B. Budgetary Variance Reporting
The below table provides explanations for significant variances between Finance’s original budget estimates, as published in the 2020-21 Portfolio Budget Statements and the actual financial performance and position for the year.
Affected line Items
B1 General insurance activities
Insurance claims expenses
Outstanding insurance claims
Special account cash held in the OPA
Insurance claims expenses and provision were impacted in 2020-21 due to several prior year individual Liability claims. These movements were partially offset by a favourable experience against the Property portfolio in relation to prior year weather events.
B2 Finance Owned Estate
Non-financial asset write-downs and impairments
Assets held for sale
Return of equity - special accounts
have impacted the financial performance of the Finance Owned Estate include:
· Revaluation decrements for investment
property (recognised in surplus/deficit) associated with significant capital works
· Delays in divestments planned for 2020-21
impacting gains, assets classified as held for sale and return of equity - special accounts
· Transfer of the final stage of the Villawood Detention Facility Redevelopment Project to the Department of Home Affairs impacting building asset balances and contributed equity/capital.
B3 Lapsing appropriations
Other departmental undrawn
Capital appropriations receivable and contributed equity/capital were lower than originally budgeted for mainly due to lapsing appropriations for completed prior year projects.
B4 Investment funds
Investment funds revenues, expenses and gains
Investment funds assets and liabilities
Investment funds distributions
The net asset balance for the investment funds is higher than originally budgeted primarily due to:
· Higher than expected investment and
earnings, mainly from gains
· Payments to the states and territories
from the DisabilityCare Australia Fund (the Fund) were lower than estimate reflecting that no payments were made from the Fund to Western Australia (WA) as WA are yet to sign a full Scheme bilateral agreement with the Commonwealth.
B5 Defence Housing Australia (DHA) loans
Cash and cash equivalents
During 2020-21, DHA loans were transferred from the Department of Defence and are now managed through a special account to support more flexible debt funding arrangements. This change was reflected in the 2020-21 Additional Estimates budget.
For budget reporting purposes, the discount rate used by actuaries in preparing the Long Term Cost Reports (LTCRs) is used to value the superannuation liability. The use of the LTCR rate reduces the volatility in reported liabilities that would occur from year to year if the long term government bond rate were used.
Consistent with Australian Accounting Standards, the superannuation liability and expense are valued using the long term government bond rate as at 30 June and 1 July respectively for the purpose of financial reporting.
Any change in the rates used for budget and financial reporting purposes significantly impacts on the superannuation provisions and superannuation expense.