total external revenue |
3,660 |
3,728 |
Amounts written off |
||
Departmental |
- |
- |
Administered |
- |
- |
Total amounts written off |
- |
- |
Regulatory charging activities:
Classification Fees: Before every film, computer game and certain publications can be legally made available to the Australian public by means of sale, exhibition or commercial distribution they must be classified (with limited exceptions). A valid classification application is to be accompanied with the prescribed fee before any classification decision can be made. The Classification (Publications, Films and Computer Games) Act 1995 and the Classification (Publications, Films and Computer Games) Regulations 2005 are the enabling legislation.
Cost Recovery Implementation Statement for the above activity is available at http://www.classification.gov.au/About/Pages/Legislation.aspx.
6. People and Relationships
6.1 Employee Provisions
This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.
2019 $'000 |
2018 $'000 |
|
---|---|---|
6.1: Employee Provisions |
||
Leave |
25,975 |
25,011 |
Separations and redundancies |
316 |
- |
Total employee provisions |
26,291 |
25,011 |
Accounting policy
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
The liability for employee benefits includes provision for annual leave and long service leave. The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the entity’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.
The liability for long service leave has been determined by using the Department of Finance’s Short Hand Method as at 30 June 2019, as outlined in the Financial Reporting Rule. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.
Separation and Redundancy
Provision is made for separation and redundancy benefit payments. The entity 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
The entity's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap), or other superannuation funds held outside the Australian Government. The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.
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 entity makes employer contributions to the employees' defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The entity accounts for the contributions as if they were contributions to defined contribution plans.
The liability for superannuation recognised as at 30 June represents outstanding contributions.
6.2 Key Management Personnel Remuneration
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Department, directly or indirectly. During 2017-18 the Secretary formed the Secretary’s Business Meeting (SBM) with the first meeting held on 24 November 2017. For the 2018-19 financial year, the Department has determined the key management personnel to be permanent members of the SBM, being the Secretary, Deputy Secretaries and Chief Operating Officer and anyone who has acted in one of those positions and attended a SBM during the acting periods.
In the previous year the Department had determined the key management personnel to be the members of the Executive Leadership Team (ELT), comprising the Secretary, Deputy Secretaries, First Assistant Secretaries and the Chief Risk Officer. The total key management personnel remuneration expense for the Executive Leadership Team in 2018 was $4,269,000. However, for comparative purposes the 2018 figures have been re-stated based on the SBM.
Key management personnel remuneration is reported in the table below:
2019 $'000 |
2018 $'000 |
|
---|---|---|
Short-term employee benefits |
1,688 |
1,827 |
Post-employment benefits |
260 |
296 |
Other long-term employee benefits |
38 |
176 |
Termination benefits |
- |
221 |
Total key management personnel remuneration expenses1 |
1,986 |
2,520 |
The total number of key management personnel included in the above table is six individuals, being four individuals who held the position for the full year and two who acted in the position for part of the year (2018: nine individuals, being two who held the position for the full year and seven who held the position for part of the year, including acting arrangements).
There were no termination benefits paid in 2019.
1The above key management personnel remuneration excludes the remuneration and other benefits of the Cabinet Ministers, Portfolio Ministers, Assistant Ministers and Presiding Officers. The ministers’ remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the Department.
6.3 Related Party Disclosures
Related party relationships:
The Department is an Australian Government controlled entity. Related parties to this Department are Key Management Personnel including the Portfolio Minister and Executive, and other Australian Government entities.
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. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.
Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the Department, it has been determined that there are no related party transactions to be separately disclosed.
7. Managing Uncertainties
7.1 Contingent Assets and Liabilities
This section analyses how the Department of Communications and the Arts manages financial risks within its operating environment.
7.1A: Departmental Contingent Assets and Liabilities
Quantifiable Contingencies
There are no significant quantifiable contingencies as at 30 June 2019 (2018: nil).
Unquantifiable Contingencies
There are no significant unquantifiable contingencies as at 30 June 2019 (2018: nil).
Significant Remote Contingencies
Operating Leases and Car Parking Licences
The Commonwealth indemnifies third parties against loss in relation to operating leases for accommodation, storage and some car parking. The Commonwealth also indemnifies some third parties against loss in relation to car parking facilities acquired under car parking licence agreements. As at 30 June 2019, no claims have been made.
Westpac Banking Corporation
The Commonwealth indemnifies Westpac Banking Corporation against loss reasonably incurred in relation to Departmental banking functions. In June 2013, the Department entered into a new banking contract with Westpac that provided for an indemnity capped at $50 million per occurrence. The previous contract provided for an indemnity capped at $25 million per occurrence. As at 30 June 2019, no claims have been made (2018: nil).
Accounting Policy
Contingent liabilities and contingent assets are not recognised in the Statement of Financial Position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.
Indemnities
The maximum amounts payable under the indemnities given is disclosed above. At the time of completion of the financial statements, there was no reason to believe that the indemnities would be called upon, and no recognition of any liability was therefore required.
7.1B: Administered – Contingent Assets and Liabilities
Quantifiable Administered Contingencies
As at 30 June 2019, the Australian Government did not have any quantifiable contingencies (2018: nil).
Unquantifiable Administered Contingencies
NBN Co Limited (NBN Co) Board Members Insolvency Indemnity
The Australian Government has provided Directors of NBN Co with an indemnity against liability should the Government fail to meet its funding obligations to NBN Co. The liabilities covered by this indemnity would be no greater than those covered by the NBN Co Equity Funding Agreement, with the exception of any legal expenses incurred by individual Directors arising from this indemnity.
Significant Remote Administered Contingencies
Telstra Financial Guarantee
The Australian Government has provided to Telstra Corporation Limited (Telstra) a Guarantee in respect of
NBN Co financial obligations under the Definitive Agreements. The Agreements were amended on 14 December 2014. The Guarantee was not amended at that time and it continues in force in accordance with its terms in respect of the amended Definitive Agreements. The liabilities under the Definitive Agreements between Telstra and NBN Co arise progressively during the roll-out of the National Broadband Network as Telstra’s infrastructure is accessed and Telstra’s customers are disconnected from its copper and Hybrid Fibre Coaxial cable networks. The Australian Government is only liable in the event NBN Co does not pay an amount when due under the Definitive Agreements. As at 30 June 2019, NBN Co had generated liabilities covered by the Guarantee estimated at $9.4 billion. The Guarantee will terminate when NBN Co achieves specified credit ratings for a period of two continuous years and either:
- the company is capitalised by the Commonwealth to the agreed amount; or
- the Communications Minister declares, under the National Broadband Network Companies Act 2011, that, in his or her opinion, the National Broadband Network should be treated as built and fully operational.
Optus Financial Guarantee
The Australian Government has provided a Guarantee in respect of the NBN Co financial obligations to Optus Networks Pty Ltd, Optus Internet Pty Ltd, Optus Vision Media Pty Ltd and SingTel Optus Pty Ltd (collectively, Optus) under the Optus HFC Subscriber Agreement (the Agreement). An amended version of the Agreement came into effect on 22 January 2019. The Guarantee continues to apply to that Agreement. The Agreement extends for the period of the National Broadband Network roll-out in Optus Hybrid Fibre Coaxial areas. The Australian Government is only liable in the event NBN Co does not pay an amount when due under the Optus Agreement. As at 30 June 2019, NBN Co had generated liabilities covered by the Optus Agreement, which are estimated at an amount lower than $197.0 million. There is a low risk that a claim would be made under the Guarantee. The Guarantee will terminate in 2021.
Equity Funding Agreement
The Australian Government has entered into an Equity Funding Agreement with NBN Co to provide $29.5 billion equity funding. Although this Agreement ended on 30 June 2019, the Australian Government retains obligations to meet NBN Co’s costs arising from a termination of the roll-out. As at 30 June 2019, NBN Co’s termination liabilities were estimated at $21.3 billion.
7.2 Financial Instruments
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 7.2A: Categories of Financial Instruments |
||
Financial Assets under AASB 139 |
||
Loans and receivables |
||
Cash and cash equivalents |
4,666 |
|
Goods and services receivable |
2,147 |
|
Other receivables |
847 |
|
Total loans and receivables |
7,660 |
|
Financial Assets under AASB 9 |
||
Financial assets at amortised cost |
||
Cash and cash equivalents |
5,592 |
|
Goods and services receivable |
834 |
|
Other receivables |
515 |
|
Total financial assets at amortised cost |
6,941 |
|
Total financial assets |
6,941 |
7,660 |
Financial Liabilities |
||
Financial liabilities measured at amortised cost |
||
Suppliers |
3,724 |
3,794 |
Other payables |
2,214 |
1,923 |
Total financial liabilities measured at amortised cost |
5,938 |
5,717 |
Total financial liabilities |
5,938 |
5,717 |
Classification of financial assets on the date of initial application of AASB 9 |
|||||
---|---|---|---|---|---|
Financial assets class |
Note |
AASB 139 original classification |
AASB 9 new classification |
AASB 139 carrying amount at 1 July 2018 $'000 |
AASB 9 carrying amount at 1 July 2018 $'000 |
Cash and cash equivalents |
3.1A |
Loans and receivable |
Amortised Cost |
4,666 |
4,666 |
Goods and services receivable |
3.1B |
Loans and receivable |
Amortised Cost |
2,147 |
2,147 |
Other receivables |
3.1B |
Loans and receivable |
Amortised Cost |
847 |
847 |
Total financial assets |
7,660 |
7,660 |
Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9 |
||||
---|---|---|---|---|
AASB 139 carrying amount at 1 July 2018 $'000 |
Reclassification $'000 |
Re-measurement $'000 |
AASB 9 carrying amount at 1 July 2018 $'000 |
|
Financial assets at amortised cost |
||||
Cash and cash equivalents |
4,666 |
- |
- |
4,666 |
Goods and services receivable |
2,147 |
- |
- |
2,147 |
Other receivables |
847 |
- |
- |
847 |
Total amortised cost |
7,660 |
- |
- |
7,660 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 7.2B: Net Gains or Losses on Financial Assets |
||
Financial assets at amortised cost |
||
Impairment |
(7) |
- |
Net loss on financial assets at amortised cost |
(7) |
- |
Net loss on financial assets |
(7) |
- |
The Department had no gains or losses on financial liabilities in either the current or prior year.
Accounting Policy
Financial assets
With the implementation of AASB 9 Financial Instruments for the first time in 2019; the entity classifies its financial assets in the following categories:
a) financial assets at fair value through profit or loss;
b) financial assets at fair value through other comprehensive income; and
c) financial assets measured at amortised cost.
The classification depends on both the entity’s business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon a trade date.
Comparatives have not been restated on initial application.
Financial Assets at Amortised Cost
Financial assets included in this category need to meet two criteria:
- the financial asset is held in order to collect the contractual cash flows; and
- the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.
Amortised cost is determined using the effective interest method.
Effective Interest Method
Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost.
Financial Assets at Fair Value Through Other Comprehensive Income (FVOCI)
Financial assets measured at fair value through other comprehensive income are held with the objective of both collecting contractual cash flows and selling the financial assets and the cash flows meet the SPPI test.
Any gains or losses as a result of fair value measurement or the recognition of an impairment loss allowance is recognised in other comprehensive income.
Financial Assets at Fair Value Through Profit or Loss (FVTPL)
Financial assets are classified as financial assets at fair value through profit or loss where the financial assets either doesn’t meet the criteria of financial assets held at amortised cost or at FVOCI (i.e. mandatorily held at FVTPL) or may be designated.
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.
Impairment of Financial Assets
Financial assets are assessed for impairment at the end of each reporting period based on expected credit losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12-month expected credit losses if the risk has not increased.
The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses.
A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.
Financial Liabilities
Financial liabilities are classified as either financial liabilities at ‘fair value through profit or loss’ or other financial liabilities.
Financial liabilities are recognised and derecognised upon ‘trade date’.
Financial Liabilities at Fair Value Through Profit or Loss
Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
Financial Liabilities at Amortised Cost
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.
Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).
All payables are expected to be settled within 12 months except where indicated.
7.3 Administered – Financial Instruments
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 7.3A: Categories of Financial Instruments |
||
Financial Assets under AASB 139 |
||
Loans and receivables |
||
Cash on hand or on deposit |
47 |
|
Loans to corporate Commonwealth entities |
||
Australian Broadcasting Corporation |
49,021 |
|
NBN Co Limited |
5,531,000 |
|
Grants receivable |
264 |
|
Other |
1 |
|
Total loans and receivables |
5,580,333 |
|
Available for sale financial assets |
||
Other investments |
26,448,077 |
|
Total available for sale financial assets |
26,448,077 |
|
Financial Assets under AASB 9 |
||
Financial assets at amortised cost |
||
Cash on hand or on deposit |
98 |
|
Loans to corporate Commonwealth entities |
||
Australian Broadcasting Corporation |
29,619 |
|
NBN Co Limited |
13,053,335 |
|
Grants receivable |
264 |
|
Total financial assets at amortised cost |
13,083,316 |
|
Financial assets at fair value through other comprehensive income |
||
Other investments |
21,672,171 |
|
Total financial assets at fair value through other comprehensive income |
21,672,171 |
|
Total financial assets |
34,755,487 |
32,028,410 |
Financial Liabilities |
||
Financial liabilities measured at amortised cost |
||
Suppliers |
330,215 |
340,653 |
Grants payable |
13,255 |
29,632 |
Total financial liabilities measured at amortised cost |
343,470 |
370,285 |
Total financial liabilities |
343,470 |
370,285 |
Classification of financial assets on the date of initial application of AASB 9 |
|||||
---|---|---|---|---|---|
Financial asset class |
Notes |
AASB 139 original classification |
AASB 9 new classification |
AASB 139 carrying amount at 1 July 2018 $'000 |
AASB 9 carrying amount at 1 July 2018 $'000 |
Cash on hand or on deposit |
4.1A |
Loans and receivable |
Amortised Cost |
47 |
47 |
Loans to corporate Commonwealth entities |
|||||
Australian Broadcasting Corporation |
4.1B |
Loans and receivable |
Amortised Cost |
49,021 |
49,021 |
NBN Co Limited |
4.1B |
Loans and receivable |
Amortised Cost |
5,531,000 |
5,529,400 |
Grants receivable |
4.1B |
Loans and receivable |
Amortised Cost |
264 |
264 |
Other |
4.1B |
Loans and receivable |
Amortised Cost |
1 |
1 |
Other investments |
4.1C |
Available-for-sales financial assets |
FVOCI |
26,448,077 |
26,448,077 |
Total financial assets |
32,028,410 |
32,026,810 |
Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9 |
||||
---|---|---|---|---|
AASB 139 carrying amount at 1 July 2018 $'000 |
Reclassification $'000 |
Re-measurement $'000 |
AASB 9 carrying amount at 1 July 2018 $'000 |
|
Financial assets at amortised cost |
||||
Cash on hand or on deposit |
47 |
- |
- |
47 |
Loans to corporate Commonwealth entities |
||||
Australian Broadcasting Corporation |
49,021 |
- |
- |
49,021 |
NBN Co Limited1 |
5,531,000 |
- |
(1,600) |
5,529,400 |
Grants receivable |
264 |
- |
- |
264 |
Other |
1 |
- |
- |
1 |
Total amortised cost |
5,580,333 |
- |
(1,600) |
5,578,733 |
Financial assets at fair value through other comprehensive income |
||||
Other investments |
26,448,077 |
- |
- |
26,448,077 |
Total fair value through other comprehensive income |
26,448,077 |
- |
- |
26,448,077 |
1The Department has reviewed the requirements of the expected credit loss model under AASB 9 and has recognised an impairment allowance on the NBN Co loan on transition to the new standard at 1 July 2018 of $1,600,000. The Department has assessed that there has been no significant increase in credit risk of the NBN Co loan since inception and the probability of default is extremely low. In accordance with the transitional provisions in AASB 9, the impairment allowance has been recognised in the current year opening retained earnings with no change to comparatives.
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 7.3B: Net Gains and Losses on Financial Assets |
||
Financial assets at amortised cost |
||
Interest revenue |
353,374 |
71,862 |
Australia Post dividend |
42,205 |
78,472 |
Impairment |
(241) |
- |
Net gains on financial assets at amortised cost |
395,338 |
150,334 |
Financial assets at fair value through other comprehensive income |
||
Losses recognised in equity |
(4,831,145) |
(4,915,290) |
Net losses on financial assets at fair value through other comprehensive income |
(4,831,145) |
(4,915,290) |
Net losses on financial assets |
(4,435,807) |
(4,764,956) |
Note 7.3C: Fair Value of Financial Instruments |
||||
---|---|---|---|---|
Carrying amount 2019 $'000 |
Fair value 2019 $'000 |
Carrying amount 2018 $'000 |
Fair value 2018 $'000 |
|
Financial Assets |
||||
Cash and cash equivalents |
98 |
98 |
47 |
47 |
Loans to corporate Commonwealth entities |
||||
Australian Broadcasting Corporation |
29,619 |
30,295 |
49,021 |
49,669 |
NBN Co Limited |
13,051,735 |
13,051,735 |
5,531,000 |
5,531,000 |
Other investments |
21,672,171 |
21,672,171 |
26,448,077 |
26,448,077 |
Total financial assets |
34,753,623 |
34,754,299 |
32,028,145 |
32,028,793 |
Financial Liabilities |
||||
Suppliers |
330,215 |
330,215 |
340,653 |
340,653 |
Grants |
13,255 |
13,255 |
29,632 |
29,632 |
Total financial liabilities |
343,470 |
343,470 |
370,285 |
370,285 |
Note 7.3D: Credit Risk
The administered activities of the Department were not exposed to a high level of credit risk as the majority of financial assets are trade receivables, loans to Government controlled and funded entities and investment in Portfolio Agencies. The maximum exposure to credit risk is the risk that arises from potential default of a debtor. The carrying amount of financial assets, net of impairment losses, reported in the Administered Schedule of Assets and Liabilities represents the maximum exposure to credit risk as $13,081 million (2018: $5,580 million).
Grants receivable - Credit risk is managed by undertaking background and credit checks prior to allowing a debtor relationship. In addition, there are policies and procedures that guide debt recovery techniques that are to be applied. The Department has assessed the risk of the default on payment of grants receivable and has allocated $264,000 to an impairment allowance in 2019 (2018: nil). The Department has reviewed the historic impairment provision for grants receivable in accordance with AASB 9 Financial Instruments and has determined that there is no material adjustment on adoption of the new standard.
Loans to Government controlled and funded entities – the loan to NBN Co is monitored between origination and maturity through a series of oversight arrangements that assess the short and long-term financial performance of NBN Co. This considers changes in the borrower’s earnings, expenditure and market position. Our assessment of the security for the loan recognises that NBN Co is a wholly-owned Government Business Enterprise.
Note 7.3E: Liquidity Risk
The Administered financial liabilities are trade creditors and grants payable. The exposure to liquidity risk is based on the notion that the Commonwealth will encounter difficulty in meeting its obligations associated with Administered financial liabilities. This is highly unlikely due to appropriation funding and mechanisms, internal policies and procedures that are currently in place.
All financial liabilities are payable within one year.
Note 7.3F: Market Risk
Currency risk
Other than Administered Investments the Commonwealth holds basic financial instruments that do not expose the Commonwealth to certain market risk. The Department’s Administered activities are not exposed to ‘currency risk’ and ‘other price risk’.
Interest rate risk
‘Interest rate risk’ refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The only interest bearing item in the closing Administered Schedule of Assets and Liabilities is ‘loans receivable’. These items have fixed interest and will, therefore, not fluctuate due to changes in the market interest rate. As the loans to corporate Commonwealth entities are fixed interest only loans there is no inherent interest rate risk.
Other price risk
The Department’s administered activities are not exposed to ‘Other Price Risk’. The Administered investments are not traded on the Australian Stock Exchange. The Department does not hold any other financial instruments that would be exposed to price risk.
7.4 Fair Value Measurement
The following table provides an analysis of assets and liabilities that are measured at fair value. The remaining assets and liabilities disclosed in the Statement of Financial Position do not apply to the fair value hierarchy.
The different levels of fair value hierarchy are defined below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Department can access at measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Note 7.4A: Fair Value Measurement |
||
---|---|---|
Fair value measurements at the end of the reporting period |
||
2019 $'000 |
2018 $'000 |
|
Non-financial assets1 |
||
Heritage and cultural4 |
36,022 |
35,734 |
Plant and equipment2 |
6,596 |
8,018 |
Buildings2 |
12,649 |
13,843 |
Total non-financial assets |
55,267 |
57,595 |
1The Department's assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all non-financial assets is considered their highest and best use.
2No non-financial assets were measured at fair value on a non-recurring basis as at 30 June 2019 (2018: nil).
3The remaining assets and liabilities reported by the Department are not measured at fair value in the Statement of Financial Position.
4Heritage and cultural assets relate to the Artbank collection.
Accounting Policy
A desktop materiality review of the artwork was conducted as at 30 June 2019 and the outcomes were relied upon to assess the fair value measurement for this asset class.
The Department engaged the service of Jones Lang LaSalle (JLL) to conduct an asset materiality review of all non-financial assets with the exception of Artbank’s artwork collection (Heritage and Cultural asset class) as at 30 June 2019. An annual assessment is undertaken to determine whether the carrying amount of the assets is materially different from the fair value. Comprehensive valuations are carried out at least once every three years with the previous comprehensive valuation conducted as at 30 June 2018. JLL has provided written assurance to the Department that the models developed are in compliance with AASB 13 Fair Value Measurement.
The methods utilised to determine and substantiate the unobservable inputs are derived and evaluated as follows:
Physical Depreciation and Obsolescence - Assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured utilising the Depreciated Replacement Cost approach. Under the Depreciated Replacement Cost approach the estimated cost to replace the asset is calculated and then adjusted to take into account the physical depreciation and obsolescence. Physical depreciation and obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration. For all Leasehold Improvement assets, the consumed economic benefit/asset obsolescence deduction is determined based on the term of the associated lease.
The Department’s policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the reporting period.
7.5 Administered – Fair Value Measurements
The following table provides an analysis of assets and liabilities that are measured at fair value. The remaining assets and liabilities disclosed in the Statement of Financial Position do not apply to the fair value hierarchy.
The different levels of fair value hierarchy are defined below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Department can access at measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Accounting Policy
Fair values for Regional Backbone Blackspots Program (RBBP) network infrastructure assets under property, plant and equipment are determined based on the depreciated replacement cost method. The method is calculated for each individual part of the asset using a price per unit adjusted for inflation, a quantity of each component and a location factor before being aggregated to form the values for each identified component of the assets. Components include fibre optic cable, Control Environment Vault Shelters and Backbone Point of Interconnect cabinets. There has been no change in the valuation technique for the RBBP network infrastructure assets.
The Department engaged the service of Jones Lang LaSalle (JLL) to conduct an asset materiality review of all non-financial assets (excluding the RBBP) at 30 June 2019, which includes the Administered National Institute of Dramatic Arts Building. An annual assessment is undertaken to determine whether the carrying amount of the assets is materially different from the fair value. Comprehensive valuations are carried out at least once every three years. JLL has provided written assurance to the Department that the models developed are in compliance with AASB 13 Fair Value Measurement. If a particular asset class experiences significant or volatile changes in fair value (i.e. where indicators suggest that the value of the class has changed materially since the previous reporting period), that class is subject to specific valuation in the reporting period, where practicable, regardless of the timing of the last specific valuation.
The methods utilised to determine and substantiate the unobservable inputs are derived and evaluated as follows:
Physical Depreciation and Obsolescence - Assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured utilising the Depreciated Replacement Cost approach. Under the Depreciated Replacement Cost approach the estimated cost to replace the asset is calculated and then adjusted to take into account the physical depreciation and obsolescence. Physical depreciation and obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration. For all Leasehold Improvement assets, the consumed economic benefit / asset obsolescence deduction is determined based on the term of the associated lease.
The Department's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Note 7.5A: Fair Value Measurements |
|||||
---|---|---|---|---|---|
Fair value measurements at the end of the reporting period1 |
|||||
2019 $'000 |
2018 $'000 |
Category (Level 1,2 or 3)2 |
Valuation Technique(s) and Inputs Used |
||
Financial assets5 |
|||||
Loans to corporate Commonwealth entities: |
|||||
Australian Broadcasting Corporation |
30,295 |
49,669 |
2 |
Discounted cash flow (DCF): Future principal, interest cash flows and market rate interest. |
|
NBN Co Limited |
13,051,735 |
5,531,000 |
2 |
Amortised cost basis using the effective interest rate method. |
|
Other investments6 |
|||||
Australian Broadcasting Corporation |
1,071,656 |
1,033,352 |
3 |
Net asset balance |
|
Special Broadcasting Service Corporation |
222,626 |
215,544 |
3 |
Net asset balance |
|
Australia Council |
14,725 |
14,340 |
3 |
Net asset balance |
|
Australian Film,Television and Radio School |
11,105 |
11,122 |
3 |
Net asset balance |
|
Australian National Maritime Museum |
263,063 |
256,668 |
3 |
Net asset balance |
|
National Film and Sound Archive of Australia |
353,384 |
292,051 |
3 |
Net asset balance |
|
National Gallery of Australia |
6,333,026 |
6,314,864 |
3 |
Net asset balance |
|
National Library of Australia |
1,695,104 |
1,691,970 |
3 |
Net asset balance |
|
National Museum of Australia |
459,315 |
471,444 |
3 |
Net asset balance |
|
National Portrait Gallery of Australia |
146,170 |
143,798 |
3 |
Net asset balance |
|
Screen Australia |
17,749 |
17,743 |
3 |
Net asset balance |
|
Old Parliament House |
112,629 |
93,924 |
3 |
Net asset balance |
|
Bundanon Trust |
59,196 |
58,729 |
3 |
Net asset balance |
|
Creative Partnerships Australia |
5,473 |
2,922 |
3 |
Net asset balance |
|
NBN Co Limited |
8,682,301 |
13,247,377 |
3 |
Administered investment valuation in NBN Co Limited is based on its net assets balance with the property, plant and equipment adjusted for fair value and the discounting of leave and superannuation liabilities adjusted by applying the Government bond rate. Administered investment valuation is based on discounted cash flow (DCF): Volume and price growth rates, and Weighted Average Cost of Capital (WACC). |
|
Investment in Australian Postal Corporation3 |
2,224,649 |
2,582,229 |
3 |
||
Volume & Price Growth Rates Range |
|||||
10% an increase of approximately $251 million |
|||||
(10)% a decrease of approximately $231 million |
|||||
Weighted Average Cost of Capital Range |
|||||
1.25% a decrease of approximately $489 million |
|||||
(0.11)% an increase of approximately $51 million |
|||||
Total financial assets |
34,754,201 |
32,028,746 |
|||
Non-financial assets2 |
|||||
Buildings |
55,569 |
56,377 |
3 |
Depreciated Replacement Cost (DRC): Current Cost per square metre of floor area relevant to the location asset. Physical depreciation and obsolescence has been determined based on the term of the associated nominal lease. Depreciated Replacement Cost (DRC) |
|
Property, plant and equipment |
138,140 |
148,012 |
3 |
||
Replacement cost per unit for the following asset components: |
|||||
Asset Component |
Range ($'000) |
||||
- Fibre optic cable (per km) |
$5.33 - $12.71 ($6.57) |
||||
- Controlled environment vault shelters (per section) |
$271.90 - $528.13 ($324.46) |
||||
- Transmission Equipment (per section) |
$538.61 - $869.21 ($615.65) |
||||
- Bpol cabinets (per cabinet) |
$15.23 - $119.24 ($92.44) |
||||
Other Inputs |
|||||
Input |
Range (weighted average) |
||||
- Remaining useful life (in years) |
7 - 23 (19) |
||||
- Inflation factor |
0.98 - 1.26 (1.15) |
||||
- Installation cost (per section of network) |
$492.73 - $1,117.20 ($562.87) |
||||
- Installation cost (per cabinet) |
$35.98 - $154.05 ($110.30) |
||||
Sensitivity of the fair value measurement to change in unobservable inputs. The estimated fair value would increase (decrease) if: |
|||||
Total non-financial assets |
193,709 |
204,389 |
|||
Total assets |
34,947,910 |
32,233,135 |
1The Department did not measure any non-financial assets at fair value on a non-recurring basis as at 30 June.
2Significant Level 3 inputs utilised by the Department are derived and evaluated as follows; assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured utilising the cost (Depreciated Replacement Cost or DRC) approach. Under the DRC approach the estimated cost to replace the asset is calculated and then adjusted to take into account its consumed economic benefit/asset obsolescence (accumulated depreciation). Consumed economic benefit/asset obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration.
3The Discounted Cash Flow (DCF) method, is appropriate when it results in a measurement that is more representative of fair value. Per AASB13.B10 when using an income approach, fair value reflects current market expectations about the future amounts.
4Significant unobservable inputs only. Not applicable for assets or liabilities in the Level 2 category. The weighted average is determined by assessing the fair value measurement as a proportion of the total fair value for the class against the total useful life of each asset.
5The current use of all non-financial assets is considered their highest and best use.
6Administered investments valuations are based on the audited net asset balance with the exception of the Australian Postal Corporation and NBN Co Limited (NBN Co), refer Note 4.1C.
- Australia Post is based on the discounted cash flow methodology.
- NBN Co is based on the audited net asset balance adjusted for fair value of property, plant and equipment and discounting leave and superannuation liabilities adjusted by applying the Government bond rate. The impact of these adjustments was an increase of $1.345 billion at 30 June 2019 (2018: $1.035 billion) to the $7.337 billion reported in
- NBN Co's financial statements. NBN Co engaged an independent reviewer to assess the fair value of property, plant and equipment in June 2019 and in June 2018.
Note 7.5B: Reconciliation for Recurring Level 3 Fair Value Measurements |
||||||||
---|---|---|---|---|---|---|---|---|
Recurring Level 3 fair value measurements - reconciliation for assets |
||||||||
Financial assets |
Non-financial assets |
|||||||
Administered Investments |
Building |
Property, plant and equipment |
Total |
|||||
2019 $'000 |
2018 $'000 |
2019 $'000 |
2018 $'000 |
2019 $'000 |
2018 $'000 |
2019 $'000 |
2018 $'000 |
|
As at 1 July1 |
26,448,077 |
29,293,211 |
56,377 |
58,110 |
148,012 |
156,135 |
26,652,466 |
29,507,456 |
Revaluation (decrements)/increments recognised in other comprehensive income |
(4,831,145) |
(4,915,290) |
- |
- |
(1,841) |
(88) |
(4,832,986) |
(4,915,378) |
Equity injections |
55,240 |
2,075,156 |
1,608 |
1,636 |
- |
- |
56,848 |
2,076,792 |
Returns to the Consolidated Revenue Fund (CRF) |
- |
(5,000) |
- |
- |
- |
- |
- |
(5,000) |
Depreciation |
- |
- |
(2,416) |
(1,787) |
(8,031) |
(8,035) |
(10,447) |
(9,822) |
Other2 |
(1) |
- |
- |
(1,582) |
- |
- |
(1) |
(1,582) |
Total as at 30 June3 |
21,672,171 |
26,448,077 |
55,569 |
56,377 |
138,140 |
148,012 |
21,865,880 |
26,652,466 |
1 Opening balance as determined in accordance with AASB 13.
2 Included in the other movement is rounding for administered investments and for buildings is a revaluation decrement in 2018 (2019: nil).
3 Additional details in Note 4.2A.
8. Other Information
8.1 Aggregate Assets and Liabilities
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 8.1A: Aggregate Assets and Liabilities |
||
Assets expected to be recovered in: |
||
No more than 12 months |
27,656 |
27,634 |
More than 12 months |
65,381 |
64,755 |
Total assets |
93,037 |
92,389 |
Liabilities expected to be settled in: |
||
No more than 12 months |
16,968 |
16,262 |
More than 12 months |
22,712 |
21,106 |
Total liabilities |
39,680 |
37,368 |
2019 $'000 |
2018 $'000 |
|
---|---|---|
Note 8.1B: Administered - Aggregate Assets and Liabilities |
||
Assets expected to be recovered in: |
||
No more than 12 months |
56,445 |
59,318 |
More than 12 months |
34,927,010 |
32,212,499 |
Total assets |
34,983,455 |
32,271,817 |
Liabilities expected to be settled in: |
||
No more than 12 months |
351,913 |
380,227 |
More than 12 months |
8,763 |
10,292 |
Total liabilities |
360,676 |
390,519 |
8.2 Restructuring
There were no Departmental or Administered restructures for 2019 (2018: nil).
8.3 Budgetary Reports and Explanations of Major Variances
The following tables provide a comparison of the original budget as presented in the 2018-19 Portfolio Budget Statements to the 2018-19 final financial outcome as presented in accordance with Australian Accounting Standards for the Department. The Budget is not audited and does not reflect additional estimates provided in the 2018-19 Portfolio Additional Estimates Statements. Explanations are provided for significant variances between actual results and the original budget, being the Portfolio Budget Statements. Significant variances are those relevant to the performance of the Department and are typically those greater than $5 million (Departmental), $20 million (Administered) and greater than five percent.
8.3A: Departmental Budgetary Reports |
|||
---|---|---|---|
Statement of Comprehensive Income |
|||
for the period ended 30 June 2019 |
|||
Budget estimate |
|||
Actual 2019 $'000 |
Original 2019 $'000 |
Variance 2019 $'000 |
|
NET COST OF SERVICES |
|||
Expenses |
|||
Employee benefits |
73,068 |
72,733 |
335 |
Suppliers1 |
38,753 |
36,571 |
2,182 |
Depreciation and amortisation |
5,227 |
4,691 |
536 |
Finance costs |
3 |
66 |
(63) |
Impairment loss allowance on financial instruments |
7 |
- |
7 |
Losses from sale of assets |
129 |
- |
129 |
Other expenses |
3,200 |
2,912 |
288 |
Total expenses |
120,387 |
116,973 |
3,414 |
Own-Source Income |
|||
Own-source revenue |
|||
Sales of goods and rendering of services |
3,625 |
3,495 |
130 |
Rental income2 |
1,991 |
- |
1,991 |
Other revenue |
1,382 |
2,087 |
(705) |
Total own-source revenue |
6,998 |
5,582 |
1,416 |
Gains |
|||
Other gains |
415 |
488 |
(73) |
Total gains |
415 |
488 |
(73) |
Total own-source income |
7,413 |
6,070 |
1,343 |
Net cost of services |
(112,974) |
(110,903) |
(2,071) |
Revenue from Government |
107,763 |
106,212 |
1,551 |
Surplus (Deficit) before income tax on continuing operations |
(5,211) |
(4,691) |
(520) |
Surplus (Deficit) after income tax on continuing operations |
(5,211) |
(4,691) |
(520) |
OTHER COMPREHENSIVE INCOME |
|||
Items not subject to subsequent reclassification to net cost of services |
|||
Changes in asset revaluation surplus |
- |
- |
- |
Total other comprehensive income |
- |
- |
- |
Total comprehensive income (loss) |
(5,211) |
(4,691) |
(520) |
The above statement should be read in conjunction with note 8.3B.
Statement of Financial Position |
|||
---|---|---|---|
as at 30 June 2019 |
|||
Actual 2019 $'000 |
Original 2019 $'000 |
Variance 2019 $'000 |
|
ASSETS |
|||
Financial Assets |
|||
Cash and cash equivalents |
5,592 |
3,398 |
2,194 |
Trade and other receivables |
19,387 |
19,163 |
224 |
Total financial assets |
24,979 |
22,561 |
2,418 |
Non-Financial Assets |
|||
Buildings3 |
12,649 |
2,645 |
10,004 |
Property, plant and equipment3 |
6,596 |
15,251 |
(8,655) |
Intangibles4 |
8,627 |
5,969 |
2,658 |
Heritage and cultural assets |
36,022 |
36,126 |
(104) |
Other non-financial assets |
4,164 |
1,586 |
2,578 |
Total non-financial assets |
68,058 |
61,577 |
6,481 |
Total assets |
93,037 |
84,138 |
8,899 |
LIABILITIES |
|||
Payables |
|||
Suppliers |
5,523 |
2,882 |
2,641 |
Other payables5 |
7,492 |
2,440 |
5,052 |
Total payables |
13,015 |
5,322 |
7,693 |
Provisions |
|||
Employee provisions |
26,291 |
25,869 |
422 |
Other provisions |
374 |
342 |
32 |
Total provisions |
26,665 |
26,211 |
454 |
Total liabilities |
39,680 |
31,533 |
8,147 |
Net assets |
53,357 |
52,605 |
752 |
EQUITY |
|||
Contributed equity |
72,849 |
73,528 |
(679) |
Reserves |
7,049 |
7,439 |
(390) |
Accumulated deficit |
(26,541) |
(28,362) |
1,821 |
Total equity |
53,357 |
52,605 |
752 |
The above statement should be read in conjunction with note 8.3B
Statement of Changes in Equity |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
for the period ended 30 June 2019 |
||||||||||||
Retained Earnings |
Asset revaluation reserve |
Contributed equity/capital |
Total Equity |
|||||||||
Budget Estimate |
Budget Estimate |
Budget Estimate |
Budget Estimate |
|||||||||
Actual 2019 $'000 |
Original 2019 $'000 |
Variance 2019 $'000 |
Actual 2019 $'000 |
Original 2019 $'000 |
Variance 2019 $'000 |
Actual 2019 $'000 |
Original 2019 $'000 |
Variance 2019 $'000 |
Actual 2019 $'000 |
Original 2019 $'000 |
Variance 2019 $'000 |
|
Opening balance |
||||||||||||
Balance carried forward from previous period |
(21,330) |
(23,671) |
2,341 |
7,049 |
7,439 |
(390) |
69,302 |
69,981 |
(679) |
55,021 |
53,749 |
1,272 |
Adjusted opening balance |
(21,330) |
(23,671) |
2,341 |
7,049 |
7,439 |
(390) |
69,302 |
69,981 |
(679) |
55,021 |
53,749 |
1,272 |
Comprehensive income |
||||||||||||
Surplus/(Deficit) for the period |
(5,211) |
(4,691) |
(520) |
- |
- |
- |
- |
- |
- |
(5,211) |
(4,691) |
(520) |
Total comprehensive income |
(5,211) |
(4,691) |
(520) |
- |
- |
- |
- |
- |
- |
(5,211) |
(4,691) |
(520) |
Transactions with owners |
||||||||||||
Contributions by owners |
||||||||||||
Departmental capital budget |
- |
- |
- |
- |
- |
- |
3,547 |
3,547 |
- |
3,547 |
3,547 |
- |
Total transactions with owners |
- |
- |
- |
- |
- |
- |
3,547 |
3,547 |
- |
3,547 |
3,547 |
- |
Transfers between equity components |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Closing balance as at 30 June |
(26,541) |
(28,362) |
1,821 |
7,049 |
7,439 |
(390) |
72,849 |
73,528 |
(679) |
53,357 |
52,605 |
752 |
The above statement should be read in conjunction with note 8.3B
Cash Flow Statement |
|||
---|---|---|---|
for the period ended 30 June 2019 |
|||
Budget Estimate |
|||
Actual |
Original |
Variance |
|
2019 |
2019 |
2019 |
|
$'000 |
$'000 |
$'000 |
|
OPERATING ACTIVITIES |
|||
Cash received |
|||
Receipts from Government6 |
115,904 |
106,475 |
9,429 |
Sales of goods and rendering of services2 |
5,334 |
514 |
4,820 |
GST received |
3,315 |
- |
3,315 |
Other |
3,179 |
5,005 |
(1,826) |
Total cash received |
127,732 |
111,994 |
15,738 |
Cash used |
|||
Employees |
71,571 |
72,360 |
(789) |
Suppliers1 |
42,697 |
36,722 |
5,975 |
Section 74 receipts transferred to Official Public Account6 |
8,706 |
- |
8,706 |
Other expenses |
3,200 |
2,912 |
288 |
Total cash used |
126,174 |
111,994 |
14,180 |
Net cash from operating activities |
1,558 |
- |
1,558 |
INVESTING ACTIVITIES |
|||
Cash used |
|||
Purchase of land and buildings |
483 |
- |
483 |
Purchase of property, plant and equipment7 |
545 |
3,547 |
(3,002) |
Purchase of intangibles4 |
4,023 |
- |
4,023 |
Total cash used |
5,051 |
3,547 |
1,504 |
Net cash used by investing activities |
(5,051) |
(3,547) |
(1,504) |
FINANCING ACTIVITIES |
|||
Cash received |
|||
Contributed equity |
150 |
- |
150 |
Departmental capital budget |
4,269 |
3,547 |
722 |
Total cash received |
4,419 |
3,547 |
872 |
Net cash from financing activities |
4,419 |
3,547 |
872 |
Net increase in cash held |
926 |
- |
926 |
Cash and cash equivalents at the beginning of the reporting period |
4,666 |
3,398 |
1,268 |
Cash and cash equivalents at the end of the reporting period |
5,592 |
3,398 |
2,194 |
The above statement should be read in conjunction with note 8.3B.
8.3B: Departmental Major Budget Variances
Explanations of major variances
1Supplier expenditure was higher than budgeted due to increases in departmental projects.
2The budget relating to rental income in the Statement of Comprehensive Income and the Cash Flow Statement is included in ‘other revenue’.
3During 2017-18 the Department relocated from Sydney Avenue in Barton to the Nishi Building on Philip Law Street in Acton. The fitout assets in the Nishi Building were originally recognised as ‘property, plant and equipment’ in the budget estimates, the balances will be moved to ‘buildings’ in the next budget update.
4The Department’s Information Technology standard operating environment was upgraded during 2018-19 which is reflected in an increase in the ‘intangibles’ balance.
5The balance reported as ‘other payables’ mainly reflects the recognition of lease incentives and rental income.
6Receipts from government is higher than budgeted due to the inclusion of the PGPA Section 74 receipts transferred to the Official Public Account.
7The fitout of the Nishi building required less modification to meet the needs of the Department than expected, resulting in lower than budgeted expenditure on property, plant and equipment.
8.3C: Administered Budgetary Reports |
|||
---|---|---|---|
Administered Schedule of Comprehensive income |
|||
for the period ended 30 June 2019 |
|||
Budget estimate |
|||
Actual 2019 $'000 |
Original 2019 $'000 |
Variance 2019 $'000 |
|
NET COST OF SERVICES |
|||
Expenses |
|||
Suppliers1 |
376,205 |
355,350 |
20,855 |
Grants2 |
249,580 |
272,404 |
(22,824) |
Depreciation and amortisation |
10,447 |
9,671 |
776 |
Impairment loss allowance on financial instruments |
241 |
- |
241 |
Payments to corporate Commonwealth entities |
1,788,930 |
1,774,530 |
14,400 |
Subsidies3 |
- |
570,188 |
(570,188) |
Other expenses |
13,625 |
7,146 |
6,479 |
Total expenses |
2,439,028 |
2,989,289 |
(550,261) |
Income |
|||
Revenue |
|||
Non-taxation revenue |
|||
Sale of goods and rendering of services |
3,628 |
3,309 |
319 |
Interest4 |
353,374 |
401,836 |
(48,462) |
Dividends5 |
42,205 |
71,800 |
(29,595) |
Rental income |
1,529 |
1,529 |
- |
Other revenue |
942 |
389 |
553 |
Total non-taxation revenue |
401,678 |
478,863 |
(77,185) |
Total revenue |
401,678 |
478,863 |
(77,185) |
Gains |
|||
Other gains |
5,527 |
- |
5,527 |
Total gains |
5,527 |
- |
5,527 |
Total income |
407,205 |
478,863 |
(71,658) |
Net cost of services |
(2,031,823) |
(2,510,426) |
478,603 |
Deficit |
(2,031,823) |
(2,510,426) |
478,603 |
OTHER COMPREHENSIVE INCOME |
|||
Items not subject to subsequent reclassification to net cost of services |
|||
Changes in asset revaluation surplus |
(1,841) |
- |
(1,841) |
Items subject to subsequent reclassification to net cost of services |
|||
Losses on available for sale financial assets6 |
(4,831,145) |
- |
(4,831,145) |
Total other comprehensive income |
(4,832,986) |
- |
(4,832,986) |
Total comprehensive loss |
(6,864,809) |
(2,510,426) |
(4,354,383) |
The above statement should be read in conjunction with note 8.3D.
Administered Schedule of Assets and Liabilities |
|||
---|---|---|---|
as at 30 June 2019 |
|||
Budget estimate |
|||
Actual 2019 $'000 |
Original 2019 $'000 |
Variance 2019 $'000 |
|
ASSETS |
|||
Financial Assets |
|||
Cash and cash equivalents7 |
98 |
26,711 |
(26,613) |
Trade and other receivables4 |
13,114,512 |
14,754,100 |
(1,639,588) |
Other investments6 |
21,672,171 |
25,271,723 |
(3,599,552) |
Total financial assets |
34,786,781 |
40,052,534 |
(5,265,753) |
Non-financial assets |
|||
Buildings |
55,569 |
58,080 |
(2,511) |
Property, plant and equipment |
138,140 |
140,069 |
(1,929) |
Other non-financial assets |
2,965 |
6,288 |
(3,323) |
Total non-financial assets |
196,674 |
204,437 |
(7,763) |
Total assets administered on behalf of Government |
34,983,455 |
40,256,971 |
(5,273,516) |
LIABILITIES |
|||
Payables |
|||
Suppliers |
330,215 |
335,350 |
(5,135) |
Grants2 |
13,255 |
39,452 |
(26,197) |
Subsidies3 |
- |
563,989 |
(563,989) |
Other payables |
17,206 |
18,317 |
(1,111) |
Total payables |
360,676 |
957,108 |
(596,432) |
Total liabilities administered on behalf of Government |
360,676 |
957,108 |
(596,432) |
Net assets |
34,622,779 |
39,299,863 |
(4,677,084) |
The above statement should be read in conjunction with note 8.3D.
8.3D: Administered Major Budget Variances
Explanation of major variances
1Supplier expenses increased in 2018-19 mainly as a result of the advertising costs relating to the online safety campaign and increased activity under the Public Interest Telecommunications program.
2The lower than budgeted grants expense mainly relates to the Mobile Black Spots Program. Some base stations that were budgeted for completion in 2018-19 will be completed in 2019-20 and the related grant milestones payments will now be made in 2019-20.
3The 2018-19 Budget estimates reflected the planned commencement of the Regional Broadband Scheme in 2018-19. The Budget was updated during the year to reflect the commencement of the program being deferred to 2019-20.
4During 2018-19 NBN Co accessed less of the loan funding than anticipated in the Budget estimates resulting in lower interest revenue being recognised and a lower than budgeted loan receivable balance being recorded in the Administered Schedule of Assets and Liabilities.
5Dividend revenue reflects the dividend paid to the Government by the Australian Postal Corporation. The Budget estimates for dividend revenue were updated during the year to reflect more recent projections as agreed by Shareholder Ministers.
6The Department’s Budget estimates for Administered Investments are generally held constant over the forward years due to the difficulties associated with predicting any changes likely to occur in the values of portfolio entities.
7Representing the closing balance of the Public Interest Telecommunications Services and National Cultural Heritage special accounts cash held in the Official Public Account. The variance is mainly driven by actual activities of the programs during the year.
Visit
https://www.transparency.gov.au/annual-reports/department-communications-and-arts/reporting-year/2018-2019-31