Notes to and forming part of the Financial Statements
For the period ended 30 June 2020
Overview
1. Departmental Financial Performance
1.1. Expenses
1.2. Own-Source Revenue and Gains
2. Income and Expenses Administered on Behalf of Government
2.1. Administered – Expenses
2.2. Administered – Income
3. Departmental Financial Position
3.1. Financial Assets
3.2. Non-Financial Assets
3.3. Payables
3.4. Interest Bearing Liabilities
3.5. Make Good Provisions
4. Assets and Liabilities Administered on Behalf of Government
4.1. Administered – Financial Assets
4.2. Administered – Non-Financial Assets
4.3. Administered – Payables
4.4. Administered – Interest Bearing Liabilities
5. Funding
5.1. Appropriations
5.2. Special Accounts
6. People
6.1. Employee Provisions
6.2. Key Management Personnel Remuneration
6.3. Related Party Disclosures
7. Managing Uncertainties
7.1. Contingent Assets and Liabilities
7.2. Financial Instruments
7.3. Administered – Financial Instruments
8. Other Information
8.1. Aggregate Assets and Liabilities
8.2. Restructuring
Overview
Objectives of the Department of Prime Minister and Cabinet
The Department of the Prime Minister and Cabinet (PM&C) is a not-for-profit Australian Government controlled entity for the purposes of preparing the financial statements. The objective of the Department is to provide policy advice and support to the Prime Minster, the Cabinet, Portfolio Ministers and Assistant Ministers on matters that are at the forefront of public and government administration.
During 2019-20, the Prime Minister announced the creation of two new functions to be based in the Department. The National Bushfire Recovery Agency was announced on 6 January 2020 to lead and coordinate a national response to rebuilding communities affected by bushfires across large parts of Australia. On 25 March 2020, a National COVID-19 Commission (NCC) was created to coordinate advice to the Australian Government on actions to anticipate and mitigate the economic and social effects of the global coronavirus pandemic. Both functions are included in the 2019-20 PM&C Financial Statements. In addition, Old Parliament House was transferred from the then Communications and the Arts portfolio to the PM&C portfolio following amendments to the Administrative Arrangements Order issued on 8 August 2019.
Following the Executive Order signed by the Governor-General on 29 May 2019 establishing the National Indigenous Australians Agency (NIAA) on 1 July 2019, Indigenous Affairs functions (Outcome 2) were transferred to NIAA. This has resulted in a significant change to the balances compared to original budget and prior year. The Department is structured to meet one outcome as outlined below:
Outcome 1: Provide high quality policy advice and support to the Prime Minister, the Cabinet, Portfolio Ministers and Assistant Ministers including through the coordination of government activities, policy development and program delivery.
Basis of preparation of the financial statements
The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability (PGPA) Act 2013.
The financial statements have been prepared in accordance with:
- Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
- 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.
PM&C has assessed the impact of COVID-19 pandemic on the balances included in its financial statements. The fair value of its land, buildings, property, plant and equipment and leasehold improvements was assessed due to the valuation uncertainty created by the COVID-19 pandemic. Further information is included in the accounting policy for Note 3.2 Non-financial Assets, Note 4.1C Investments on Corporate Commonwealth entities and companies and Note 4.2 Administered – Non-financial Assets. PM&C has concluded that COVID-19 has not had a material impact on the fair value of these assets.
Taxation
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 standards have been adopted earlier than the application date as stated in the standard.
AASB 16 Leases and AASB15/1058 are applicable to the current reporting period and the financial impact is recorded in the financial statements for the period ended 30 June 2020. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.
Standard/ Interpretation | Nature of change in accounting policy, transitional provisions, and adjustment to financial statements |
AASB 15 Revenue from Contracts with Customers / AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities and AASB 1058 Income of Not-For-Profit Entities | AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements. |
AASB 16 Leases | AASB 16 became effective on 1 July 2019. This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements. |
Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not-For-Profit Entities
PM&C adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under the various applicable AASBs and related interpretations.
Under the new income recognition model, PM&C shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), PM&C applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, PM&C shall consider whether AASB 1058 applies.
In relation to AASB 15, PM&C elected to apply the new standard to all new and uncompleted contracts from the date of initial application. PM&C is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.
Application of AASB 16 Leases
PM&C adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.
PM&C elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.
AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. PM&C applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:
- Applied a single discount rate to a portfolio of leases with reasonably similar characteristics;
- Excluded initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
- Relied on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and
- Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.
As a lessee, PM&C previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, PM&C recognises right-of-use assets and lease liabilities for most leases. However, PM&C has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.
On adoption of AASB 16, PM&C recognised right-of-use assets and lease liabilities in relation to leases of office space and motor vehicles, which had previously been classified as operating leases.
The lease liabilities were measured at the present value of the remaining lease payments, discounted using PM&C’s incremental borrowing rate as at 1 July 2019. PM&C’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions.
The right-of-use assets were measured as follows:
- Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.
- All other leases: the carrying value that would have resulted from AASB 16 being applied from the commencement date of the leases, subject to the practical expedients noted above.
Impact on transition
On transition to AASB 16, PM&C recognised additional right-of-use assets and additional lease liabilities, recognising the reversal of lease incentives, recognised under the old AASB 117 standard, in retained earnings. The impact on transition is summarised below:
1 July 2019 | |
Departmental | $'000 |
Right-of-use assets - property, plant and equipment | 123,276 |
Reduce lease prepayments | -657 |
Lease liabilities | 122,619 |
Reduce lease incentives liabilities | -13,720 |
Reduce straight line provision | -8,349 |
Retained earnings | 22,069 |
The following table reconciles the Departmental minimum lease commitments disclosed in PM&C's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019: | |
1 July 2019 | |
$'000 | |
Minimum operating lease commitment at 30 June 2019 | 318,238 |
Less: short-term leases not recognised under AASB 16 | -264 |
Less: Lease commitments transferred to NIAA | -182,714 |
Undiscounted lease payments | 135,260 |
Less: effect of discounting using the incremental borrowing rate as at the date of initial application | -11,984 |
Less: lease prepayments | -657 |
Lease liabilities recognised at 1 July 2019 | 122,619 |
Administered | 1 July 2019 |
$'000 | |
Right-of-use assets - property, plant and equipment | 1,533 |
Reduce lease prepayments | -31 |
Lease liabilities | 1,502 |
Reduce straight line provision | -1 |
Retained earnings (Administered reconciliation schedule) | 1 |
The following table reconciles the Administered minimum lease commitments disclosed in PM&C's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019: | |
1 July 2019 | |
$'000 | |
Minimum operating lease commitment at 30 June 2019 | 2,142 |
Less: short-term leases not recognised under AASB 16 | -208 |
Less: lease commitments transferred to NIAA | -368 |
Undiscounted lease payments | 1,566 |
Less: effect of discounting using the incremental borrowing rate as at the date of initial application | -33 |
Less: lease prepayments | -31 |
Lease liabilities recognised at 1 July 2019 | 1,502 |
Events after the reporting period
On 15 June 2020, the Prime Minister announced the Deregulation Taskforce will be brought into PM&C from the Department of the Treasury. This will further drive a whole-of-government approach to regulatory policy. The Taskforce has been tasked with revitalising Australia’s regulatory reform and deregulation agenda. The date of effect for this transfer is 1 July 2020.
1. Departmental Financial Performance
This section analyses the financial performance of the Department of the Prime Minister and Cabinet for the period ended 30 June 2020.
1.1 Expenses
2020 | 2019 | |
$'000 | $'000 | |
Note 1.1A: Employee benefits | ||
Wages and salaries | 92,680 | 189,372 |
Superannuation | ||
Defined contribution plans | 9,987 | 18,919 |
Defined benefit plans | 6,481 | 17,006 |
Leave and other entitlements | 11,558 | 33,551 |
Separation and redundancies | 1,715 | 2,705 |
Other | 702 | 3,066 |
Total employee benefits | 123,123 | 264,619 |
Note 1.1B Suppliers | ||
Goods and services supplied or rendered | ||
Consultants, legal, contractors and secondees | 49,307 | 51,817 |
Equipment, repairs and maintenance | 440 | 6,583 |
General expenses | 9,026 | 12,863 |
Venue hire | 120 | 443 |
Office accommodation, facility management and security | 5,988 | 5,826 |
Information, communication and technology | 28,880 | 30,976 |
Travel | 2,578 | 11,020 |
Total goods and services supplied or rendered | 96,339 | 119,528 |
Goods supplied | 3,224 | 7,975 |
Services rendered | 93,115 | 111,553 |
Total goods and services supplied or rendered | 96,339 | 119,528 |
Other suppliers | ||
Operating lease rentals1 | 0 | 34,259 |
Short-term leases | 264 | 0 |
Workers compensation expenses | 641 | 2,521 |
Total other supplier expenses | 905 | 36,780 |
Total suppliers | 97,244 | 156,308 |
1 PM&C applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.
The above lease disclosures should be read in conjunction with the accompanying notes 1.1C, 1.2C, and 3.2.
Accounting Policy Short-term leases and leases of low-value assets PM&C has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (less than $10,000). PM&C recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. |
2020 | 2019 | |
$'000 | $'000 | |
Note 1.1C: Finance costs | ||
Unwinding of discount on make good | 0 | 7 |
Interest on lease liabilities1 | 1,563 | 0 |
Total finance costs | 1,563 | 7 |
1 PM&C has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.
The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 1.2C, and 3.2.
Note 1.1D: Losses from asset sales | ||
Property, plant and equipment | ||
Proceeds from sale | 0 | 1,238 |
Carrying value of asset sold | 0 | -1,270 |
Selling expense | 0 | -10 |
Total losses from asset sales | 0 | 42 |
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
2020 | 2019 | |
$'000 | $'000 | |
Own-source revenue | ||
Note 1.2A: Revenue from contracts with customers | ||
Revenue from contracts with customers | 61,507 | 19,078 |
Total revenue from contracts with customers | 61,507 | 19,078 |
Disaggregation of revenue from contracts with customers | ||
Major product / service line: | ||
Delivery of enabling services | 53,779 | 0 |
Cost recovery | 7,728 | 0 |
61,507 | 0 | |
Type of customer: | ||
Australian Government entities (related parties) | 58,578 | 0 |
Non-government entities | 2,929 | 0 |
61,507 | 0 | |
Timing of transfer of goods and services: | ||
Over time | 61,507 | 0 |
61,507 | 0 | |
Accounting Policy Revenue from the sale of goods is recognised when control has been transferred to the buyer. Revenue from Memorandum of Understanding (MoU) agreements between PM&C and other related parties are recognised as per AASB 15 and revenue from appropriations & resources received free of charge are recognised as per AASB1058. The principal activity from which the PM&C generates its revenue is delivery of enabling services and its performance obligations are satisfied over time. The transaction price is the total amount of consideration to which PM&C expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. 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 | 5,821 | 4,077 |
Volunteer services | 1,149 | 0 |
Other | 202 | 477 |
Total resources received free of charge | 7,172 | 4,554 |
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. On the initial recognition of volunteer services as an asset or an expense, PM&C recognises any related amounts in accordance with the relevant standard. |
Note 1.2C: Other gains | ||
Gain on early termination of lease | 0 | 80 |
Reversal of impairment | 777 | 9 |
Reversal of make good provision | 0 | 10 |
Total other gains | 777 | 99 |
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.
For the period ended 30 June 2020
2.1 Administered – Expenses
2020 | 2019 | |
$'000 | $'000 | |
Note 2.1A: Employee benefits | ||
Wages and salaries | 1,158 | 1,083 |
Superannuation | ||
Defined contribution plans | 125 | 140 |
Defined benefit plans | 52 | 52 |
Leave and other entitlements | 90 | 240 |
Total employee benefits | 1,425 | 1,515 |
Note 2.1B: Suppliers | ||
Goods and services supplied or rendered | ||
Outsourced providers, contractors and consultants | 602 | 47,622 |
Equipment, repairs and maintenance | 551 | 721 |
General expenses | 713 | 7,455 |
Travel | 1,662 | 2,194 |
Information, communication and technology | 115 | 4,006 |
Total goods and services supplied or rendered | 3,643 | 61,998 |
Goods supplied | 659 | 1,172 |
Services rendered | 2,984 | 60,826 |
Total goods and services supplied or rendered | 3,643 | 61,998 |
Other suppliers | ||
Workers compensation expenses | 13 | 13 |
Total other supplier expenses | 13 | 13 |
Total suppliers | 3,656 | 62,011 |
2020 | 2019 | |
$'000 | $'000 | |
Note 2.1C: Grants | ||
Public sector | ||
Australian Government entities | 17,437 | 87,203 |
Local Governments | 0 | 78,052 |
State and Territory Governments | 0 | 65,781 |
Private sector | ||
Non-profit organisations | 3,392 | 859,651 |
Commercial entities | 160 | 191,164 |
Total grants | 20,989 | 1,281,851 |
Program 1.1 - Prime Minister and Cabinet | 20,989 | 18,608 |
Program 2.1 - Jobs, Land and Economy | 0 | 626,083 |
Program 2.2 - Children and Schooling | 0 | 314,124 |
Program 2.3 - Safety and Wellbeing | 0 | 246,665 |
Program 2.4 - Culture and Capability | 0 | 46,438 |
Program 2.5 - Remote Australia Strategy | 0 | 29,933 |
Total grants | 20,989 | 1,281,851 |
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. Please refer to the Administered Budget Commentary for further information. Settlement is made according to the terms and conditions of each grant. This is usually within 30 days of performance or eligibility. |
Note 2.1D: Finance costs | ||
Service costs | 0 | 3,547 |
Interest on lease liabilities | 14 | 0 |
Unwinding of discount | 0 | 331 |
Total finance costs | 14 | 3,878 |
The above lease disclosures should be read in conjunction with the accompanying note 4.2.
Note 2.1E: Payments associated with Land Councils | ||
Payments associated with Land Councils administration | 0 | 59,008 |
Land Councils' distributions | 0 | 122,703 |
Total payments associated with Land Councils | 0 | 181,711 |
Note 2.1F: Payments to Corporate Commonwealth entities and companies | ||
Aboriginal Hostels Limited | 36,241 | 36,323 |
Australian Institute of Aboriginal and Torres Strait Islander Studies | 20,371 | 20,388 |
Indigenous Business Australia | 9,538 | 9,762 |
Indigenous Land and Sea Corporation | 8,572 | 8,749 |
Old Parliament House | 8,565 | - |
Torres Strait Regional Authority | 35,897 | 35,883 |
Total payments to Corporate Commonwealth entities and companies | 119,184 | 111,105 |
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
2020 | 2019 | |
$'000 | $'000 | |
Note 2.2A: Interest | ||
Interest on investments | 0 | 57,377 |
Interest on loans | 0 | 1,153 |
Unwinding of discount on concessional loans | 0 | 2,172 |
Total interest | 0 | 60,702 |
Note 2.2B: Other revenue | ||
Return of grant funding | 2 | 12,118 |
Other | 681 | 94 |
Lease rental income | 0 | 2,251 |
Total other revenue | 683 | 14,463 |
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.
For the period ended 30 June 2020
3.1 Financial Assets
2020 | 2019 | |
$'000 | $'000 | |
Note 3.1: Trade and other receivables | ||
Goods and services receivables | ||
Goods and services | 10,134 | 5,752 |
Total goods and services receivables | 10,134 | 5,752 |
Appropriations receivables | ||
Existing programs | 19,578 | 86,599 |
Total appropriations receivable | 19,578 | 86,599 |
Other receivables | ||
Statutory receivables | 1,981 | 2,471 |
Other | 0 | 3,000 |
Total other receivables | 1,981 | 5,471 |
Total trade and other receivables (gross) | 31,693 | 97,822 |
Less impairment loss allowance | ||
Goods and services | -35 | -828 |
Total impairment loss allowance | -35 | -828 |
Total trade and other receivables (net) | 31,658 | 96,994 |
3.2 Non-Financial Assets
Note 3.2: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles | ||||||||
Land | Buildings | Leasehold improvements | Plant and equipment | Computer software internally developed | Computer software purchased | Total | ||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | ||
As at 1 July 2019 | ||||||||
Gross book value | 0 | 0 | 0 | 0 | 29,140 | 3,191 | 32,331 | |
Fair value | 10,336 | 42,132 | 55,177 | 23,761 | 0 | 0 | 131,406 | |
Work in progress | 0 | 495 | 15,543 | 2,553 | 17,645 | 1,578 | 37,814 | |
Accumulated depreciation/amortisation and impairment | 0 | -5,616 | -16,558 | -10,239 | -14,068 | -2,773 | -49,254 | |
Total as at 1 July 2019 | 10,336 | 37,011 | 54,162 | 16,075 | 32,717 | 1,996 | 152,297 | |
Recognition of right of use asset on initial application of AASB 16 | 0 | 123,214 | 0 | 62 | 0 | 0 | 123,276 | |
Other adjustments1 | 0 | 0 | 0 | -492 | 0 | 0 | -492 | |
Adjusted total as at 1 July 2019 | 10,336 | 160,225 | 54,162 | 15,645 | 32,717 | 1,996 | 275,081 | |
Additions | ||||||||
Purchase | 0 | 9 | 6,330 | 2,584 | 4,546 | 118 | 13,587 | |
Right-of-use assets | 0 | 2,909 | 0 | 0 | 0 | 0 | 2,909 | |
Revaluations and impairments recognised in other comprehensive income | 0 | 0 | 1,246 | -707 | 0 | 0 | 539 | |
Restructuring | -10,336 | -36,443 | -23,533 | -4,840 | -10,107 | -1,428 | -86,687 | |
Depreciation and amortisation | 0 | 0 | -2,145 | -2,906 | -4,784 | -169 | -10,004 | |
Depreciation on right-of-use assets | 0 | -9,549 | 0 | -25 | 0 | 0 | -9,574 | |
Write-down and impairments recognised in net cost of services (expense) | 0 | -72 | 0 | -119 | -131 | 0 | -322 | |
Total as at 30 June 2020 | 0 | 117,079 | 36,060 | 9,632 | 22,241 | 517 | 185,529 | |
Total as at 30 June 2020 represented by | ||||||||
Gross book value | 0 | 0 | 0 | 0 | 27,420 | 614 | 28,034 | |
Fair value | 0 | 129,735 | 48,452 | 17,156 | 0 | 0 | 195,343 | |
Work in progress | 0 | 505 | 5,870 | 995 | 8,479 | 481 | 16,330 | |
Accumulated depreciation, amortisation and impairment | 0 | -13,161 | -18,262 | -8,519 | -13,658 | -578 | -54,178 | |
Total as at 30 June 2020 | 0 | 117,079 | 36,060 | 9,632 | 22,241 | 517 | 185,529 | |
Carrying amount of right-of-use assets | 0 | 116,574 | 0 | 37 | 0 | 0 | 116,611 | |
Contractual commitments for the acquisition of property, plant, equipment and intangible assets
There are no contractual commitments for the acquisition of IT equipment and other capital works payable in 2020 (2019: $0.295 million).
1 Relates to assets recognised by shared services clients.
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. Leased Right-of-Use (ROU) Assets Leased ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted for by Commonwealth lessees as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned. On initial adoption of AASB 16 PM&C has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right-of-use lease asset that shows indicators of impairment and an impairment loss is recognised against any right-of-use lease asset that is impaired. Revaluations Following initial recognition at cost, property, plant and equipment (excluding ROU assets) are carried at fair value (or an amount not materially different from fair value) less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets’ fair value as at the reporting date. The regularity of independent valuations depended upon volatility of movements in market values for the relevant assets. Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. 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 |
Significant accounting judgements and estimates In 2019-20, PM&C procured the services of independent valuation experts (Opteon) to perform a valuation of departmental property, plant and equipment and leasehold improvements as at 30 June 2020. The experts provided written assurance that the models developed to value assets are in compliance with accounting and valuation standards and identified that currently there is significant valuation uncertainty due to the COVID-19 pandemic impacting markets. However, whilst this uncertainty exists the valuations also took into consideration that real estate markets and in particular certain niches in the market (unique properties such as those held by PM&C) are less volatile. The valuation methodologies used (the market approach and the depreciated replacement cost method) have reflected current market conditions and the impact of COVID-19. The department currently has no assets held for sale which may be impacted by the market uncertainty. Due to the valuation uncertainty, PM&C will conduct a revaluation in 2020-21 to ensure the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. | |
Accounting Policy (continued) 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 currently has zero assets held for sale. (2019: $1.01 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 2020. 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. 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 (2019: 3 to 50 years) |
Leasehold improvements | Lease term (2019: Lease term) |
Plant and equipment | 1 to 25 years (2019: 1 to 25 years) |
Intangibles | 1 to 5 years (2019: 1 to 5 years) |
The depreciation rates for ROU assets are based on the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. 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
2020 | 2019 | |
$'000 | $'000 | |
Note 3.3: Other payables | ||
Salaries, wages and superannuation | 1,954 | 1,721 |
Separation and redundancies payable | 0 | 292 |
Unearned income | 606 | 1,854 |
Lease liability | 0 | 14,156 |
Lease incentive1 | 0 | 22,767 |
Other | 2,988 | 2,345 |
Total other payables | 5,548 | 43,135 |
1 PM&C has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.
3.4 Interest Bearing Liabilities
2020 | 2019 | |
$'000 | $'000 | |
Note 3.4: Leases | ||
Lease liabilities1 | ||
Buildings | 119,455 | 0 |
Plant and equipment | 37 | 0 |
Total finance leases | 119,492 | 0 |
1 PM&C has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.
Total cash outflow for leases for the year ended 30 June 2020 was $7.599 million.
Accounting Policy Refer Overview section for accounting policy on leases. |
3.5 Make Good Provisions
Make good provision | Total | |
$’000 | $’000 | |
As at 1 July 2019 | 642 | 642 |
Transferred on restructure | -642 | -642 |
Total as at 30 June 2020 | 0 | 0 |
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.
For the period ended 30 June 2020
4.1 Administered - Financial Assets
2020 | 2019 | |
$'000 | $'000 | |
Note 4.1A: Cash and cash equivalents | ||
Cash on hand or on deposit | 1,342 | 1,282 |
Aboriginals Benefit Account - Special Account | 0 | 9,154 |
Cash held in the Official Public Account - Special Account | 0 | 28,626 |
Total cash and cash equivalents | 1,342 | 39,062 |
Note 4.1B: Trade and other receivables | ||
Goods and services receivables | ||
Goods and services receivable | 0 | 16 |
Total goods and services receivables | 0 | 16 |
Advances and loans | ||
Loans to Australian Government entities | 0 | 23,624 |
Total advances and loans | 0 | 23,624 |
Other receivables | ||
Statutory receivables | 73 | 15,522 |
Interest receivable | 0 | 14,685 |
Grants receivable | 146 | 23,182 |
Other | 0 | 911 |
Total other receivables | 219 | 54,300 |
Total trade and other receivables (gross) | 219 | 77,940 |
Less impairment loss allowance | ||
Grants receivables | -146 | -21,488 |
Total impairment loss allowance | -146 | -21,488 |
Total trade and other receivables (net) | 73 | 56,452 |
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. All loans were transferred to the National Indigenous Australians Agency (NIAA). |
2020 | 2019 | |
$'000 | $'000 | |
Note 4.1C: Investments in Corporate Commonwealth entities and companies | ||
Equity interest in | ||
Aboriginal Hostels Limited | 143,347 | 149,272 |
Anindilyakwa Land Council | 16,512 | 15,468 |
Australian Institute of Aboriginal and Torres Strait Islander Studies | 44,254 | 41,087 |
Central Land Council | 44,091 | 42,168 |
Indigenous Land and Sea Corporation | 455,486 | 479,132 |
Indigenous Business Australia | 1,552,467 | 1,499,150 |
National Australia Day Council Limited | 932 | 797 |
Northern Land Council | 31,431 | 11,516 |
Outback Stores Pty Ltd | 41,120 | 41,983 |
Tiwi Land Council | 7,144 | 4,704 |
Torres Strait Regional Authority | 87,357 | 85,084 |
Wreck Bay Aboriginal Community Council | 57,547 | 56,938 |
Old Parliament House | 115,410 | - |
Total investments in Corporate Commonwealth entities and companies | 2,597,098 | 2,427,299 |
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.
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 and Sea Corporation
The Indigenous Land and Sea Corporation provides economic, environmental, social and cultural benefits for Aboriginal persons and Torres Strait Islanders by assisting in the acquisition and management of land, fresh water and salt water.
Indigenous Business Australia
Indigenous Business Australia assists and enhances Aboriginal and Torres Strait Islander self-management and economic self-sufficiency, and aims to advance the commercial and economic interests of Aboriginal and Torres Strait Islander people by accumulating and using a substantial capital asset for their benefit.
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.
Old Parliament House
The Old Parliament House promotes an enhanced appreciation and understanding of the political and social heritage of Australia for members of the public through activities including the conservation and upkeep of, and the provision of access to, Old Parliament House and the development of its collection, exhibitions and educational programs.
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 are classified as fair value through other comprehensive income and are measured at their fair value as at 30 June 2020. 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. Corporate Commonwealth Entities and Companies are subject to prevailing economic conditions which include the impact of the COVID-19 pandemic. Due to the pandemic occurring late in this financial year, it has not caused any significant impacts to the amounts recorded for assets and liabilities of the Corporate Commonwealth Entities as at 30 June 2020. However, it should be noted that the full and ongoing impact from COVID-19 on the operations of the Corporate Commonwealth Entities and Companies into the future is at present unknown. |
4.2 Administered–Non-Financial Assets
Note 4.2: Reconciliation of the opening and closing balances of plant and equipment | |||||
Land | Buildings | Leasehold improvements | Plant and equipment | Total | |
$’000 | $’000 | $’000 | $’000 | $’000 | |
As at 1 July 2019 | |||||
Fair value | 44,000 | 5,900 | 97 | 758 | 50,755 |
Work in progress | 0 | 0 | 76 | 148 | 224 |
Accumulated depreciation and impairment | 0 | 0 | -97 | -232 | -329 |
Total as at 1 July 2019 | 44,000 | 5,900 | 76 | 674 | 50,650 |
Recognition of right of use asset on initial application of AASB 16 | 0 | 1,533 | 0 | 0 | 1,533 |
Adjusted total as at 1 July 2019 | 44,000 | 7,433 | 76 | 674 | 52,183 |
Additions | |||||
Purchases | 0 | 58 | 425 | 275 | 758 |
Right-of-use assets | 0 | 212 | 0 | 0 | 212 |
Revaluations recognised in other comprehensive income | -589 | 71 | 140 | -2 | -380 |
Depreciation expense | 0 | -236 | -114 | -94 | -444 |
Depreciation on right-of-use assets | 0 | -428 | 0 | 0 | -428 |
Reclassifications | 0 | 7 | 107 | -165 | -51 |
Write-down and impairments | -161 | 0 | 0 | -122 | -283 |
Total as at 30 June 2020 | 43,250 | 7,117 | 634 | 566 | 51,567 |
Total as at 30 June 2020 represented by | |||||
Fair value | 43,250 | 7,781 | 731 | 1,238 | 53,000 |
Work in progress | 0 | 0 | 0 | 102 | 102 |
Accumulated depreciation and impairment | 0 | -664 | -97 | -774 | -1,535 |
Total as at 30 June 2020 | 43,250 | 7,117 | 634 | 566 | 51,567 |
Carrying amount of right-of-use assets | 0 | 1,317 | 0 | 0 | 1,317 |
Accounting Policy Revaluation In 2019-20, PM&C procured the services of independent valuation experts (JLL) to perform a desktop valuation of administered land, buildings, property, plant and equipment and leasehold improvements assets as at 30 June 2020. The experts provided written assurance that the models developed to value assets are in compliance with accounting and valuation standards and identified that currently there is significant valuation uncertainty due to the COVID-19 pandemic impacting markets. However, whilst this uncertainty exists the valuations also took into consideration that real estate markets and in particular certain niches in the market (unique properties such as those held by PM&C) are less volatile. The valuation methodologies used (the market approach and the depreciated replacement cost method) have reflected current market conditions and the impact of COVID-19. The department currently has no assets held for sale which may be impacted by the market uncertainty. Due to the valuation uncertainty, PM&C will conduct a revaluation in 2020-21 to ensure the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. 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 (2019: 22 to 30 years) |
Leasehold improvements | Lease term (2019: Lease term) |
Plant and equipment | 5 to 114 years (2019: 5 to 114 years) |
4.3 Administered–Payables
2020 | 2019 | |
$'000 | $'000 | |
Note 4.3A: Grants | ||
Public sector | ||
Australian Government entities (related parties) | 0 | 21 |
Local Governments | 0 | 220 |
State and Territory Governments | 0 | 13 |
Private sector | ||
Commercial entities | 0 | 236 |
Non-profit organisations | 0 | 23,474 |
Total grants | 0 | 23,964 |
Note 4.3B: Other payables | ||
Office of Township Leasing payables | 0 | 1,809 |
Salaries, wages and superannuation | 24 | 0 |
Other | 413 | 1,074 |
Total other payables | 437 | 2,883 |
4.4 Administered – Interest Bearing Liabilities
Note 4.4: Leases | ||
Lease Liabilities1 | ||
Buildings | 1,314 | 0 |
Total finance leases | 1,314 | 0 |
1 PM&C has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.
Total cash outflow for leases for the year ended 30 June 2020 was $0.37 million.
5. Funding
This section identifies the Department of the Prime Minister and Cabinet funding structure.
For the period ended 30 June 2020
5.1 Appropriations
Note 5.1A: Departmental annual and unspent appropriations ('recoverable GST exclusive') | ||
2020 | 2019 | |
$'000 | $'000 | |
Ordinary annual services | ||
Annual Appropriation | ||
Operating | 308,803 | 407,376 |
Capital budget | 20,174 | 17,514 |
Section 74 receipts | 60,926 | 27,889 |
Section 75 transfers | -112,458 | -1,237 |
Total available appropriation | 277,445 | 451,542 |
Appropriation applied (current and prior years) | -250,658 | -442,747 |
Variance | 26,787 | 8,795 |
Opening unspent appropriation balance | 110,979 | 103,374 |
Repeal of Appropriation Acts 2016-17 | -11,320 | 0 |
Repeal of Appropriation Act (No. 1) 2015-16 | 0 | -1,190 |
Closing unspent appropriation balance | 126,446 | 110,979 |
Balance comprises appropriations as follows1: | ||
Appropriation Act (No. 1) 2016-17 | 0 | 11,320 |
Appropriation Act (No. 1) 2017-18 - Capital Budget (DCB) - Non Operating | 3,795 | 3,795 |
Appropriation Act (No. 1) 2017-18 | 10,168 | 10,168 |
Appropriation Act (No. 1) 2018-19 | 4,000 | 76,770 |
Appropriation Act (No. 1) 2018-19 - Capital Budget (DCB) - Non Operating | 0 | 180 |
Appropriation Act (No. 1) 2018-19 cash held by the department | 0 | 2,160 |
Appropriation Act (No. 3) 2018-19 | 0 | 6,586 |
Appropriation Act (No. 1) 2019-20 | 90,703 | 0 |
Appropriation Act (No. 1) 2019-20 - Capital Budget (DCB) - Non Operating | 8,787 | 0 |
Appropriation Act (No. 1) 2019-20 cash held by the department | 8,993 | 0 |
Total unspent appropriation - ordinary annual services | 126,446 | 110,979 |
Other services | ||
Annual Appropriation | ||
Equity injections | 791 | 8,273 |
Total available appropriation | 791 | 8,273 |
Appropriation applied (current and prior years) | 0 | -7,791 |
Variance | 791 | 482 |
Opening unspent appropriation balance | 7,063 | 6,581 |
Prior year section 75 transfers | -7,715 | 0 |
Closing unspent appropriation balance | 139 | 7,063 |
Balance comprises appropriations as follows : | ||
Appropriation Act (No. 2) 2018-19 - Non Operating - Equity Injection | 139 | 7,063 |
Total unspent appropriation - other services | 139 | 7,063 |
Total unspent appropriation | 126,585 | 118,042 |
1 The unspent annual appropriation is shown inclusive of Section 51 permanent quarantines against Appropriation Act (No. 1) 2017-18 – Capital Budget – Non Operating of $3.795 million, Appropriation Act (No. 1) 2017-18 of $10.168 million, Appropriation Act (No. 1) 2018-19 of $4.000 million, Appropriation Act (No. 1) 2019-20 of $73.341 million and Appropriation Act (No. 1) 2019-20 – Capital Budget – Non Operating of $6.710 million.
Note 5.1B: Administered annual and unspent appropriations ('recoverable GST exclusive') | ||
2020 | 2019 | |
$'000 | $'000 | |
Ordinary annual services | ||
Annual Appropriation | ||
Operating | 558,971 | 1,270,474 |
Capital budget | 1,233 | 1,276 |
Payments to corporate Commonwealth entities/companies | 119,184 | 111,105 |
Section 74 receipts | 514 | 4,103 |
Section 75 transfers | -563,430 | 126 |
Total available appropriation | 116,472 | 1,387,084 |
Appropriation applied (current and prior years) | -147,921 | -1,402,289 |
Variance | -31,449 | -15,205 |
Opening unspent appropriation balance | 77,895 | 102,254 |
Repeal of Annual Appropriation Acts 2015-16 | 0 | -9,154 |
Repeal of Annual Appropriation Act 2016-17 | -39,216 | 0 |
Closing unspent appropriation balance | 7,230 | 77,895 |
Balance comprises appropriations as follows:1 | ||
Appropriation Act (No. 1) 2016-17 | 0 | 39,058 |
Appropriation Act (No. 1) 2016-17 - Capital Budget (DCB) - Non Operating | 0 | 146 |
Supply Act (No. 1) 2016-17 - Capital Budget (DCB) - Non Operating | 0 | 12 |
Appropriation Act (No. 1) 2017-18 | 984 | 1,010 |
Appropriation Act (No. 1) 2017-18 - Capital Budget (DCB) - Non Operating | 253 | 253 |
Appropriation Act (No. 1) 2018-19 | 107 | 34,654 |
Appropriation Act (No. 1) 2018-19- Capital Budget (DCB) - Non Operating | 863 | 863 |
Appropriation Act (No. 3) 2018-19 | 1,709 | 1,709 |
Appropriation Act (No. 1) 2018-19 - Capital Budget (DCB) - Non Operating | 190 | 190 |
Appropriation Act (No. 1) 2019-20 | 0 | 0 |
Appropriation Act (No. 1) 2019-20 - Capital Budget (DCB) - Non Operating | 407 | 0 |
Supply Act (No. 1) 2019-20 - Capital Budget (DCB) - Non Operating | 514 | 0 |
Appropriation Act (No. 3) 2019-20 | 2,203 | 0 |
Total unspent appropriation - ordinary annual services | 7,230 | 77,895 |
Other services | ||
Annual Appropriation | ||
States, ACT, NT and Local government | 0 | 6,536 |
Payments to corporate Commonwealth entities/companies | 25,035 | 24,913 |
Total available appropriation | 25,035 | 31,449 |
Appropriation applied (current and prior years) | -25,035 | -31,449 |
Variance | 0 | 0 |
Opening unspent appropriation balance | 0 | 0 |
Closing unspent appropriation balance | 0 | 0 |
Total unspent appropriation | 7,230 | 77,895 |
1 The administered unspent annual appropriation is shown inclusive of Section 51 permanent quarantines against Appropriation Act (No.1) 2017-18 of $0.984 million and Appropriation Act (No.1) Capital Budget (DCB) 2017-18 of $0.253 million.
Note 5.1C: Special appropriations ('recoverable GST exclusive') | ||
Authority | Appropriation applied | |
2020 | 2019 | |
$'000 | $'000 | |
Aboriginal Land Rights (Northern Territory) Act 1976 | 0 | 430,627 |
Public Governance, Performance and Accountability Act 2013 s.77 | 0 | 0 |
Higher Education Support Act 2003 | 0 | 69,135 |
Total | 0 | 499,762 |
There were no transactions during 2019 for special appropriations Indigenous Education (Targeted Assistance) Act 2000, s.13 and Native Title Act 1993, s.54(2). These were transferred to NIAA on 1 July 2019.
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. |
5.2 Special Accounts
Services for Other Entities and Trust Moneys1 | Aboriginals and Torres Strait Islander Corporations Unclaimed Money Account2 | Indigenous Remote Services Delivery Special Account3 | Aboriginals Benefit Account4 | Aboriginals and Torres Strait Islander Land Account5 | ||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |
Balance brought forward from previous period | 1,864 | 1,418 | 979 | 981 | 25,782 | 9,885 | 9,154 | 11,212 | 0 | 1 |
Increases | ||||||||||
Administered | ||||||||||
Appropriation credited to special account | 0 | 0 | 0 | 0 | 0 | 28,500 | 0 | 429,608 | 0 | 0 |
Investments realised | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 853,746 | 0 | 1,717,559 |
Interest receipts | 0 | 0 | 0 | 0 | 0 | 0 | 20,348 | 0 | 32,718 | |
Other receipts | 100 | 817 | 0 | 0 | 0 | 1,363 | 0 | 2,394 | 0 | 0 |
Total increase | 100 | 817 | 0 | 0 | 0 | 29,863 | 0 | 1,306,096 | 0 | 1,750,277 |
Available for payments | 1,964 | 2,235 | 979 | 981 | 25,782 | 39,748 | 9,154 | 1,317,308 | - | 1,750,278 |
Decreases | ||||||||||
Administered | ||||||||||
Transfers due to restructure | -1,637 | 0 | -979 | 0 | -25,782 | 0 | -9,154 | 0 | 0 | 0 |
Transfers to OPA | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -366,122 |
PGPA Act section 58 investments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -1,102,500 | 0 | -1,330,745 |
Payments made | -327 | -371 | 0 | -2 | 0 | -13,966 | - | -205,654 | 0 | -53,411 |
Total decreases | -1,964 | -371 | -979 | -2 | -25,782 | -13,966 | -9,154 | -1,308,154 | 0 | -1,750,278 |
Total balance carried to the next period | 0 | 1,864 | 0 | 979 | 0 | 25,782 | 0 | 9,154 | 0 | 0 |
Balance represented by: | ||||||||||
Cash held in entity bank accounts | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 9,154 | 0 | 0 |
Cash held in the Official Public Account | 0 | 1,864 | 0 | 979 | 0 | 25,782 | 0 | 0 | 0 | 0 |
Total balance carried to the next period | 0 | 1,864 | 0 | 979 | 0 | 25,782 | 0 | 9,154 | 0 | 0 |
Indigenous Land and Sea Corporation Funding Special Account
The Indigenous Land and Sea Corporation Funding Special Account is a special account under section 80 of the PGPA Act.
Establishing Instrument: Section 12 of the Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2018 (ATSILSFF Act).
The new Indigenous Land and Sea Corporation Funding Special Account was established on 1 February 2019 to continue payments to the Indigenous Land and Sea Corporation. There were no transactions credited or debited to the special account during 2019. This account transferred to NIAA on 1 July 2019.
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 2019. This account transferred to NIAA on 1 July 2019.
6. People
This section describes a range of employment and post-employment benefits provided to our people.
For the period ended 30 June 2020
6.1 Employee Provisions
2020 | 2019 | |
$'000 | $'000 | |
Note 6.1A: Employee provisions | ||
Annual leave | 15,058 | 25,953 |
Long service leave | 25,755 | 60,244 |
Total employee provisions | 40,813 | 86,197 |
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 2020. 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. |
2020 | 2019 | |
$'000 | $'000 | |
Note 6.1B: Administered employee provisions | ||
Annual leave | 194 | 174 |
Long service leave | 264 | 259 |
Total employee provisions | 458 | 433 |
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 | 18,008 | 18,909 |
Total non-cash benefits - former Governors-General benefits | 18,008 | 18,909 |
Changes in the value of the defined benefit obligations are as follows: | ||
Net liability at 1 July | 18,909 | 13,251 |
Current service cost | 0 | 3,547 |
Finance costs | 236 | 331 |
Actuarial losses | 593 | 3,257 |
Benefits paid | -1,730 | -1,477 |
Net liability at 30 June | 18,008 | 18,909 |
Principal actuarial assumptions at the reporting date (expressed as weighted averages): | ||
Discount rate at 30 June | 0.69% | 1.25% |
Future salary increases | 2.90% | 3.50% |
Inflation rate | 1.97% | 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, which is performed annually. |
6.2 Key Management Personnel Remuneration
2020 | 2019 | |
$'000 | $'000 | |
Short-term employee benefits | 3,332 | 4,184 |
Post-employment benefits | 467 | 616 |
Other long-term employee benefits | 107 | 211 |
Termination benefits | 880 | 0 |
Total key management personnel remuneration expenses1 | 4,786 | 5,011 |
The total number of key management personnel included in the above table is 13 (2019: 16). The reduction in the number of key management personnel is due to the transfer of the Indigenous Affairs function to the NIAA. 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.
Transactions with related parties
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. PM&C transacts with other Australian Government controlled entities for normal day-to-day business operations provided under normal terms and conditions or on a cost recovery basis. This includes the provision of shared services such as IT, Finance, HR and governance and ministerial support. 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
This section analyses how the Department of the Prime Minister and Cabinet manages financial risks within its operating environment.
For the period ended 30 June 2020
7.1 Contingent Assets and Liabilities
Note 7.1A: Contingent assets and liabilities
PM&C is not aware of any material quantifiable or unquantifiable contingent assets or liabilities as at 30 June 2020.
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 2020.
7.2 Financial Instruments
2020 | 2019 | |
$'000 | $'000 | |
Note 7.2A: Categories of financial instruments | ||
Financial assets at amortised cost | ||
Cash and cash equivalents | 8,993 | 2,160 |
Goods and services receivables (net) | 2,831 | 4,924 |
Accrued revenue | 4,866 | 1,876 |
Total financial assets at amortised cost | 16,690 | 8,960 |
Total financial assets | 16,690 | 8,960 |
Financial liabilities | ||
Financial liabilities measured at amortised cost | ||
Trade creditors and accruals | 8,501 | 19,035 |
Total financial liabilities measured at amortised cost | 8,501 | 19,035 |
Total financial liabilities | 8,501 | 19,035 |
Note 7.2B: Net gains or losses on financial assets | ||
Financial assets at amortised cost | ||
Impairment | 0 | -151 |
Reversal of impairment | 777 | 9 |
Net gains/ (losses) on financial assets at amortised cost | 777 | -142 |
Net gain/ (loss) on financial assets | 777 | -142 |
Accounting Policy Impairment of financial assets Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses. Using the general approach, the loss allowance is based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12‐month expected credit losses if risk has not increased. The simplified approach for trade and contract receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses. 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. The relevant government bond rate has been used to discount non-current liabilities. |
7.3 Administered - Financial Instruments
2020 | 2019 | |
$'000 | $'000 | |
Note 7.3A: Categories of financial instruments | ||
Financial assets at amortised cost | ||
Bank term deposits | 0 | 1,042,500 |
Cash and cash equivalents | 1,342 | 39,062 |
Loans to Australian Government entities | 0 | 23,624 |
Goods and services receivable | 0 | 16 |
Interest receivable | 0 | 14,685 |
Grants receivable (net) | 0 | 1,694 |
Total financial assets at amortised cost | 1,342 | 1,121,581 |
Financial assets at fair value through other comprehensive income | ||
Investments in Corporate Commonwealth entities | 2,597,098 | 2,427,299 |
Total financial assets at fair value through other comprehensive income | 2,597,098 | 2,427,299 |
Total financial assets | 2,598,440 | 3,548,880 |
Financial liabilities | ||
Financial liabilities measured at amortised cost | ||
Trade creditors and accruals | 148 | 8,549 |
Grants | 0 | 23,964 |
Other payables | 0 | 1,809 |
Total financial liabilities measured at amortised cost | 148 | 34,322 |
Total financial liabilities | 148 | 34,322 |
2020 | 2019 | |
$000 | $000 | |
Note 7.3B: Net gains or losses on financial instruments | ||
Financial assets at amortised cost | ||
Interest revenue | 0 | 60,702 |
Reversal of impairment | 0 | 669 |
Impairment | 0 | -2,091 |
Other gains | 0 | 2,568 |
Net gains on financial assets at amortised cost | 0 | 61,848 |
Investment in equity instruments at fair value through other comprehensive income | ||
Changes in investments in Corporate Commonwealth entities | 27,018 | 92,620 |
Net gain on investments in equity instruments at fair value through other comprehensive income | 27,018 | 92,620 |
Accounting Policy Financial assets Term Deposits In 2018-19, investment activities were conducted in accordance with the requirements of section 58 of the PGPA Act. Investments were typically low risk and took the form of term deposits. The investment objective of PM&C was to comply with legislative obligations under the PGPA Act and the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA). Investment practices were also governed by the investment policy of PM&C, which required 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. Term deposits transferred to NIAA on 1 July 2019. Administered Investments Administered investments are classified as fair value through other comprehensive income (FVOCI) and are measured at their fair value as at 30 June 2020. 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. Any gains or losses as a result of fair value measurement or the recognition of an impairment loss allowance is recognised in other comprehensive income. |
8. Other information
For the period ended 30 June 2020
8.1 Aggregate Assets and Liabilities
2020 | 2019 | |
$'000 | $'000 | |
Note 8.1A: Aggregate Assets and Liabilities | ||
Assets expected to be recovered in: | ||
No more than 12 months | 49,557 | 108,593 |
More than 12 months | 186,217 | 153,396 |
Total assets | 235,774 | 261,989 |
Liabilities expected to be settled in: | ||
No more than 12 months | 34,772 | 53,943 |
More than 12 months | 139,582 | 95,066 |
Total liabilities | 174,354 | 149,009 |
Note 8.1B: Administered Aggregate Assets and Liabilities | ||
Assets expected to be recovered in: | ||
No more than 12 months | 1,589 | 1,121,520 |
More than 12 months | 2,648,665 | 2,498,162 |
Total assets | 2,650,254 | 3,619,682 |
Liabilities expected to be settle in: | ||
No more than 12 months | 1,221 | 35,585 |
More than 12 months | 19,468 | 19,258 |
Total liabilities | 20,689 | 54,843 |
8.2 Restructuring
In 2019-20 there were several restructures that impacted the Department as the result of Government decisions. PM&C assumed responsibility for the Deregulation agenda from the former Department of Employment, Skills, Small and Family Business following a decision of the Prime Minister on 4 December 2019. Old Parliament House was transferred from the then Communications and the Arts portfolio to the PM&C portfolio following amendments to the Administrative Arrangements Order issued on 8 August 2019.
The NIAA was established in the PM&C Portfolio as at 1 July 2019. Indigenous Affairs functions have been relinquished by the Department and transferred to NIAA as at that date.
Restructuring 2020
Deregulation | Old Parliament House | |
Department of Employment, Skills, Small and Family Business | Department of Communications and the Arts | |
$'000 | $'000 | |
FUNCTION ASSUMED | ||
Assets recognised | ||
Appropriation receivable | 172 | 0 |
Investments in Corporate Commonwealth entities | 0 | 117,746 |
Total assets recognised | 172 | 117,746 |
Liabilities recognised | ||
Other payables | 11 | 0 |
Employee provisions | 184 | 0 |
Total liabilities recognised | 195 | 0 |
Net Assets / (liabilities) assumed | -23 | 117,746 |
Income | ||
Recognised by the receiving entity | 268 | 8,665 |
Recognised by the losing entity | 414 | 6,118 |
Total income assumed | 682 | 14,783 |
Expenses | ||
Recognised by the receiving entity | 268 | 8,665 |
Recognised by the losing entity | 414 | 6,118 |
Total expenses | 682 | 14,783 |
Indigenous Affairs | ||
National Indigenous Australians Agency | ||
$'000 | $'000 | |
FUNCTION RELINQUISHED | ||
Assets relinquished | ||
Cash and cash equivalents | 37,552 | 0 |
Trade and other receivables | 41,304 | 52,249 |
Other financial assets | 1,042,500 | 750 |
Property, plant and equipment | 0 | 75,152 |
Intangibles | 0 | 11,535 |
Assets held for sale | 0 | 1,012 |
Other non-financial assets | 3,677 | 0 |
Total assets relinquished | 1,125,033 | 140,698 |
Liabilities relinquished | ||
Trade creditors and accruals | 8,263 | 2,047 |
Grants payable | 23,964 | 0 |
Other payables | 2,773 | 16,078 |
Employee provisions | 49 | 48,079 |
Make good provisions | 0 | 642 |
Total liabilities relinquished | 35,049 | 66,846 |
Net assets relinquished | 1,089,984 | 73,852 |
Equity relinquished | ||
Reserves | 0 | 5,516 |
Total equity relinquished | 0 | 5,516 |
Other functions relinquished
Responsibility for the National Orphanage Museum establishment was relinquished to the Department of Social Services following a decision of the Prime Minister, effective 3 September 2019. No assets or liabilities were transferred.
Responsibility for the ongoing activities of the former Joint Agency Drought Taskforce was relinquished to the Department of Agriculture following a decision of the Prime Minister, effective 1 July 2019. No assets or liabilities were transferred.
Restructuring 2019
National Office of Child Safety (NOCS) | Indigenous Children and Schooling | ||
Department of Social Services1 | Department of Education2 | ||
$'000 | $'000 | $'000 | |
FUNCTION ASSUMED | |||
Assets recognised | |||
Appropriation receivable | 0 | 361 | 67 |
Total assets recognised | 0 | 361 | 67 |
Liabilities recognised | |||
Employee provisions | 0 | 361 | 67 |
Total liabilities recognised | 0 | 361 | 67 |
Net assets assumed | 0 | 0 | 0 |
Expenses | |||
Recognised by the receiving entity | 126 | 813 | 293 |
Recognised by the losing entity | 4 | 695 | 0 |
Total expenses | 130 | 1,508 | 293 |
National Cyber Security Adviser3 | Independent National Security Legislation Monitor4 | |
Australian Signals Directorate | Attorney-General's Department | |
$'000 | $'000 | |
FUNCTION RELINQUISHED | ||
Assets relinquished | ||
Appropriation receivable | 72 | 227 |
Total assets relinquished | 72 | 227 |
Liabilities relinquished | ||
Employee provisions | 72 | 227 |
Total liabilities relinquished | 72 | 227 |
Net assets relinquished | 0 | 0 |
1 Responsibility for the NOCS was transferred to PM&C following a decision of the Prime Minister effective 24 January 2019.
2 Responsibility for Indigenous Children and Schooling Program was transferred to PM&C following a decision of the Prime Minister on 3 April 2018.
3 Responsibility for the National Cyber Security Advisor was relinquished to the Australian Signals Directorate in 2017-18 following the Administrative Arrangements Order of 10 May 2018. Funding transfers for this function were finalised in 2018-19 as presented above.
4 Responsibility for the Independent National Security Legislation Monitor was relinquished to the Attorney-General's Department in 2017-18 following the Administrative Arrangements Order of 10 May 2018. Funding transfers for this function were finalised in 2018-19 as presented above.
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https://www.transparency.gov.au/annual-reports/department-prime-minister-and-cabinet/reporting-year/2019-20-57