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9. Budgetary Reports and Explanation of Major Variances

9.1 Departmental Budgetary Reports

Statement of Comprehensive Income

for the period ended 30 June 2018

Actual

Budget estimate

Original1

Variance2

2018

2018

2018

$’000

$’000

$’000

NET COST OF SERVICES

Expenses

Employee benefits

130,035

138,769

(8,734)

Suppliers

64,358

65,409

(1,051)

Grants

1,592

1,958

(366)

Depreciation and amortisation

8,878

5,353

3,525

Write-down and impairment of assets

2,177

-

2,177

Finance costs

84

-

84

Total expenses

207,124

211,489

(4,365)

Own-Source Income

Own-source revenue

Sale of goods and rendering of services

8,857

11,651

(2,794)

Other revenues

1,020

772

248

Total own-source revenue

9,877

12,423

(2,546)

Gains

Other gains

3,688

4,133

(445)

Total gains

3,688

4,133

(445)

Total own-source income

13,565

16,556

(2,991)

Net cost of services

(193,559)

(194,933)

1,374

Revenue from Government

187,844

189,580

(1,736)

Surplus / (Deficit)

(5,715)

(5,353)

(362)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation reserves

262

-

262

Total other comprehensive income

262

-

262

Total comprehensive income/(loss) attributable to the Australian Government

(5,453)

(5,353)

(100)

  1. The Treasury’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the Treasury’s 2017-18 Portfolio Budget Statements (PBS)).
  2. Between the actual and original budgeted amounts for 2018. Explanations of major variances (that are greater than +/- 10% of the original budget for a line item and greater than +/- $1 million) are provided below.

Explanations of major variances

Affected line items

Depreciation and amortisation expenses for 2017-18 were $8.9 million, an increase of $3.5 million compared with the original budget. The increase is largely driven by prior year revaluation increments for leasehold improvements and property plant and equipment, resulting in larger asset bases and therefore increased depreciation/amortisation expenditure for 2018.

Depreciation and amortisation

The variance of $2.2 million is mainly driven by a $1.3 million impairment of software which related to the replacement of an existing system as well as $0.7 million in land and building write offs that were driven by the return of leasehold space to the Department of Finance.

Write-down and impairment of assets

The variance of $2.8 million is driven by a decrease in actual Service Level Agreement (SLA) revenue compared to budget due to a lower than expected take-up of shared services arrangements between Treasury and other departments.

Sale of goods and rendering of services

Statement of Financial Position

as at 30 June 2018

Actual

Budget estimate

Original1

Variance2

2018

2018

2018

$’000

$’000

$’000

ASSETS

Financial assets

Cash and cash equivalents

640

1,000

(360)

Trade and other receivables

64,881

53,531

11,350

Total financial assets

65,521

54,531

10,990

Non-financial assets

Land and buildings

16,675

14,243

2,432

Plant and equipment

11,242

15,857

(4,615)

Intangibles

7,628

11,470

(3,842)

Prepayments

4,644

4,890

(246)

Total non-financial assets

40,189

46,460

(6,271)

Total assets

105,710

100,991

4,719

LIABILITIES

Payables

Suppliers

11,326

335

10,991

Other payables

3,563

5,527

(1,964)

Total payables

14,889

5,862

9,027

Provisions

Employee provisions

46,374

47,803

(1,429)

Provision for restoration

3,508

3,279

229

Total provisions

49,882

51,082

(1,200)

Total liabilities

64,771

56,944

7,827

Net assets

40,939

44,047

(3,108)

EQUITY

Asset revaluation reserve

12,676

12,188

488

Contributed equity

77,142

77,132

10

Retained surplus/(deficit)

(48,879)

(45,273)

(3,606)

Total equity

40,939

44,047

(3,108)

  1. The Treasury’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the Treasury’s 2017-18 Portfolio Budget Statements (PBS)).
  2. Between the actual and original budgeted amounts for 2018. Explanations of major variances (that are greater than +/- 10% of the original budget for a line item and greater than +/- $1 million) are provided below.

Explanations of major variances

Affected line items

Trade and other receivables at 30 June 2018 amounted to $64.9 million, an increase of $11.4 million compared with the original budget. The increase relates to a higher appropriations receivable balance, due to a decrease in expenditure compared with the original budget and the delay in establishing the National Housing Finance and Investment Corporation.

Trade and other receivables

Land and buildings at 30 June 2018 amounted to $16.7 million, an increase of $2.4 million compared with the original budget. The increase is due to a revaluation increment recognised at 30 June 2017 that had not been allowed for in the original budget and reflects the ongoing refurbishment of the Treasury Building.

Land and buildings

Plant and Equipment at 30 June 2018 amounted to $11.2 million, a decrease of $4.6 million compared with the original budget, reflecting higher depreciation rates used than assumed in the budget, partly offset by the transfer from intangibles.

Plant and Equipment

Intangibles at 30 June 2018 amounted to $7.6 million, a decrease of $3.8 million compared with the original budget, explained by a mixture of impairment ($1.3 million), the transfer of $1.2 million from intangibles to plant and equipment with the remainder driven by higher amortisation rates that assumed in budget.

Intangibles

Total payables at 30 June 2018 amounted to $14.9 million, an increase of $9 million compared with the original budget due to the timing of employee and supplier payments.

Total Payables

Cash Flow Statement

for the period ended 30 June 2018

Actual

Budget estimate

Original1

Variance2

2018

2018

2018

$’000

$’000

$’000

OPERATING ACTIVITIES

Cash received

Appropriations

205,741

189,527

16,214

Sale of goods and rendering of services

8,366

11,651

(3,285)

GST received from ATO

5,149

-

5,149

Other

1,152

772

380

Total cash received

220,408

201,950

18,458

Cash used

Employees

130,379

138,280

(7,901)

Suppliers

57,310

61,712

(4,402)

Grants

1,592

-

1,592

Section 74 receipts transferred to OPA1

21,306

-

21,306

GST paid to ATO

6,161

-

6,161

Other

-

1,958

(1,958)

Total cash used

216,748

201,950

14,798

Net cash from/(used by) operating activities

3,660

-

3,660

INVESTING ACTIVITIES

Cash used

Purchase of land and buildings

3,037

-

3,037

Purchase of plant and equipment

6,377

12,996

(6,619)

Purchase of intangibles

3,111

-

3,111

Total cash used

12,525

12,996

(471)

Net cash from/(used by) investing activities

(12,525)

(12,996)

471

FINANCING ACTIVITIES

Cash received

Contributed equity - departmental capital budget

8,246

4,750

3,496

Contributed equity - equity injections

9

8,246

(8,237)

Total cash received

8,255

12,996

(4,741)

Net cash from/(used by) financing activities

8,255

12,996

(4,741)

Net increase/(decrease) in cash held

(610)

-

(610)

Cash at the beginning of the reporting period

1,250

1,000

250

Cash at the end of the reporting period

640

1,000

(360)

  1. Treasury’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the Treasury’s 2017-18 Portfolio Budget Statements (PBS)).
  2. Between the actual and original budgeted amounts for 2018. Explanations of major variances (that are greater than +/- 10% of the original budget for a line item and greater than +/- $1 million) are provided below.

Explanations of major variances

Affected line items

The net change in cash held during 2017-18 was $0.610 million, lower than the balanced position in the original budget. The change was predominantly driven by an increase in the drawdown of funds (Appropriations) and a delay in staff recruitment (Employees), offset by a decrease in sale of goods and rendering of services related to Service Level Agreement revenue; and a decrease in equity injection drawdowns relating to the establishment of the National Housing Finance and Investment Corporation (NHFIC) - this was not fully utilised in 2017-18 and will continue into 2018-19.

Net increase/(decrease) in cash held

The original budget for purchases in property, plant and equipment (PP&E) and intangibles was not split between each asset class, but presented at an aggregate level. Comparison of cash used to purchase PP&E and intangibles with the total reported in the budget does not illustrate a significant variance.

Total cash used — investing activities

9.2 Administered Budgetary Reports

Statement of Comprehensive Income

for the period ended 30 June 2018

Actual

Budget estimate

Original1

Variance2

2018

2018

2018

$’000

$’000

$’000

NET COST OF SERVICES

Expenses

Grants

99,113,632

98,835,834

277,798

Interest

42,544

30,292

12,252

Medicare Guarantee Fund

34,774,894

-

34,774,894

Foreign exchange losses

-

124,642

(124,642)

Suppliers

16,169

9,525

6,644

Total expenses

133,947,239

99,000,293

34,946,946

Income

Revenue

Non-taxation revenue

Sale of goods and rendering of services

638,403

731,921

(93,518)

Interest

7,711

8,941

(1,230)

Dividends

726,421

629,500

96,921

COAG revenue from government agencies

479,530

792,189

(312,659)

Other

94,009

4,600

89,409

Total non-taxation revenue

1,946,074

2,167,151

(221,077)

Total revenue

1,946,074

2,167,151

(221,077)

Gains

Foreign exchange

10,183

-

10,183

Total gains

10,183

-

10,183

Total income

1,956,257

2,167,151

(210,894)

Net cost of (contribution by) services

(131,990,982)

(96,833,142)

(35,157,840)

Surplus/(Deficit)

(131,990,982)

(96,833,142)

(35,157,840)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation surplus

3,464,067

-

3,464,067

Total comprehensive income

3,464,067

-

3,464,067

Total comprehensive income/(loss)

(128,526,915)

(96,833,142)

(31,693,773)

  1. Treasury’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the Treasury’s 2017-18 Portfolio Budget Statements (PBS)).
  2. Between the actual and original budgeted amounts for 2018. Explanations of major variances (that are greater than +/- 10% of the original budget for a line item and greater than +/- $1 billion) are provided below.

Explanations of major variances

Affected line items

Medicare Guarantee Fund was not reported in the Budget 2017-18, but was updated in MYEFO once Medicare Guarantee Act 2017 received royal assent on the 26 June 2017.

Medicare Guarantee Fund

Changes in asset revaluation surplus for 2017-18 totalled $3.5 billion. The changes are driven by the movement in the net asset position of the Reserve Bank of Australia.

Changes in assets revaluation surplus

Administered Schedule of Assets and Liabilities

as at 30 June 2018

Actual

Budget estimate

Original1

Variance2

2018

2018

2018

$’000

$’000

$’000

ASSETS

Financial assets

Loans and other receivables

1,404,114

1,386,803

17,311

Investments

39,551,532

37,339,779

2,211,753

Total financial assets

40,955,646

38,726,582

2,229,064

Non-financial assets

Other

375

400

(25)

Total non-financial assets

375

400

(25)

Total assets administered on behalf of

Government

40,956,021

38,726,982

2,229,039

LIABILITIES

Payables

Grants

283,816

86,964

196,852

Other payables

5,877,642

5,474,915

402,727

Unearned income

12,047

17,927

(5,880)

Total payables

6,173,505

5,579,806

593,699

Interest bearing liabilities

Promissory notes

10,009,796

9,141,760

868,036

Total interest bearing liabilities

10,009,796

9,141,760

868,036

Provisions

Other provisions

898,753

82,485

816,268

Total provisions

898,753

82,485

816,268

Total liabilities administered on behalf of

17,082,054

14,804,051

2,278,003

government

Net assets

23,873,967

23,922,931

(48,964)

  1. Treasury’s original budgeted financial statement that was first presented to Parliament in respect of the reporting period (i.e. from the Treasury’s 2017-18 Portfolio Budget Statements (PBS)).
  2. Between the actual and original budgeted amounts for 2018. Explanations of major variances (that are greater than +/- 10% of the original budget for a line item and greater than +/- $1 billion) are provided below.

Explanations of major variances

Affected line items

Investments as at 30 June 2018 totalled $39.6 billion, an increase of $2.2 billion compared with the original budget. The increase is driven by the change in the net assets position of the Reserve Bank of Australia of $3.5 billion and movements in the value of the IMF quota and other investments in international financial institutions as a result of changes in foreign exchange rates.

Investments