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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

for the period ended 30 June 2018

Overview

Basis of preparation of the financial statements

The financial statements are general purpose financial statements and are required by section 42 of the PGPA Act.

The financial statements have been prepared in accordance with:

  • Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) for reporting periods ending on or after 1 July 2017.
  • Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period. The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except where certain assets and liabilities are recorded at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars, and are rounded to the nearest thousand dollars unless otherwise specified.
    Except where stated below, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Taxation

The Department of the Prime Minister and Cabinet (PM&C) is exempt from all forms of taxation except Fringe Benefits Tax (FBT), the Goods and Services Tax (GST) and Mining Withholding Tax (WHT).

New Australian accounting standards

No accounting standard has been adopted earlier than the application date as stated in the standard.

Other new standards, revised standards, interpretations and amending standards that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material financial impact, and are not expected to have a future material financial impact on PM&C.

Compliance with statutory conditions for payments from the consolidated revenue fund

The Australian Government continues to have regard to developments in case law, including the High Court’s most recent decision on Commonwealth expenditure in Williams v Commonwealth [2014] HCA 23, as they contribute to the larger body of law relevant to the development of Commonwealth programs. In accordance with its general practice, the Government will continue to monitor and assess risk and decide on any appropriate actions to respond to risks of expenditure not being consistent with constitutional or other legal requirements.

During 2017-18 PM&C reviewed its exposure to the risk of not complying with statutory conditions on payments from appropriations, namely section 83 of the Constitution.

The review identified the following technical breach:

  • The Aboriginals Benefit Account (ABA) special account – testing of transactions revealed that three payments made from the ABA under section 64(3) of the Aboriginal Land Rights (Northern Territory) Act 1976 (the ALRA), contravened section 83 of the Constitution totalling $0.594 million. The payments were a technical contravention, despite the payments having been made in accordance with the requirements of section 64(3) of the ALRA. Of the overpayments, $0.129 million has been recovered through reduction of subsequent payments and the remaining $0.465 million will be offset against future payments. Overpayments from previous years of $0.680 million were partially recovered during the year and the remaining $0.041 million will be offset against future payments.
    Payments are required to be made out of the ABA based on royalties received by the Northern Territory and Australian Governments. The contraventions occur when the royalties upon which the payments were based had been estimated at a value greater than the eventual actual. Legislation has been prepared, and is awaiting presentation to Parliament, to reduce the risks of non-compliance associated with these payments to an acceptably low level.

PM&C will continue to monitor its level of compliance with section 83 of the Constitution across all legislation for which it is administratively responsible. Where possible, amendments to legislation will continue to be progressed.

Events after the reporting period

Departmental

There are no known events occurring after the reporting period that could impact on the financial statements.

Administered

On 12 February 2018, the Minister for Indigenous Affairs announced that the Government will introduce new Bills into Parliament to ensure the long-term sustainability of the new Indigenous Land and Sea Corporation which acquires and manages assets for Indigenous Australians, and allow the entity to invest in sea country and water assets. The Bill will establish a new special account, ‘Aboriginal and Torres Strait Islander Land and Sea Future Fund Special Account’ and transfer all assets of the Aboriginal and Torres Strait Islander Land Account to this account. As at date of signing the financial statements, this Bill had not been passed.


1. Departmental Financial Performance

This section analyses the financial performance of the Department of the Prime Minister and Cabinet for the year ended 30 June 2018.

1.1. Expenses

2018

2017

$'000

$'000

Note 1.1A: Employee benefits

Wages and salaries

191,968

182,817

Superannuation

Defined contribution plans

18,016

16,711

Defined benefit plans

18,515

19,436

Leave and other entitlements

30,252

27,245

Separation and redundancies

5,576

1,566

Other

3,635

3,621

Total employee benefits

267,962

251,396

Note 1.1B: Suppliers

Goods and services supplied or rendered

Consultants, legal, contractors and secondees

53,304

57,538

Equipment, repairs and maintenance

10,929

7,062

General expenses1

14,268

13,619

Venue hire

2,774

762

Office accommodation, facility management and security

5,879

5,365

Information, communication and technology

40,615

40,310

Travel

14,250

11,216

Total goods and services supplied or rendered

142,019

135,872

Goods supplied

13,422

11,386

Services rendered

128,597

124,486

Total goods and services supplied or rendered

142,019

135,872

Other suppliers

Operating lease rentals

34,074

28,658

Workers compensation expenses

2,834

2,773

Payments to related entities

-

10,000

Total other supplier expenses

36,908

41,431

Total suppliers

178,927

177,303

Leasing commitments

Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:

Within 1 year

25,755

28,031

Between 1 to 5 years

92,166

90,134

More than 5 years

221,175

11,202

Total operating lease commitments

339,096

129,367

Note: Commitments are GST inclusive where relevant.

Operating lease commitments - leases for office accommodation

Office accommodation lease payments are subject to periodic increases in accordance with the rent review provisions in the lease agreements.

Operating leases comprise 80 leases for office accommodation (2017: 77).

1 Includes $0.029 million audit fees to the ANAO for the financial statements audit of the Aboriginal and Torres Strait Islander Land Account (ATSILA) (2017: $0.029 million), which is not a resource received free of charge.

for the period ended 30 June 2018

Accounting Policy

Leases

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease.

Lease payments are allocated between the principal component and the interest expense.

PM&C currently has five (2017: seven) agreements for the leasing of premises which have provisions requiring the premises to be restored to their original condition at the conclusion of the lease. PM&C has recognised a make good provision to reflect the present value of this obligation.

2018

2017

$'000

$'000

Note 1.1C: Write-down and impairment of assets

Asset write-downs and impairments from:

Impairment and write-down of property, plant and equipment and intangibles

6,705

5,160

Impairment of receivables

16

153

Total write-down and impairment of assets

6,721

5,313

Note 1.1D: Losses from asset sales

Property, plant and equipment

Proceeds from sale

1,019

4,123

Carrying value of asset sold

(1,105)

(4,700)

Selling expense

(31)

(178)

Total losses from asset sales

117

755

Accounting Policy

Gains or losses from disposal of assets are recognised when control of the asset has passed to the buyer.

1.2 Own-Source Revenue and Gains

2018

2017

$'000

$'000

Own-source revenue

Note 1.2A: Sale of goods and rendering of services

Sale of goods

-

15

Rendering of services

16,726

14,109

Total sale of goods and rendering of services

16,726

14,124

Accounting Policy

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

  • The amount of revenue, stage of completion and transaction costs incurred can be reliably measured.
  • The probable economic benefits associated with the transaction will flow to PM&C.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Note 1.2B: Resources received free of charge

Seconded staff

9,092

7,065

Other

474

474

Total resources received free of charge

9,566

7,539

Accounting Policy

Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

Note 1.2C: Other gains

Gain on early termination of lease

4,944

-

Reversal of previous asset write-down

76

1,379

Reversal of make good provision

613

593

Asset first recognised

-

603

Total other gains

5,633

2,575

2. Income and Expenses Administered on Behalf of Government

2. Income and Expenses Administered on Behalf of Government

This section analyses the activities that the Department of the Prime Minister and Cabinet does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

2.1. Administered – Expenses

2018

2017

$'000

$'000

Note 2.1A: Employee benefits

Wages and salaries

851

818

Superannuation

Defined contribution plans

40

37

Defined benefit plans

93

146

Leave and other entitlements

152

51

Separation and redundancies

62

43

Total employee benefits

1,198

1,095

Note 2.1B: Suppliers

Goods and services supplied or rendered

Outsourced providers, contractors and consultants

47,934

47,677

Equipment, repairs and maintenance

830

607

General expenses

7,707

8,198

Travel

3,004

2,703

Information, communication and technology

1,159

257

Total goods and services supplied or rendered

60,634

59,442

Goods supplied

626

529

Services rendered

60,008

58,913

Total goods and services supplied or rendered

60,634

59,442

Other suppliers

Operating lease rentals

3

3

Workers compensation expenses

11

12

Total other supplier expenses

14

15

Total suppliers

60,648

59,457

Leasing commitments

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

Within 1 year

380

570

Between 1 to 5 years

576

719

More than 5 years

1,415

1,538

Total operating lease commitments

2,371

2,827

Note: Commitments are GST inclusive where relevant.

Operating leases comprise 14 leases, five for office accommodation for the former Governors-General, one relating to the Indigenous Education (Northern Territory Facilities) program and eight relating to the Children and Schooling program. Lease payments are subject to periodic increase in accordance with the rent review provisions of the lease.

Accounting Policy

Leases

PM&C administers four (2017: four) agreements for the leasing of premises which have provisions requiring the premises to be restored to their original condition at the conclusion of the lease. A make good provision has been raised to reflect the present value of this obligation.

2018

2017

$'000

$'000

Note 2.1C: Grants

Public sector

Australian Government entities

100,676

90,278

Local Governments

87,893

70,103

State and Territory Governments

70,156

60,378

Private sector

Non-profit organisations

883,412

940,224

Commercial entities

198,787

186,390

Total grants

1,340,924

1,347,373

Program 2.1 - Jobs, Land and Economy

646,114

639,175

Program 2.2 - Children and Schooling

330,840

356,011

Program 2.3 - Safety and Wellbeing

258,133

236,612

Program 2.4 - Culture and Capability

47,756

63,955

Program 2.5 - Remote Australia Strategy

43,332

44,564

Program 1.1 - Prime Minister and Cabinet

14,749

7,056

Total grants

1,340,924

1,347,373

Accounting Policy

PM&C administers a number of grants and subsidy schemes on behalf of the Government. Grant liabilities are recognised to the extent that (i) the services required to be performed by the grantee have been performed; or (ii) the grant eligibility criteria have been satisfied, but payments due have not been made. Where grant moneys are paid in advance of performance or eligibility, a prepayment is recognised.

Settlement is usually made according to the terms and conditions of each grant. This is usually within 30 days of performance or eligibility.

Note 2.1D: Write-down and impairment of assets

Impairment of receivables

2,814

8,632

Write-down of non-financial assets

13

-

Total write-down and impairment of assets

2,827

8,632

Note 2.1E: Payments associated with Land Councils

Payments associated with Land Councils administration

49,843

46,798

Land Councils distributions

97,482

50,875

Total payments associated with Land Councils

147,325

97,673

Note 2.1F: Payments to Corporate Commonwealth entities and companies

Aboriginal Hostels Limited

36,563

37,075

Australian Institute of Aboriginal and Torres Strait Islander Studies

3,249

-

Indigenous Business Australia

10,133

10,602

Indigenous Land Corporation

8,928

9,156

Torres Strait Regional Authority

36,056

35,919

Total payments to Corporate Commonwealth entities and companies

94,929

92,752

Accounting Policy

Payments to Corporate Commonwealth entities and companies from amounts appropriated for that purpose are classified as administered expenses, equity injections or loans of PM&C. The appropriation to PM&C is disclosed in section 5 Funding.

2018

2017

$'000

$'000

Note 2.1C: Grants

Public sector

Australian Government entities

100,676

90,278

Local Governments

87,893

70,103

State and Territory Governments

70,156

60,378

Private sector

Non-profit organisations

883,412

940,224

Commercial entities

198,787

186,390

Total grants

1,340,924

1,347,373

Program 2.1 - Jobs, Land and Economy

646,114

639,175

Program 2.2 - Children and Schooling

330,840

356,011

Program 2.3 - Safety and Wellbeing

258,133

236,612

Program 2.4 - Culture and Capability

47,756

63,955

Program 2.5 - Remote Australia Strategy

43,332

44,564

Program 1.1 - Prime Minister and Cabinet

14,749

7,056

Total grants

1,340,924

1,347,373

Accounting Policy

PM&C administers a number of grants and subsidy schemes on behalf of the Government. Grant liabilities are recognised to the extent that (i) the services required to be performed by the grantee have been performed; or (ii) the grant eligibility criteria have been satisfied, but payments due have not been made. Where grant moneys are paid in advance of performance or eligibility, a prepayment is recognised.

Settlement is usually made according to the terms and conditions of each grant. This is usually within 30 days of performance or eligibility.

Note 2.1D: Write-down and impairment of assets

Impairment of receivables

2,814

8,632

Write-down of non-financial assets

13

-

Total write-down and impairment of assets

2,827

8,632

Note 2.1E: Payments associated with Land Councils

Payments associated with Land Councils administration

49,843

46,798

Land Councils distributions

97,482

50,875

Total payments associated with Land Councils

147,325

97,673

Note 2.1F: Payments to Corporate Commonwealth entities and companies

Aboriginal Hostels Limited

36,563

37,075

Australian Institute of Aboriginal and Torres Strait Islander Studies

3,249

-

Indigenous Business Australia

10,133

10,602

Indigenous Land Corporation

8,928

9,156

Torres Strait Regional Authority

36,056

35,919

Total payments to Corporate Commonwealth entities and companies

94,929

92,752

Accounting Policy

Payments to Corporate Commonwealth entities and companies from amounts appropriated for that purpose are classified as administered expenses, equity injections or loans of PM&C. The appropriation to PM&C is disclosed in section 5 Funding.

2.2 Administered – Income

Note 2.2A: Interest

Interest on investments

72,412

74,488

Interest on loans

1,513

1,644

Unwinding of discount on concessional loans

2,963

2,976

Total interest

76,888

79,108

Note 2.2B: Other revenue

Return of grant funding

11,372

25,176

Lease rental income

1,848

2,280

Other

44

108

Total other revenue

13,264

27,564

Accounting Policy

All administered revenues relate to ordinary activities performed by PM&C on behalf of the Australian Government. As such, administered appropriations are not revenues of the individual entity. PM&C oversees distribution or expenditure of the funds as directed.

Interest revenue is recognised using the effective interest method.

3. Departmental Financial Position

This section analyses the Department of the Prime Minister and Cabinet’s assets used to generate financial performance and the operating liabilities incurred as a result. Employee related information is disclosed in the People section.

3.1. Financial Assets

2018

2017

$'000

$'000

Note 3.1: Trade and other receivables

Goods and services receivables

Goods and services

11,729

3,615

Total goods and services receivables

11,729

3,615

Appropriations receivables

Existing programs

81,571

81,768

Total appropriations receivable

81,571

81,768

Other receivables

Statutory receivables

3,449

3,588

Other

-

13,199

Total other receivables

3,449

16,787

Total trade and other receivables (gross)

96,749

102,170

Less impairment allowance

Goods and services

(106)

(167)

Total impairment allowance

(106)

(167)

Total trade and other receivables (net)

96,643

102,003

Reconciliation of the impairment allowance

2018

2017

$'000

$'000

As at 1 July

(167)

(112)

Amounts written off

-

24

Amounts recovered and reversed

76

74

Increases

(15)

(153)

Total as at 30 June

(106)

(167)

3.2 Non-Financial Assets

Note 3.2: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles

Land1

Buildings1

Leasehold improvements

Plant and equipment

Computer software internally developed

Computer software purchased

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2017

Gross book value

-

-

-

-

24,986

3,764

28,750

Fair value

14,107

41,540

31,221

13,626

-

-

100,494

Work in progress

-

9,053

760

1,242

2,929

60

14,044

Accumulated depreciation/amortisation and impairment

-

(2,103)

(5,988)

(4,387)

(4,550)

(2,373)

(19,401)

Total as at 1 July 2017

14,107

48,490

25,993

10,481

23,365

1,451

123,887

Additions

Purchase

-

462

25,285

7,935

11,625

533

45,840

Revaluations and impairments recognised in other comprehensive income

-

(823)

-

-

-

-

(823)

Reclassifications

(1,160)

(4,130)

2,882

(364)

-

92

(2,680)

Depreciation and amortisation

-

(1,546)

(6,791)

(3,377)

(5,763)

(931)

(18,408)

Write-down and impairments recognised in net cost of services (expense)

(2,331)

(2,697)

(1,245)

(432)

-

-

(6,705)

Total as at 30 June 2018

10,616

39,756

46,124

14,243

29,227

1,145

141,111

Total as at 30 June 2018 represented by

Gross book value

-

-

-

-

32,283

4,292

36,575

Fair value

10,616

43,111

54,577

18,848

-

-

127,152

Work in progress

-

103

4,002

2,483

7,247

99

13,934

Accumulated depreciation, amortisation and impairment

-

(3,458)

(12,455)

(7,088)

(10,303)

(3,246)

(36,550)

Total as at 30 June 2018

10,616

39,756

46,124

14,243

29,227

1,145

141,111

1 PM&C has a property portfolio divestment strategy that will result in properties throughout Australia being sold within the next 12 months.

Contractual commitments for the acquisition of property, plant, equipment and intangible assets

Contractual commitments for the acquisition of IT equipment and other capital works of $6,529 million are payable within one year. (2017: $11.624 million).

Accounting Policy

Asset recognition threshold

Purchases of property, plant and equipment and intangibles are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $5,000, which are expensed in the year of acquisition (other than IT assets where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by PM&C where there exists an obligation to restore the asset to its original condition. These costs are included in the value of PM&C's property, plant and equipment with a corresponding provision for the ‘make good’ recognised.

Property, plant and equipment are subsequently measured at fair value.

Revaluations

Fair values for each class of asset are determined as shown below:

Asset class

Fair value measurement

Land

Market selling price

Buildings excluding leasehold improvements

Market selling price and depreciated replacement cost

Leasehold improvements

Depreciated replacement cost

Plant and equipment

Market selling price and depreciated replacement cost

PM&C procured valuation services from independent valuation experts and relied on the valuations made by these experts. The experts provided written assurance that the models developed to value assets are in compliance with accounting standards. PM&C tests the procedures of the valuation model as an internal management review at least once every 12 months. PM&C has a rolling revaluation plan in place which ensures all assets are formally revalued at least once every three years. If a particular asset class experiences significant and volatile changes in fair value (i.e. where indicators suggest that the value of the class has changed materially since the previous reporting period), that class is subject to specific valuation in the reporting period, where practicable, regardless of the timing of the last specific valuation.

Assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured using the cost (Depreciated Replacement Cost or DRC) approach. Professional judgement has been applied in calculating the consumed economic benefit/asset obsolescence relevant to the asset under construction.

All property, plant and equipment assets are valued on a recurring basis except for assets held for sale.

Upon revaluation, any accumulated depreciation is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Assets held for sale

Assets held for sale are measured at the lesser of their carrying amount and fair value less cost to sell and are valued at a non-recurring basis. PM&C is currently marketing five residential properties (staff housing) that are no longer essential for operational requirements. 2018: $1.825 million (2017: $0.250 million).

Intangibles

PM&C’s intangibles comprise internally developed and purchased software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Impairment

All assets were assessed for impairment during 2018.

Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

Accounting Policy (continued)

Depreciation/Amortisation

Depreciable assets are written-off to their estimated residual values over their estimated useful lives to PM&C using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each class of asset are based on the following total useful lives for the current and prior reporting periods:

Buildings excluding leasehold improvements 3 to 50 years (2017: 3 to 50 years)

Leasehold improvements Lease term (2017: Lease term)

Plant and equipment 1 to 25 years (2017: 1 to 24 years)

Intangibles 1 to 5 years (2017: 1 to 5 years)

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

3.3 Payables

2018

2017

$'000

$'000

Note 3.3: Other payables

Salaries, wages and superannuation

1,704

1,763

Separation and redundancies payable

3,314

601

Unearned income

2,435

2,725

Lease liability

10,666

10,980

Lease incentive

15,154

1,631

Other

3,026

3,059

Total other payables

36,299

20,759

3.4. Other Provisions

Make good provision

Total

$’000

$’000

As at 1 July 2017

1,258

1,258

Additional provisions made

121

121

Finance cost

10

10

Amounts used

(131)

(131)

Gain on reversal of provision

(613)

(613)

Total as at 30 June 2018

645

645

Significant accounting judgements and estimates

Provision for the restoration of leased premises (make good) is based on future obligations relating to the underlying assets and is supported by independent qualified valuers’ opinions.

4. Assets and Liabilities Administered on Behalf of Government

This section analyses assets used to generate financial performance and the operating liabilities incurred as a result which the Department of the Prime Minister and Cabinet does not control, but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

4.1 Administered – Financial Assets

2018

2017

$'000

$'000

Note 4.1A: Cash and cash equivalents

Cash on hand or on deposit

79

304

Aboriginals Benefit Account - Special Account

11,212

24,334

Aboriginal and Torres Strait Islander Land Account - Special Account

1

1

Cash held in the Official Public Account - Special Account

12,284

11,433

Total cash and cash equivalents

23,576

36,072

Note 4.1B: Trade and other receivables

Goods and services receivables

Goods and services receivable

17

7

Total goods and services receivables

17

7

Advances and loans

Loans to Australian Government entities

48,549

50,967

Total advances and loans

48,549

50,967

Other receivables

Statutory receivables

14,707

23,393

Interest receivable

34,243

32,829

Grants receivable

21,516

18,358

Other

322

743

Total other receivables

70,788

75,323

Total trade and other receivables (gross)

119,354

126,297

Less impairment allowance

Other receivables

(16,847)

(15,413)

Total impairment allowance

(16,847)

(15,413)

Total trade and other receivables (net)

102,507

110,884

Accounting Policy

Loans

Concessional loans are initially recognised at their fair value. If the rate of interest charged is lower than the government bond rate (for government/public sector loans) or the counterparty’s borrowing rate (for non-government loans), the difference between the amortised cost and the fair value of the loan is treated as an expense.

Loans to Australian Government entities are made for the period up to 7 years based on current interest rates. Interest is variable and is paid quarterly.

Reconciliation of the impairment allowance

Movements in relation to 2018

2018

2017

$'000

$'000

As at 1 July

(15,413)

(8,606)

Amounts written off

-

591

Amounts recovered and reversed

1,651

2,043

Increases

(3,085)

(9,441)

Total as at 30 June

(16,847)

(15,413)

2018

2017

$'000

$'000

Note 4.1C: Investments in Corporate Commonwealth entities and companies

Equity interest in

Aboriginal Hostels Limited

149,556

146,332

Anindilyakwa Land Council

15,945

14,607

Australian Institute of Aboriginal and Torres Strait Islander Studies

37,919

-

Central Land Council

41,665

39,598

Indigenous Land Corporation

452,005

371,367

Indigenous Business Australia

1,415,737

1,334,810

National Australia Day Council Limited

790

1,137

Northern Land Council

11,346

21,966

Outback Stores Pty Ltd

41,617

41,686

Tiwi Land Council

2,796

1,283

Torres Strait Regional Authority

83,600

79,821

Wreck Bay Aboriginal Community Council

56,790

61,377

Total investments in Corporate Commonwealth entities and companies

2,309,766

2,113,984

All investments in Corporate Commonwealth entities and companies are expected to be recovered in more than 12 months.

Investment in Corporate Commonwealth Entities

The Australian Government holds a 100% equity interest in the following administered investments:

Aboriginal Hostels Limited

Provides temporary accommodation to Aboriginal and Torres Strait Islander people through a national network of hostels.

Australian Institute of Aboriginal and Torres Strait Islander Studies

The Australian Institute of Aboriginal and Torres Strait Islander Studies (AIATSIS) is a research, collections and publishing organisation that promotes knowledge and understanding of Aboriginal and Torres Strait Islander cultures, traditions, languages and stories, past and present.

AIATSIS transferred from the Education portfolio into the PM&C portfolio during the year. Refer Note 8.1 Restructuring.

Investment in Commonwealth Entities (continued)

Land Councils

The Land Councils include:

-Anindilyakwa Land Council

-Central Land Council

-Northern Land Council

-Tiwi Land Council; and

-Wreck Bay Aboriginal Community Council

The Land Councils represent the Aboriginal people living in the area of the Land Council in the management of Aboriginal land in the area, and in relation to legislation concerning that land. The Land Councils also consult and protect the interests of traditional owners and take measures to assist in the protection of sacred sites in the area of the Land Council. Wreck Bay Aboriginal Community Council holds title to land and provides services to the Aboriginal community of Jervis Bay.

Indigenous Land Corporation

The Indigenous Land Corporation provides economic, environmental, social and cultural benefits for Aboriginal persons and Torres Strait Islanders by assisting in the acquisition and management of an Indigenous land base.

Indigenous Business Australia

Indigenous Business Australia creates opportunities for Aboriginal and Torres Strait Islander people and communities to build assets and gain wealth.

National Australia Day Council Limited

Promotes national pride, active citizenship and the observance and celebration of Australia Day; administration of the Australian of the Year awards, which includes awards for the Young Australian of the Year, the Senior Australian of the Year and Australia’s Local Hero; distribution of grants to State and Territory Australia Day Councils; and provision of recommendations and advice to the Australian Government on all matters relating to year-round national pride activities.

Outback Stores Pty Ltd.

Outback Stores Pty Ltd improves access to affordable, healthy food for Indigenous communities, particularly in remote areas, through providing food supply and store management and support services.

Torres Strait Regional Authority

The Torres Strait Regional Authority formulates, implements and monitors the effectiveness of programs for Aboriginal and Torres Strait Islander people living in the Torres Strait and Northern Peninsula Area.

Accounting Policy

Administered investments

Administered investments in subsidiaries are not consolidated because their consolidation is relevant only at the whole-of-government level.

Administered investments other than those held for sale are classified as available for sale and are measured at their fair value as at 30 June 2018. Fair value has been taken to be the Australian Government's proportional interest in the net assets as advised by the entities as at the end of the reporting period recorded in the latest management accounts or unaudited financial statements provided.

Accounting Policy

Administered investments

Administered investments in subsidiaries are not consolidated because their consolidation is relevant only at the whole-of-government level.

Administered investments other than those held for sale are classified as available for sale and are measured at their fair value as at 30 June 2018. Fair value has been taken to be the Australian Government's proportional interest in the net assets as advised by the entities as at the end of the reporting period recorded in the latest management accounts or unaudited financial statements provided.

4.2 Administered – Non-Financial Assets

Note 4.2: Reconciliation of the opening and closing balances of property, plant and equipment

Land

Buildings

Leasehold improvements

Plant and equipment

Total

$’000

$’000

$’000

$’000

$’000

As at 1 July 2017

Fair value

-

-

97

1,990

2,087

Accumulated depreciation and impairment

-

-

(23)

(999)

(1,022)

Total as at 1 July 2017

-

-

74

991

1,065

Additions

Acquisition of entities or operations (including restructuring)

44,000

5,811

-

-

49,811

Revaluations recognised in other comprehensive income

-

-

-

(203)

(203)

Depreciation expense

-

(126)

(49)

(143)

(318)

Write-down and impairments recognised in net cost of services (expense)

-

-

-

(13)

(13)

Total as at 30 June 2018

44,000

5,685

25

632

50,342

Total as at 30 June 2018 represented by

Fair value

44,000

5,811

97

1,095

51,003

Accumulated depreciation and impairment

-

(126)

(72)

(463)

(661)

Total as at 30 June 2018

44,000

5,685

25

632

50,342

Accounting Policy

Revaluation

All leasehold improvements, plant and equipment assets were formally valued during the year by independent qualified valuers and were assessed for impairment.

Depreciation

Depreciation rates applying to each class of depreciable asset are based on the following useful lives for the current and prior reporting periods:

Buildings excluding leasehold improvements 22 to 30 years (2017: n/a)

Leasehold improvements Lease term (2017: Lease term)

Plant and equipment 5 to 114 years (2017: 1 to 115 years)

4.3A - Administered – Payables

2018 2017 $'000 $'000 Note 4.3A: Grants Public sector Australian Government entities (related parties) 17,064 1,979 Local Governments 22 60 State and Territory Governments 21,327 7,105 Private sector Commercial entities 860 857 Non-profit organisations 8,924 31,790 Total grants 48,197 41,791

Note 4.3B: Other payables

Office of Township Leasing payables

1,094

160

Other

341

743

Total other payables

1,435

903

All other payables are expected to be settled in no more than 12 months.

5. Funding

1.

This section identifies the Department of the Prime Minister and Cabinet funding structure.

5.1. Appropriations

Note 5.1A: Departmental annual and unspent appropriations ('recoverable GST exclusive')

2018

2017

$'000

$'000

Ordinary annual services

Annual Appropriation

Operating

451,886

404,494

Capital budget

14,506

11,732

Section 74 receipts

26,047

22,924

Section 75 transfers

(11,072)

-

Total available appropriation

481,367

439,150

Appropriation applied (current and prior years)

(470,695)

(439,277)

Variance

10,672

(127)

Opening unspent appropriation balance

143,464

143,591

Repeal of Annual Appropriation Acts 2013-14, 2014-15

(50,762)

-

Closing unspent appropriation balance

103,374

143,464

Balance comprises appropriations as follows1, 2:

Appropriation Act (No. 1) 2013-14

-

5,000

Appropriation Act (No.1) 2014-15

-

43,446

Appropriation Act (No.1) 2014-15 - Capital Budget (DCB)

-

2,316

Appropriation Act (No.1) 2015-16

1,190

1,190

Appropriation Act (No.1) 2016-17

13,128

86,770

Appropriation Act (No.1) 2016-17 cash held by the department

-

2,976

Appropriation Act (No.3) 2016-17

-

305

Appropriation Act (No.3) 2016-17 - Capital Budget (DCB) - Non Operating

-

1,461

Appropriation Act (No.1) 2017-18

78,867

-

Appropriation Act (No.1) 2017-18 cash held by the department

1,910

-

Appropriation Act (No.1) 2017-18 - Capital Budget (DCB) - Non Operating

8,279

-

Total unspent appropriation - ordinary annual services

103,374

143,464

Other services

Annual Appropriation

Equity injections

11,694

8,611

Total available appropriation

11,694

8,611

Appropriation applied (current and prior years)

(9,665)

(12,334)

Variance

2,029

(3,723)

Opening unspent appropriation balance

4,609

8,332

Repeal of Annual Appropriation Act 1 (No.2) 2014-15

(57)

-

Closing unspent appropriation balance

6,581

4,609

Balance comprises appropriations as follows :

Appropriation Act (No 2) 2014-15 - Non Operating - Equity Injection

-

57

Appropriation Act (No.2) 2016-17 - Non Operating - Equity Injection

-

4,552

Appropriation Act (No.2) 2017-18 - Non Operating - Equity Injection

6,581

-

Total unspent appropriation - other services

6,581

4,609

Total unspent appropriation

109,955

148,073

1 The current year unspent appropriation balance is shown inclusive of Section 51 permanent quarantines against Appropriation Act (No.1) 2017-18 of $10.168 million, Appropriation Act (No.1) 2017-18 – Capital Budget(DCB) – Non Operating of $3.795 million, Appropriation Act (No.1) 2015-16 of $1.190 million and Appropriation Act (No.1) 2016-17 of $11.320 million.

2 The current year unspent appropriation balance is shown inclusive of re-allocations of amounts from Appropriation Act (No.1) 2017-18 to Appropriation Act (No.1) 2017-18 – Capital Budget (DCB) of $1.600 million that was approved by the Finance Minister during 2017-18.

Accounting Policy

Revenue from Government - Departmental

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as revenue from Government when PM&C gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

Note 5.1B: Administered annual and unspent appropriations ('recoverable GST exclusive')

2018

2017

$'000

$'000

Ordinary annual services

Annual Appropriation

Operating

1,320,644

1,408,961

Capital budget

253

250

Payments to corporate Commonwealth entities/companies

94,929

92,752

Section 74 receipts

5,213

2,131

Section 75 transfers

(19,037)

-

Total available appropriation

1,402,002

1,504,094

Appropriation applied (current and prior years)

(1,395,502)

(1,437,686)

Variance

6,500

66,408

Opening unspent appropriation balance

122,651

56,243

Repeal of Annual Appropriation Acts 2012-13, 2013-14 and 2014-15

(26,897)

-

Closing unspent appropriation balance

102,254

122,651

Balance comprises appropriations as follows1:

Appropriation Act (No.1) - Capital Budget (DCB) - - Non Operating 2012-13

-

240

Appropriation Act (No.1) 2013-14

-

10

Appropriation Act (No.5) 2013-14

-

10

Appropriation Act (No.1) 2014-15

-

26,497

Appropriation Act (No.1) - Capital Budget (DCB) - - Non Operating 2014-15

-

140

Appropriation Act (No.3) 2015-16

8,902

8,902

Appropriation Act (No.1) - Capital Budget (DCB) - - Non Operating 2015-16

252

252

Appropriation Act (No.1) 2016-17

39,058

86,442

Appropriation Act (No.1) - Capital Budget (DCB) - - Non Operating 2016-17

146

146

Supply Act (No.1) - Capital Budget (DCB) - - Non Operating 2016-17

12

12

Appropriation Act (No.1) 2017-18

53,631

-

Appropriation Act (No.1) - Capital Budget (DCB) - - Non Operating 2017-18

253

-

Total unspent appropriation - ordinary annual services

102,254

122,651

Other services

Annual Appropriation

States, ACT, NT and Local government

7,762

7,648

Payments to corporate Commonwealth entities/companies

23,850

36,550

Total available appropriation

31,612

44,198

Appropriation applied (current and prior years)

(31,612)

(45,257)

Variance

-

(1,059)

Opening unspent appropriation balance

23,838

24,897

Repeal of Annual Appropriation Acts 2013-14 and 2014-15

(23,838)

-

Closing unspent appropriation balance

-

23,838

Balance comprises appropriations as follows:

Appropriation Act 6 - SPP 2013-14

-

23,837

Appropriation Act 2 - SPP 2014-15

-

1

Total unspent appropriation - other services

-

23,838

Total unspent appropriation

102,254

146,489

Note 5.1C: Special appropriations ('recoverable GST exclusive')

Authority

Appropriation applied

2018

2017

$'000

$'000

Aboriginal Land Rights (Northern Territory) Act 1976

338,702

178,948

Public Governance, Performance and Accountability Act 2013 s.77

50

6

Higher Education Support Act 2003

67,979

58,584

Total

406,731

237,538

There were no transactions during 2017 and 2018 for special appropriations Indigenous Education (Targeted Assistance) Act 2000, s.13 and Native Title Act 1993, s.54(2).

1 The prior year administered unspent annual appropriation is shown inclusive of Section 51 permanent quarantines against Appropriation Act (No.3) 2015-16 of $8.902 million, Appropriation Act (No.1) Capital Budget (DCB) 2015-16 of $0.252 million, Appropriation Act (No.1) 2016-17 of $39.058 million, Appropriation Act (No.1) Capital Budget (DCB) 2016-17 of $0.146 million and Supply Appropriation Act (No.1) Capital Budget (DCB) 2016-17 of $0.012 million.

5.2 Special Accounts

Services for Other Entities and Trust Moneys1

Aboriginals and Torres Strait Islander Corporations Unclaimed Money Account2

Aboriginal Tutorial Assistance Superannuation Special Account3

Indigenous Remote Services Delivery Special Account4

Australian New Zealand Land Information Special Account5

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Balance brought forward from previous period

-

58

787

887

-

960

10,646

8,083

-

77

Increases

Administered

Other receipts

1,418

140

196

34

-

-

11,190

2,782

-

-

Total increases

1,418

140

196

34

-

-

11,190

2,782

-

-

Available for payments

1,418

198

983

921

-

960

21,836

10,865

-

77

Administered

Transfers to OPA

-

(58)

-

-

-

(960)

-

-

-

(49)

Payments made to suppliers

-

(140)

(2)

(134)

-

-

(11,951)

(219)

-

(28)

Total administered decreases

-

(198)

(2)

(134)

-

(960)

(11,951)

(219)

-

(77)

Total decreases

-

(198)

(2)

(134)

-

(960)

(11,951)

(219)

-

(77)

Total balance carried to the next period

1,418

-

981

787

-

-

9,885

10,646

-

-

Balance represented by:

Cash held in the OPA

1,418

-

981

787

-

-

9,885

10,646

-

-

Total balance carried to the next period

1,418

-

981

787

-

-

9,885

10,646

-

-

Aboriginals Benefit Account6

Aboriginals and Torres Strait Islander Land Account7

2018

2017

2018

2017

$'000

$'000

$'000

$'000

Balance brought forward from previous period

24,334

19,560

1

3

Increases

Administered

Appropriation credited to special account

337,701

177,965

-

-

Investments realised

691,500

729,500

2,004,610

2,018,239

Other receipts

20,123

17,683

53,095

58,812

Total increase

1,049,324

925,148

2,057,705

2,077,051

Available for payments

1,073,658

944,708

2,057,706

2,077,054

Decreases

Administered

PGPA Act section 58 investments

(877,746)

(785,500)

(2,004,995)

(2,025,333)

Payments made

(184,700)

(134,874)

(52,710)

(51,720)

Total administered decreases

(1,062,446)

(920,374)

(2,057,705)

(2,077,053)

Total decreases

(1,062,446)

(920,374)

(2,057,705)

(2,077,053)

Total balance carried to the next period

11,212

24,334

1

1

Balance represented by:

Cash held in entity bank accounts

11,212

24,334

1

1

Total balance carried to the next period

11,212

24,334

1

1

1Appropriation: Public Governance, Performance and Accountability Act 2013; section 78

Establishing Instrument: PGPA Act Determination (DPM&C SOETM Special Account 2018).

PGPA Act Determination (DPM&C SOETM Special Account 2018) replaces Determination 2008/13, which was repealed on 30 June 2018.

Purpose: This account was created to disburse amounts held on trust or otherwise for the benefit of a person other than the Commonwealth.

This account is non-interest bearing.

2Appropriation: Public Governance, Performance and Accountability Act 2013; section 80

Establishing Instrument: Corporations (Aboriginal and Torres Strait Islander) Act 2006; section 551-20

Purpose: To administer unclaimed moneys received by the Registrar of Aboriginal and Torres Strait Islander

Corporations.

This account is non-interest bearing.

3Appropriation: Public Governance, Performance and Accountability Act 2013; section 78

Establishing Instrument: Determination 2003/05

Purpose: To provide a source of finance for the liability for the Superannuation Productivity Benefit entitlements owing to tutors contracted under the Aboriginal Tutorial Assistance Scheme (ATAS).

This account is non-interest bearing. The Determination sunset on 1 April 2017.

4Appropriation: Public Governance, Performance and Accountability Act 2013; section 78

Establishing Instrument: Determination 2010/06

Purpose: To support the implementation of the Remote Service Delivery National Partnership Agreement. It will

provide the Australian Government with the capacity to address high priority projects in a timely way and support projects identified through the local implementation planning process.

This account is non-interest bearing.

5Appropriation: Public Governance, Performance and Accountability Act 2013; section 78

Establishing Instrument: Determination 2001/11 (amended by Determination 2006/10)

Purpose: To develop best practice policies and guidelines in spatial data management in Australia and New Zealand and to assist the growth of a spatial information industry in Australia and New Zealand.

This account is non-interest bearing. The Determination sunset on 1 April 2017.

6Appropriation: Public Governance, Performance and Accountability Act 2013; section 80

Establishing Instrument: Aboriginal Land Rights (Northern Territory) Act 1976; sections 62, 63, 64 and 65

Purpose: For the receipt and disbursement of the equivalent of mining royalty moneys derived from mining operations on Aboriginal land in the Northern Territory.

This account is interest bearing.

7Appropriation: Public Governance, Performance and Accountability Act 2013; section 80

Establishing Instrument: Section 192W of the Aboriginal and Torres Strait Islander Act 2005

Purpose: To provide a secure stream of income to the Indigenous Land Corporation in perpetuity to provide economic, environmental, social and cultural benefits for Aboriginal people and Torres Strait Islanders by assisting in the acquisition and management of an Indigenous land base.

This account is interest bearing.

Aboriginal Advancement Account

The Aboriginal Advancement Account was established under section 80 of the PGPA Act.

The purpose of the account is for furthering the social and economic advancement of Aboriginal people living in Victoria. There were no transactions credited or debited to the special account during 2017 and 2018.

6. People

6. People

This section describes a range of employment and post-employment benefits provided to our people.

6.1 Employee Provisions

2018

2017

$'000

$'000

Note 6.1A: Employee provisions

Annual leave

26,445

26,163

Long service leave

52,184

51,497

Total employee provisions

78,629

77,660

Accounting policy and significant accounting judgements

Employee benefits

Liabilities for ‘short-term employee benefits’ and termination benefits due within 12 months of the end of the reporting period are measured at their nominal amounts.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of PM&C is estimated to be less than the annual entitlement for sick leave.

The leave 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 PM&C’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the work of an actuary during 2018. 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 liability is made for separation and redundancy benefit payments. PM&C recognises a liability for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

PM&C's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or another fund of their choice.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

PM&C makes employer contributions to the employees' superannuation scheme. For Commonwealth defined benefits schemes, these rates are determined by an actuary to be sufficient to meet the current cost to the Government. PM&C accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

2018

2017

$'000

$'000

Note 6.1B: Administered employee provisions

Annual leave

113

107

Long service leave

180

144

Total employee provisions

293

251

Accounting Policy

The expense and liabilities for services rendered by staff employed in the Prime Minister’s Official Establishments and in support of former Governors-General are recognised as administered items. Accounting policies are consistent with those applied to departmental items.

Note 6.1C: Non-cash benefits - former Governors-General benefits

Non-cash benefits - former Governors-General

13,251

13,918

Total non-cash benefits - former Governors-General benefits

13,251

13,918

Changes in the value of the defined benefit obligations are as follows:

Net liability at 1 July

13,918

16,037

Finance costs

348

305

Actuarial losses/(gains)

354

(1,112)

Benefits paid

(1,369)

(1,312)

Net liability at 30 June

13,251

13,918

Principal actuarial assumptions at the reporting date (expressed as weighted averages):

Discount rate at 30 June

2.50%

2.50%

Future salary increases

3.50%

3.50%

Inflation rate

2.50%

2.50%

Rate of expenditure slow down with age

3.00%

3.00%

Accounting Policy

Former Governors-General benefits

PM&C has responsibility for the administration of non-cash benefits provided to former Governors-General. These entitlements are regarded as post-employment benefits and represent the provision of office facilities, administrative support and transport.

The liability for these benefits is calculated annually as the present value of future benefit obligations. Actuarial gains or losses are recognised in equity in the year in which they occur. Interest on the liability is recognised in the surplus/(deficit).

Significant accounting judgements and estimates

The provision for non-cash former Governors-General entitlements relate to post-employment benefits such as office facilities, administrative support and transport. The future liability for these benefits is based on the actuarial assessment determined by the Australian Government Actuary.

6.2 Key Management Personnel Remuneration

2018

2017

$'000

$'000

Short-term employee benefits

3,979

3,807

Post-employment benefits

582

569

Other long-term employee benefits

406

388

Total key management personnel remuneration expenses

4,967

4,764

The total number of key management personnel included in the above table is 17 (2017: 13). Included in that number is six staff who worked for the full-year and 11 staff who worked a part-year (2017: seven and six).

Key management personnel on acting arrangements are included where the length of the arrangement is longer than two months.

1 Excludes remuneration and other benefits of the PM&C Portfolio Ministers as these are set by the Remuneration Tribunal and are not paid by PM&C.

6.3 Related Party Disclosures

PM&C is an Australian Government controlled entity. Related parties to PM&C are Key Management Personnel including the Portfolio Ministers, and other Australian Government entities.

Significant transactions with related parties can include:

  • the payments of grants or loans;
  • purchases of goods and services;
  • asset purchases, sales transfers or leases;
  • debts forgiven; and
  • guarantees.

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens for example payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been disclosed in this note.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period (including comparative year) by PM&C, it has been determined that there are no related party transactions to be separately disclosed.

7. Managing Uncertainties

1. Managing Uncertainties

This section analyses how the Department of the Prime Minister and Cabinet manages financial risks within its operating environment.

7.1 Contingent Assets and Liabilities

Note 7.1A: Contingent assets and liabilities

Unquantifiable contingent liabilities - claims for damages and costs

Claims have been made against the Australian Government by former residents of the Retta Dixon Home in the Northern Territory. These claims are currently being assessed.

Accounting Policy

Contingent liabilities and contingent assets are not recognised in the Statement of Financial Position but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset, or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when the probability of settlement is greater than remote.

Note 7.1B: Administered contingent assets and liabilities

PM&C is not aware of any material administered quantifiable or unquantifiable contingent assets or liabilities as at 30 June 2018.

7.2 Financial Instruments

2018

2017

$'000

$'000

Note 7.2A: Categories of financial instruments

Financial assets

Loans and receivables

Cash and cash equivalents

1,910

2,976

Goods and services receivables (net)

11,623

3,448

Accrued revenue

4,056

3,787

Total loans and receivables

17,589

10,211

Total financial assets

17,589

10,211

Financial liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

22,709

22,673

Grants

232

303

Total financial liabilities measured at amortised cost

22,941

22,976

Total financial liabilities

22,941

22,976

Note 7.2B: Net gains or losses on financial assets

Loans and receivables

Impairment

(16)

(153)

Reversal of impairment

76

-

Net gains/ (losses) on loans and receivables

60

(153)

Net gain/ (loss) on financial assets

60

(153)

Accounting Policy

Financial Assets

PM&C classifies its financial assets in the following categories:

(a) Held-to-maturity investments

(b) Available for sale financial assets

(c) Loans and receivables.

All financial assets are expected to be recovered within 12 months except where indicated.

Interest is recognised by applying the effective interest rate.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period.

Financial liabilities

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Financial liabilities are recognised and derecognised upon ‘trade date’.

Settlement of supplier payables is usually made within 30 days.

Significant accounting judgements and estimates

The relevant government bond rate has been used to discount non-current liabilities.

1. Managing Uncertainties

This section analyses how the Department of the Prime Minister and Cabinet manages financial risks within its operating environment.

1.1. Contingent Assets and Liabilities

Note 7.1A: Contingent assets and liabilities

Unquantifiable contingent liabilities - claims for damages and costs

Claims have been made against the Australian Government by former residents of the Retta Dixon Home in the Northern Territory. These claims are currently being assessed.

Accounting Policy

Contingent liabilities and contingent assets are not recognised in the Statement of Financial Position but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset, or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when the probability of settlement is greater than remote.

Note 7.1B: Administered contingent assets and liabilities

PM&C is not aware of any material administered quantifiable or unquantifiable contingent assets or liabilities as at 30 June 2018.

7.2 Financial Instruments

2018

2017

$'000

$'000

Note 7.2A: Categories of financial instruments

Financial assets

Loans and receivables

Cash and cash equivalents

1,910

2,976

Goods and services receivables (net)

11,623

3,448

Accrued revenue

4,056

3,787

Total loans and receivables

17,589

10,211

Total financial assets

17,589

10,211

Financial liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

22,709

22,673

Grants

232

303

Total financial liabilities measured at amortised cost

22,941

22,976

Total financial liabilities

22,941

22,976

Note 7.2B: Net gains or losses on financial assets

Loans and receivables

Impairment

(16)

(153)

Reversal of impairment

76

-

Net gains/ (losses) on loans and receivables

60

(153)

Net gain/ (loss) on financial assets

60

(153)

Accounting Policy

Financial Assets

PM&C classifies its financial assets in the following categories:

(a) Held-to-maturity investments

(b) Available for sale financial assets

(c) Loans and receivables.

All financial assets are expected to be recovered within 12 months except where indicated.

Interest is recognised by applying the effective interest rate.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period.

Financial liabilities

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Financial liabilities are recognised and derecognised upon ‘trade date’.

Settlement of supplier payables is usually made within 30 days.

Significant accounting judgements and estimates

The relevant government bond rate has been used to discount non-current liabilities.

7.3 Administered – Financial Instruments

2018

2017

$'000

$'000

Note 7.3A: Categories of financial instruments

Financial assets

Held-to-maturity investments

Bank term deposits

2,798,741

2,612,110

Total held-to-maturity investments

2,798,741

2,612,110

Loans and receivables

Cash and cash equivalents

23,576

36,072

Loans to Australian Government entities

48,549

50,967

Goods and services receivable

17

7

Interest receivable

34,243

32,829

Grants receivable (net)

4,669

2,945

Total loans and receivables

111,054

122,820

Available for sale financial assets

Aboriginal Hostels Limited

149,556

146,332

Anindilyakwa Land Council

15,945

14,607

Australian Institute of Aboriginal and Torres Strait Islander Studies

37,919

-

Central Land Council

41,665

39,598

Indigenous Land Corporation

452,005

371,367

Indigenous Business Australia

1,415,737

1,334,810

National Australia Day Council Limited

790

1,137

Northern Land Council

11,346

21,966

Outback Stores Pty Ltd

41,617

41,686

Tiwi Land Council

2,796

1,283

Torres Strait Regional Authority

83,600

79,821

Wreck Bay Aboriginal Community Council

56,790

61,377

Total available for sale financial assets

2,309,766

2,113,984

Total financial assets

5,219,561

4,848,914

Financial liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

3,967

6,505

Grants

48,197

41,791

Other payables

1,094

845

Total financial liabilities measured at amortised cost

53,258

49,141

Total financial liabilities

53,258

49,141

2018

2017

$000

$000

Note 7.3B: Net gains or losses on financial instruments

Financial assets

Held-to-maturity investments

Interest revenue

72,200

74,244

Net gains on held-to-maturity investments

72,200

74,244

Loans and receivables

Interest revenue

4,688

4,864

Reversal of impairment

948

1,498

Impairment

(2,814)

(8,632)

Net gains/ (losses) on loans and receivables

2,822

(2,270)

Net gain on financial assets

75,022

71,974

Accounting Policy

Financial assets

Investments

Investment activities are conducted in accordance with the requirements of section 58 of the PGPA Act. Investments are typically low risk and take the form of term deposits. The duration of the term deposits are usually for a term of three to 12 months.

The investment objective of PM&C is to comply with legislative obligations under the PGPA Act, the ALRA and the Aboriginal and Torres Strait Islander Act 2005. Investment practices are also governed by the investment policy of PM&C, which requires the management of the portfolio to respond to positive investment opportunities in the market so as to achieve the best possible returns for the account within the legislative framework.

The investment portfolio and bank accounts are managed to ensure sufficient funds are available for payments as required.

The asset allocation of the portfolio as at 30 June 2018 is 100% (2017: 100%) term deposits with Australian banks.

Loans and receivables

Where loans and receivables are not subject to concessional treatment, they are carried at amortised cost using the effective interest method. Gains and losses due to impairment, derecognition and amortisation are recognised through the Administered Schedule of Comprehensive Income.

8. Other Information

8.1 Restructuring

Restructuring 2017

PM&C had no restructuring activity during 2017.

Restructuring 2018

AIATSIS1

Official Establishments2

Education

Finance

Finance

$'000

$'000

$'000

FUNCTION ASSUMED

Assets recognised

Investment in Corporate Commonwealth entities

39,974

-

-

Appropriation receivable

-

28

-

Property, plant and equipment

-

-

49,811

Total assets recognised

39,974

28

49,811

Liabilities recognised

Employee provisions

-

28

-

Total liabilities recognised

-

28

-

Net assets assumed

39,974

-

49,811

Expenses

Recognised by the receiving entity

-

-

126

Recognised by the losing entity

-

50

219

Total expenses

-

50

345

1 The Australian Institute of Aboriginal and Torres Strait Islander Studies (AIATSIS) was transferred into the PM&C Portfolio following the Administrative Arrangements Order of 19 April 2018. As a result, an investment in AIATSIS was transferred from the Department of Education and Training (Education).

2 Official Establishments, ownership and property management of the Prime Minister’s official residences was assumed from the Department of Finance (Finance) during the year following the Administrative Arrangements Order of 30 November 2017.

National policy on cities1

Cyber policy and counter terrorism coordination2

Intelligence policy3

Reducing the burden of Government regulation4

Spatial data5

DIRDC

DoHA

ONI

DJSB

DIIS

$'000

$'000

$'000

$'000

$'000

FUNCTION RELINQUISHED

Assets relinquished

Appropriation receivable

1,192

1,261

430

148

161

Total assets relinquished

1,192

1,261

430

148

161

Liabilities relinquished

Employee provisions

1,192

1,345

459

162

161

Total liabilities relinquished

1,192

1,345

459

162

161

Net assets relinquished

-

(84)

(29)

(14)

-

1 Responsibility for National policy on cities and population was relinquished to the Department of Infrastructure, Regional Development and Cities (DIRDC) following the Administrative Arrangements Order of 20 December 2017.

2 Responsibility for Cyber policy and Counter terrorism co-ordination was relinquished to the Department of Home Affairs (DoHA) following the Administrative Arrangements Order of 20 December 2017.

3 Responsibility for Intelligence Policy was relinquished to the Office of National Intelligence (ONI) following a decision of the Prime Minister, effective 21 August 2017.

4 Reducing the burden of Government regulation was relinquished to the Department of Jobs and Small Business (DJSB) following the Administrative Arrangements Order of 20 December 2017.

5 Responsibility for the spatial data function was transferred to the Department of Industry, Innovation and Science (DIIS) following a decision of the Prime Minister, effective January 2018.

Other functions relinquished

Responsibility for the APS Data Skills and Capability Framework and data platforms was relinquished to the Digital Transformation Agency following a decision of the Prime Minister, effective 31 October 2017. No assets or liabilities were transferred.

Responsibility for the Independent National Security Legislation Monitor was relinquished to the Attorney General's Department following the Administrative Arrangements Order of 10 May 2018. Funding transfers for this function had not been finalised as at 30 June 2018.

Responsibility for the Cyber Security Advisor was relinquished to the Australian Signals Directorate following the Administrative Arrangements Order of 10 May 2018. Funding transfers for this function had not been finalised as at 30 June 2018.