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Summary

Defence looks to two major indicators to measure its financial performance – its cash based result against its annual appropriation funding and other cash inflows and its departmental operating result presented in the Statement of Comprehensive Income contained within its financial statements.

Cash Result

As outlined in Table 4.1 below, the annual ordinary annual service appropriations ($34.3 billion) and annual other services non-operating appropriation ($4.0 billion) available to Defence for 2019-20 totalled $38.3 billion, an increase of 4.8% in comparison with the prior year. Additional cash inflows in relation to retainable receipts added a further $1.4 billion to funds available to support cash expenditure during the year. Cash payments made across the year totalled $39.4 billion, resulting in a cash underspend of $349.4 million or 0.9% compared to total cash available including appropriations.

Departmental Operating Result

The second indicator is the 2019-20 accrual based result reported in the annual financial statements. After allowing for own-source income, the net cost of services for the year totalled $34.0 billion resulting in a surplus of $0.3 billion or 0.7% of variance to the budgeted net cost of services. Defence is primarily funded through operating departmental appropriation of $34.3 billion. Refer to Appendix A for the 2019-20 Financial Statements.

Net Assets

Defence’s net asset position of $100.8 billion increased by $4.4 billion compared to $96.4 billion in 2018-19. The increase is largely driven by Specialist Military Equipment (SME) asset procurement of $8.8 billion and the adoption of AASB 16 Leases. The new accounting standard brought $1.4 billion on to the Balance Sheet as Right of Use Assets.

Administered Result

In 2019-20 Defence Administered had net cost of services of $8.5 billion, compared to $7.0 billion in 2018-19. The additional expenses are primarily due to an increase in the superannuation defined benefit expense of $1.4 billion to $9.8 billion. Defence recognised $25.6 million in dividends and $41.1 million in competitive neutrality revenue on behalf of the Australian Government from Defence Housing Australia.

In 2019-20, Defence paid $3.0 billion in Defence Force Superannuation payments and the Defence Home Ownership Assistance Scheme.

Table 4.1: Defence Resource Statement, 2019-20

Actual available appropriation for 2019-20

$’000

Payments made 2019-20

$’000

Balance remaining 2019-20

$’000

DEPARTMENTAL ANNUAL APPROPRIATIONS

Prior year departmental appropriation available

40,0851

40,085

-

Annual appropriation - ordinary annual services

34,334,9481

33,945,4902

389,4582

Receipts retained under PGPA Act - section 74

1,394,851

1,394,851

-

Total Departmental Annual Appropriations

35,769,884

35,380,426

389,458

DEPARTMENTAL OTHER SERVICES - NON-OPERATING APPROPRIATIONS

Prior year- other services - non-operating available

Annual appropriations - other services - non-operating

4,015,029

4,015,029

Total Departmental other services

4,015,029

4,015,029

Total Departmental Resourcing

39,784,913

39,395,455

SPECIAL APPROPRIATIONS

Defence Force Retirement Benefits Act 1948 Part 1 s. 15D and VIC, s. 82ZJ

38,375

Defence Force Retirement and Death Benefits Act 1973 Part XII, s. 125

1,608,370

Military Superannuation and Benefits Act 1991 Part V, s. 17

1,212,418

Defence Force (Home Loan Assistance) Act 1990 Part IV, s. 38

207

Australian Defence Force Cover Act 2015

12,508

Defence Home Ownership Assistance Scheme Act 2008 Part VI, s. 84

108,933

Other Administered

Total Special Appropriations

2,980,811

Special Accounts

Opening balance

115,458

Non-appropriation receipts to special accounts

326,669

Payments made

289,042

Total Special Accounts

442,127

289,042

153,085

less departmental appropriations drawn down from annual/special appropriations and credited to special accounts

-

-

-

Total Resourcing and Payments

40,227,040

42,665,308

Photo of Australian Army soldier Lance Corporal Lauren McConnell at work in the Main Operating Base in the Middle East Region.
Australian Army soldier Lance Corporal Lauren McConnell at work in the Main Operating Base in the Middle East Region.