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Employee benefits

E1: Employee benefits

Policy and measurement

Liabilities for short term employee benefits and termination benefits expected within twelve months of the end of the reporting period are measured at their nominal amounts.

Other long term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period.

Leave

The liability for employee benefits includes provision for annual leave and long service leave.

The 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 Finance’s superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out at termination.

Separation and redundancy

Provision is made for separation and redundancy benefit payments. Finance recognises a provision for restructuring when it has a detailed formal plan for the restructuring and has informed those employees affected that it will carry out the restructuring.

Superannuation

Finance’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 of the Australian Government. The PSSap is a defined contribution scheme. The liability for defined benefits is recognised in Finance’s administered statements and reported in Note C3: Superannuation.

Finance 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. Finance accounts for the contributions as if they were contributions to defined contribution plans.

Key judgements and estimates

Leave

The liability for long service leave has been determined by reference to standard parameters issued by the Department of Finance. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Leave liabilities for employees engaged under the MOP(S) Act are calculated with reference to an actuarial assessment. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and redundancy

A provision for severance payments is made for employees engaged under the MOP(S) Act in the event their employment is terminated, other than through resignation. These are measured as the defined benefit obligation adjusted for future salary increases discounted back to present value using yields on Government bonds.

Post-employment benefits

Provision is made for certain entitlements for former Prime Ministers, including staff, office and vehicle costs. The liability is calculated with reference to an actuarial assessment for each former Prime Minister individually where future recurrent expenditure assumptions are set having regard to historical data adjusted for inflation.

E1.1 Employee benefit expenses

Departmental

Administered

30 June

30 June

30 June

30 June

2018

2017

2018

2017

$'000

$'000

$'000

$'000

Wages and salaries1

121,933

127,734

223,568

187,882

Superannuation expense

Defined contribution plans

10,848

13,991

33,569

30,247

Defined benefit plans

12,575

10,714

5,677

7,562

Leave and other entitlements

15,580

12,538

20,021

17,870

Increase (decrease) in post-employment benefits liability

-

-

(3,934)

(75,596)

Separations and redundancies

7,312

2,952

5,315

10,296

Other employee expenses

229

689

14,520

16,838

Total employee expenses

168,477

168,618

298,736

195,099

1 Includes salaries and related benefits for Parliamentarians’ from 1 January 2018. Prior to this payments were administered by the Australian Public Service Commissioner (APSC).

E1.2 Employee provisions

Departmental

Administered

30 June

30 June

30 June

30 June

2018

2017

2018

2017

$'000

$'000

$'000

$'000

Employee provisions

Leave

56,468

58,403

41,744

36,185

Separation and redundancies

6,011

-

23,475

24,070

Post-employment benefits

-

-

170,646

176,754

Total employee provisions

62,479

58,403

235,865

237,009