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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.

Note Reference

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



Investment property

Assets held for sale

Return of equity - special accounts

Contributed equity/capital

Events that

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

Contributed equity/capital

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.

B6 Superannuation

Superannuation provisions

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.