Departmental operating result

The department continued to operate in an environment of strong financial discipline. The increased complexity in the broader international operating environment and tightening departmental budget position has required careful reprioritisation of resources to deliver against departmental goals.

While COVID-19 saw increases in costs for consular, staff welfare, IT support for remote working and property cleaning expenses, these were partially offset by decreases in expenditure on travel and representation activities. The remaining impact of COVID-19 was largely covered by $10.6 million in funding received to respond to the pandemic.

See also Managing our financial resources, and the Financial Statements.

Revenue

The department reported $1,645.0 million of revenue in the Statement of Comprehensive Income, comprising:

• $1,473.2 million of appropriation revenue from government
• $159.0 million of own source income
• $12.8 million in gains including sale of assets.

This represents an increase of $41.0 million from 2018–19. The main factor contributing to this movement is an increase in appropriation revenue from government, including $10.6 million in funding towards the department’s response to COVID-19.

The department also reported $131.3 million of other comprehensive income arising from asset revaluation movements in the Statement of Financial Position. This is recorded directly as equity on the Statement of Financial Position and is not incorporated into the departmental operating result.

Expenses

The department reported $1,840.3 million of expenses in the Statement of Comprehensive Income. This is an increase of $42.8 million over 2018–19.

The main factors contributing to the movement in 2019–20 were:

• an increase in employee expenses of $35.0 million due to the decrease in the 10-year government bond rate which increased the long service leave provision; an increase in overseas expenses due to exchange rate fluctuations; and the impact of a two per cent pay rise on salary, superannuation and leave expenses
• an increase in expenses of $34.9 million from implementation of the new accounting standard AASB 16 Leases, which resulted in increases in depreciation, finance costs and unrealised foreign exchange losses offset by a decrease in property lease expenses
• a decrease in other depreciation and amortisation of $10.4 million and a decrease in supplier costs of $12.3 million due to net COVID-19 impacts on business as usual.

Assets and liabilities

The department reported a strong net asset position of $4,565.5 million in the Statement of Financial Position, with liabilities equating to 26 per cent of the total asset base.

This is an increase of $74.9 million from 2018–19. The main factors contributing to the movement in 2019–20 were:

• implementation of AASB 16 Leases which resulted in right-of-use lease assets of $1,181.8 million and lease liabilities of $1,166.0 million being recognised and removal of lease straight-lining which decreased payables by $26.3 million
• an increase in building assets of $136.1 million, predominantly through revaluation and acquisition
• a decrease in appropriation receivable of $70.6 million for operating, which resulted from the net cost of services exceeding revenue from government and $36.1m in capital spend on projects where funding was carried over from last year.

Figure 15: Summary of departmental expenses

Administered program performance

In 2019–20 expenses administered by the department on behalf of government were $4,404.7 million, an increase of $341.2 million over 2018–19. The majority of the increase is attributed to an increase in multilateral replenishments and other loans of $335.0 million resulting from a new pledge and loss from re-measuring multilateral liabilities due to changes in the Australian Government bond rate and foreign exchange fluctuations. Other grants and contributions increased by $53.0 million compared to 2018–19, due primarily to funding to Tourism Australia for the Bushfire Response Package.

The department’s $3,661.4 million administered development program is focused on the
Indo-Pacific (see Deliver an effective and responsive development assistance program for more information on the development program).

In 2019–20 income administered by the department on behalf of government was $583.7 million, which is $63.4 million less than 2018–19. The movement was due predominantly to a decrease of $95.5 million for passport, consular and other fee revenue resulting from the COVID-19 travel restrictions. Return of prior year administered expenses following acquittal of aid funds increased by $18.0 million. The Export Finance Australia (EFA) dividend, which is calculated on prior year net profits, and the EFA competitive neutrality payments increased by $12.3 million.

Other comprehensive income was $140.6 million, a decrease of $100.2 million from 2018–19. This decrease was primarily driven by an increase in the value of multilateral subscriptions by $42.7 million as assessed by independent experts, and a smaller increase in the value of investments relating to net assets of Tourism Australia and EFA’s commercial account.