COMMENTARY ON THE FINANCIAL STATEMENTS
Commentary on the financial statements
INTRODUCTION
The 2014-15 Consolidated Financial Statements (CFS) for the Australian Government
are required by section 48 of the Public Governance, Performance and Accountability
Act 2013 (PGPA Act)1. The CFS present the whole of government and general
government sector (GGS) financial reports and are prepared in accordance with
AASB 1049 Whole of Government and General Government Sector Financial Reporting
(AASB 1049).
The financial report includes consolidated results for all Australian Government
controlled entities as well as disaggregated information on the sectors of government
(GGS, public non-financial corporations (PNFC) and public financial corporations
(PFC) sectors).2 The institutional structure of the public sector is explained in Note 1.
Note 16 provides the list of Australian Government controlled reporting entities,
including their sectoral classification.
AT A GLANCE
Table 1: Financial results for the year ended 30 June (2010-11 to 2014-15)
2010-11
$b
2011-12
$b
2012-13
$b
2013-14
$b
2014-15
$b
Revenue
322.3
350.4
370.4
378.9
388.2
Expenses
368.0
389.8
393.9
413.1
429.0
Net capital investment
6.7
6.9
4.5
9.0
5.6
Fiscal balance
(52.4)
(46.3)
(28.0)
(43.3)
(46.5)
Total assets
377.0
390.6
430.9
489.0
532.3
Total liabilities
480.2
647.4
641.4
753.8
841.3
Net w orth
(103.1)
(256.9)
(210.5)
(264.7)
(309.0)
Operating activities
(33.7)
(29.6)
(10.3)
(27.5)
(24.9)
Investing activities in non-financial assets
(11.5)
(12.5)
(9.2)
(12.5)
(12.7)
Cash surplus/(deficit)
(45.2)
(42.1)
(19.5)
(40.0)
(37.6)
1
2
The Financial Management and Accountability Act 1997 was replaced by the PGPA Act on
1 July 2014.
Unless explicitly stated, the financial results reported in this commentary comprise
consolidated amounts for the Australian Government as a whole, inclusive of the GGS,
PNFC and PFC sectors. The balances and movements detailed in the commentary have been
rounded to the nearest tenth of a billion. Discrepancies between totals and sums of
components are due to rounding.
5
Commentary on the financial statements
The Australian Government financial results for 2014-15 were as follows:
•
The fiscal balance result for the year to 30 June 2015 was a deficit of
$46.5 billion. For the year ended 30 June 2014, the Australian Government
reported a fiscal balance deficit of $43.3 billion.3
•
Total revenues for 2014-15 were $388.2 billion, an increase of $9.3 billion
(2.5 per cent) compared to 2013-14.
•
Total expenses for 2014-15 were $429.0 billion, an increase of $15.9 billion
(3.8 per cent) compared to 2013-14.
•
Net acquisition of non-financial assets for 2014-15 were $5.6 billion, a decrease
of $3.4 billion (37.8 per cent) compared to 2013-14.
•
The Australian Government’s closing net worth position was negative
$309.0 billion at 30 June 2015, a decrease of $44.3 billion since 30 June 2014.
•
Total assets increased by $43.3 billion (8.9 per cent) since 30 June 2014 to
$532.3 billion at 30 June 2015.
•
Total liabilities increased by $87.5 billion (11.6 per cent) since 30 June 2014 to
$841.3 billion at 30 June 2015.
•
The cash deficit was $37.6 billion, a decrease of $2.4 billion (6.0 per cent)
compared to 2013-14.
3
The 2013-14 CFS fiscal balance deficit of $42.2 billion was $1.1 billion less than the 2013-14
restated deficit balance of $43.3 billion, due to prior year adjustments to tax related items and
the treatment of Medibank Private Limited as a discontinued operation. Refer to Notes 1 and
2 to the 2014-15 CFS for further information.
6
Commentary on the financial statements
DISCUSSION AND ANALYSIS
Operating statement
Table 2: Operating statement
2014-15
$b
388.2
429.0
(40.8)
5.6
(46.5)
Revenue
Expenses
Net operating balance
Less Net acquisitions of non-financial assets
Australian Governm ent fiscal balance
2013-14
$b
378.9
413.1
(34.2)
9.0
(43.3)
Change
$b
9.3
15.9
(6.6)
(3.4)
(3.2)
Change
%
2.5
3.8
19.3
(37.8)
7.4
The fiscal balance for the year to 30 June 2015 was a deficit of $46.5 billion. For the year
ended 30 June 2014, the Australian Government reported a fiscal balance deficit of
$43.3 billion.
The decrease in the fiscal balance between 2013-14 and 2014-15 reflects an increase in
total expenses of $15.9 billion, partially offset by an increase in total revenues of
$9.3 billion and a decrease in the net acquisition of non-financial assets of $3.4 billion.
The increase in expenses was largely due to an increase in the supply of goods and
services, an increase in grants and the growth in direct personal benefits.
The increase in revenues was primarily due to an increase in taxation revenue flowing
from the modest growth in employment and wage income.
The decrease in the acquisition of non-financial assets primarily reflects the sale of
digital dividend spectrum licensing which commenced in 2014-15.
7
Commentary on the financial statements
Chart 1 provides a comparison of the Australian Government’s consolidated fiscal
balance since 2007-08.
Chart 1: Consolidated fiscal balance4
30
$billion
$billion
30
10
10
-10
-10
-30
-30
-50
-50
-70
-70
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Chart 2 provides a trend of the Australian Government’s consolidated revenues and
expenses since 2007-08.
Chart 2: Revenue and expenses
450
$billion
$billion
400
400
350
350
300
300
Expenses
Revenue
250
250
2007-08
4
450
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
The reporting of consolidated fiscal balance commenced in 2008-09 when the CFS were
prepared in accordance with the whole of government requirements of AASB 1049 for the
first time. The 2007-08 results were restated consistent with this standard in the 2008-09 CFS.
8
Commentary on the financial statements
Australian Government revenue
The Australian Government’s revenue increased by $9.3 billion (2.5 per cent) in
2014-15 to $388.2 billion.
Table 3: Revenue
2014-15
$b
354.9
33.3
388.2
Taxation revenue
Non-taxation revenue
Total revenue
2013-14
$b
348.2
30.6
378.9
Change
$b
6.7
2.7
9.3
Change
%
1.9
8.7
2.5
Chart 3 shows the composition of revenue since 2007-08.
Chart 3: Composition of revenue
400
$billion
$billion
400
350
350
300
300
250
250
200
200
150
150
100
100
50
50
0
0
2007-08
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Tax ation r evenue
Non- tax ation r evenue
9
2014-15
Commentary on the financial statements
Taxation revenue
The Australian Government total taxation revenue for the year ended on 30 June 2015
was $354.9 billion. The composition of taxation revenue is shown in Chart 4 below.
Chart 4: Composition of taxation revenue
Customs duty
3%
Sales taxes
16%
Company tax
19%
Excise duty
7%
Other*
4%
Individuals and other
withholding taxation
51%
*Other includes superannuation funds ($5.9 billion), fringe benefits tax ($4.4 billion), other — indirect taxation
($3.8 billion) and resource rent tax ($1.4 billion).
Table 4: Australian Government — taxation revenue
2014-15
$b
2013-14
$b
Change
$b
Change
%
Income taxation
Individuals and other w ithholding taxation
Company tax
Fringe benefits tax
Superannuation funds
Resource rent taxes
Total income taxation
Sales taxes
Excise duty
Customs duty
Carbon pricing mechanism
Other - indirect taxation
181.2
65.9
4.4
5.9
1.4
258.8
57.8
23.7
10.9
0.0
3.8
167.2
68.5
4.3
6.1
1.8
247.9
56.8
25.6
9.3
4.7
3.8
14.0
(2.6)
0.1
(0.2)
(0.4)
10.9
1.0
(1.9)
1.6
(4.7)
0.0
8.4
(3.8)
2.3
(3.3)
(22.2)
4.4
1.8
(7.4)
17.2
(100.0)
0.0
Total taxation revenue
354.9
348.2
6.7
1.9
10
Commentary on the financial statements
Taxation revenue increased by $6.7 billion (1.9 per cent) to $354.9 billion. The key
movements in taxation revenue from 2013-14 to 2014-15 were:
•
an increase of $14.0 billion (8.4 per cent) from individuals and other withholding
taxation. The growth in individuals and other withholding taxation is broadly
consistent with conditions in the labour market;
•
a decrease of $4.7 billion (100.0 per cent) in the carbon pricing mechanism as a
result of the carbon tax being repealed;
•
a decrease of $2.6 billion (3.8 per cent) from company tax. This was due to weaker
corporate profitability, as well as lower commodity prices affecting the mining
sector;
•
a decrease in excise duty of $1.9 billion (7.4 per cent) and a corresponding increase
in customs duty of $1.6 billion (17.2 per cent) as a result of a greater share of
tobacco products being cleared through Customs; and
•
an increase of $1.0 billion (1.8 per cent) in sales taxes, with the main contributor
being a $0.9 billion increase in goods and services tax (GST), consistent with
growth in consumption subject to GST.
Non-taxation revenue
The Australian Government’s total non-taxation revenue for the year ended on
30 June 2015 was $33.3 billion. The composition of non-taxation revenue is shown in
Chart 5 below.
Chart 5: Composition of non-taxation revenue
11
Commentary on the financial statements
Table 5: Non-taxation revenue
2014-15
$b
17.9
4.5
3.9
7.0
33.3
Sales of goods and services
Interest income
Dividend income
Other
Total non-taxation revenue
2013-14
$b
16.9
4.4
2.5
6.9
30.6
Change
$b
1.0
0.1
1.4
0.1
2.7
Change
%
5.9
2.3
56.0
1.4
8.7
Total non-taxation revenue increased by $2.7 billion (8.7 per cent) to $33.3 billion. The
key movements in non-taxation revenue from 2013-14 to 2014-15 were as follows:
•
an increase of $1.0 billion in sales of goods and services revenue mainly associated
with:
– an increase of $0.6 billion in services revenue from public corporations,
including the Australian Submarine Corporation Pty Ltd ($0.2 billion), the
Reserve Bank of Australia (RBA) ($0.2 billion) and National Broadband
Network Co Ltd (NBN) ($0.1 billion);
– a decrease of $0.3 billion due to the winding down of the Guarantee Scheme
for Large Deposits and Wholesale Funding fees by the Department of the
Treasury (the Treasury); and
– an increase of $0.2 billion in visa application fee revenue due to increased visa
activity levels.
•
an increase of $1.4 billion in dividend income, primarily from the Future Fund
investment portfolio.
•
an increase of $0.1 billion in interest income, including an increase of $0.3 billion
in interest from Australian dollar investments held by the RBA; partially offset by
a $0.1 billion decrease in interest from the Future Fund investment portfolio and a
$0.1 billion decrease in interest from residential mortgage-backed securities
investments held by the Australian Office of Financial Management (AOFM).
•
an increase of $0.1 billion in other revenue including:
– a decrease in offshore petroleum royalties and uranium royalties of $0.4 billion
due to changes in production volume, price and exchange rates;
– an increase of $0.3 billion in resources received free of charge primarily due to
increased demand for the National Disability Insurance Scheme services; and
– an increase of $0.2 billion in other non-tax revenue across a range of entities.
12
Commentary on the financial statements
Australian Government expenses
Chart 6 below shows the composition and the trend for expenses since 2007-08.
Chart 6: Expenses
450
$billion
$billion
450
400
400
350
350
300
300
250
250
200
200
150
150
100
100
50
50
0
0
2007-08
2008-09
2009-10
2010-11
Current and capital transfers
2011-12
2012-13
Gross operating
2013-14
2014-15
Interest
The Australian Government’s total expenses for the year ended on 30 June 2015 were
$429.0 billion. The composition of expenses is shown in Chart 7 below.
Chart 7: Breakdown of expenses
13
Commentary on the financial statements
Table 6: Expenses
Gross operating
Interest
Current and capital transfers
Grants
Personal benefits
Subsidies
Total current and capital transfers
Total expenses
2014-15
$b
127.9
2013-14
$b
122.6
Change
$b
5.3
25.8
23.9
2.0
Change
%
4.3
8.2
133.8
129.2
12.3
275.4
128.3
125.2
13.2
266.7
5.5
4.0
(0.9)
8.7
4.3
3.2
(6.5)
3.2
429.0
413.1
15.9
3.8
The Australian Government’s total expenses increased by $15.9 billion (3.8 per cent) in
comparison to 2013-14.
Current and capital transfers increased by $8.7 billion (3.2 per cent) to $275.4 billion.
The key changes in current and capital transfers from 2013-14 to 2014-15 were as
follows:
•
an increase of $5.5 billion in current and capital grants. The primary contributors
to the increase included:
– an increase of $5.8 billion in grants to state and territory governments, which
includes increases in: government and non-government schools national
support ($3.6 billion); general revenue assistance ($3.0 billion); financial
assistance grants for local governments ($2.3 billion); and assistance to the
states for healthcare services ($1.6 billion). These amounts were partially offset
by decreases in: state government school assistance payments ($2.1 billion); rail
transport ($0.9 billion); road transport ($0.8 billion); public hospital services
($0.8 billion); government schools ($0.3 billion) and aged care assistance
($0.3 billion);
– an increase of $1.2 billion in grants to non-profit institutions, which includes
increases in: home support ($0.9 billion); Indigenous jobs, land and economy
($0.5 billion); and the National Disability Insurance Scheme ($0.5 billion).
These amounts were partially offset by decreases to: services and support for
people with a disability ($0.3 billion); education, wellbeing and community
safety ($0.2 billion) and targeted community care ($0.2 billion);
– a decrease of $0.8 billion in grants to the private sector, which includes
decreases in: home support ($0.5 billion); industry development and
investment ($0.3 billion); and other energy related initiatives and management
($0.3 billion). These amounts were partially offset by an increase in
encouraging investment ($0.2 billion); and
– a decrease of $0.6 billion in mutually agreed write-downs, primarily penalty
and interest charge remissions by the Australian Taxation Office.
14
Commentary on the financial statements
•
an increase of $4.0 billion in personal benefits expense. This includes increases in:
the age pension ($2.2 billion); child care benefits ($1.2 billion); and student
payments ($0.8 billion).
•
a decrease of $0.9 billion in subsidy expenses primarily as a result of the repeal of
the carbon tax ($1.2 billion), partially offset by increases for the fuel tax credit
scheme ($0.3 billion) and stronger uptake of the research and development tax
incentive ($0.2 billion).
Gross operating expenses increased by $5.3 billion (4.3 per cent) to $127.9 billion. The
key changes in gross operating expenses from 2013-14 to 2014-15 were as follows:
•
the supply of goods and services expense increased by $4.6 billion, including
increases in: Defence related expenditure ($1.0 billion); Medicare services
($0.9 billion); child care rebate ($0.8 billion); residential and flexible care
($0.8 billion); disability and carers ($0.7 billion); dental services ($0.3 billion), and
public corporations, including Australia Post ($0.2 billion) and NBN ($0.2 billion).
These increases were partially offset by a $0.5 billion decrease, which was driven
by the closure of several detention centres.
•
depreciation and amortisation expenses increased by $0.7 billion consistent with
the increase in non-financial assets.
•
the current service cost of the Australian Government’s unfunded superannuation
provisions increased by $0.4 billion. The current service cost recognises the
increase in the superannuation liability that results from employee service in the
reporting period. As the calculation of the amount is based on a present value, it
is sensitive to changes in the discount rate used for the calculation. 5 The longer the
length of service, the greater the impact of discount rate changes.
Interest (excluding superannuation interest) expenses increased by $1.2 billion
(7.5 per cent) during 2014-15 to $16.8 billion as a result of an increased volume of
Australian Government Securities on issue for the year. Superannuation interest
expenses increased by $0.8 billion (9.6 per cent) during 2014-15 to $9.0 billion.
5
Under AASB 119 Employee Benefits, the expenses recognised in the operating statement,
including the current service cost and the nominal interest on superannuation, are
determined with reference to the yield on government bonds (discount rate) at the start of
the reporting period (4.1 per cent in 2014-15; 4.3 per cent in 2013-14), with the change in
interest rates reflected as an actuarial revaluation in ‘other economic flows’.
15
Commentary on the financial statements
Chart 8 below provides a presentation of total expenses based on how the Australian
Government allocated resources across the range of policy areas. The chart highlights
the relative cost of each function for 2014-15 compared with the previous year.
Chart 8: Total expenses by function
Mining, manufacturing and construction
Agriculture, forestry and fishing
Recreation and culture
Public order and safety
Housing and community amenities
Fuel and energy
Other economic affairs
Transport and communication
Defence
General public services
Education
Health
Other purposes
Social security and welfare
0
20
2014-15
40
60
80
100
120
140
$billion
2013-14
Australian Government other economic flows
Table 7: Other economic flows
2014-15
$b
(5.6)
0.4
3.8
(17.7)
1.6
13.4
0.4
(3.7)
Net w rite-dow ns of assets
Revaluation of equity investments
Net foreign exchange gains/(losses)
Actuarial revaluation of superannuation
Revaluations of non-financial assets
Net gains/(losses) from sale of assets
Other
Total other econom ic flow s
2013-14
$b
(6.6)
0.3
(0.2)
(13.0)
1.2
6.3
(8.3)
(20.3)
Change
$b
1.0
0.1
4.1
(4.7)
0.4
7.1
8.7
16.6
Change
%
(14.6)
35.8
(1,641.7)
36.2
29.6
113.2
(104.7)
(81.6)
The Australian Government reported a net loss of $3.7 billion in other economic flows
in 2014-15, a $16.6 billion change from 2013-14.
16
Commentary on the financial statements
The $4.7 billion change in the actuarial revaluation of superannuation primarily relates
to discount rate changes. Under the accounting standards, the superannuation liability
is calculated using a discount rate based on current long-term government bond rates.
Movement in the discount rate can cause significant movements in the valuation of the
liability. In 2014-15, the discount rate decreased from 4.1 per cent to 3.7 per cent
(increasing the liability and reducing net worth). In 2013-14, the discount rate
decreased from 4.3 per cent to 4.1 per cent. The actuarial assumptions applied in the
calculation of the Australian Government’s liability are detailed in Note 12C.
The major contributor to the $8.7 billion change in ‘other’ relates to a one-off variation
in indexation arrangements for military superannuation in 2013-14 ($7.8 billion).
The $7.1 billion increase in net gains from sale of assets primarily relates to the sale of
Medibank Private ($4.3 billion) and the digital dividend from spectrum licensing
($2.0 billion) in 2014-15.
The $4.1 billion increase in net foreign exchange gains/(losses) relates largely to
$6.0 billion in gains for foreign currency held by the RBA, partially offset by
$2.1 billion in foreign exchange losses relating to the Future Fund investment portfolio.
Australian Government net acquisition of non-financial assets
Table 8: Net acquisition of non-financial assets
2014-15
$b
15.6
2.5
8.1
0.6
0.0
5.6
Purchases of non-financial assets
less Sale of non-financial assets
less Depreciation
plus Change in inventories and other movements
plus Other movements in non-financial assets
Total net acquisition of non-financial assets
2013-14
$b
15.1
0.4
7.4
0.7
1.0
9.0
Change
$b
0.5
2.1
0.7
(0.1)
(1.0)
(3.4)
Change
%
3.3
525.0
9.5
(14.3)
(100.0)
(37.8)
The Australian Government’s net acquisition of non-financial assets showed a decrease
of $3.4 billion from last year to $5.6 billion in 2014-15. The increase in sale of
non-financial assets is reflective of proceeds from the sale of digital dividend spectrum
licensing which commenced in 2014-15 ($2.0 billion).
17
Commentary on the financial statements
Balance sheet
The Australian Government’s net worth decreased by $44.3 billion in 2014-15 to
produce a closing negative net worth of $309.0 billion.
Table 9: Balance sheet
2014-15
$b
386.3
146.0
532.3
455.5
385.8
841.3
(309.0)
Financial assets
Non-financial assets
Total assets
Interest bearing liabilities
Provisions and payables
Total liabilities
Net w orth
2013-14
$b
351.8
137.3
489.0
397.6
356.2
753.8
(264.7)
Change
$b
34.6
8.7
43.3
57.9
29.6
87.5
(44.3)
Change
%
9.8
6.3
8.9
14.6
8.3
11.6
16.7
The decrease in net worth resulted from the $57.9 billion increase in interest bearing
liabilities and increase of $29.6 billion in provisions and payables (primarily relating to
superannuation), partially offset by an increase in financial assets of $34.6 billion and
non-financial assets of $8.7 billion.
Chart 9 shows the movement and composition of the Australian Government’s
financial position since 2007-08.
Chart 9: Australian Government balance sheet
$billion
$billion
600
600
500
500
400
400
300
300
200
200
100
100
0
-100
0
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
-100
-200
-200
-300
-300
-400
-400
-500
-500
-600
-600
-700
-700
-800
-800
-900
-900
Financial assets
Non-financial assets
Interest bearing liabilities
Net worth
18
Provisions and payables
Commentary on the financial statements
Australian Government assets
The Australian Government’s total assets as at 30 June 2015 was $532.3 billion. The
composition of assets is shown in Chart 10 below.
Chart 10: Composition of assets
Included in the above categories are the following items:
Cash and Deposits
Cash at bank and cash on
hand;
Short-term deposits
(generally less than
three months); and
Fund deposits at call.
Other receivables
Statutory receivables and
recoverables; and
Trade debtors.
Advances Paid are loans
made for policy purposes
rather than for liquidity
management, including:
Student loans (including
Higher Education Loan
Programme (HELP));
Loans to state and territory
governments; and
Subscriptions to international
aid organisations.
Investments, Loans and
Placements
Equity investments constitute
a financial claim on other
entities and include:
Investments in public
corporations (valued using the
discounted cash flow method
or net assets);
Future Fund equity holdings;
and
Investments in international
financial institutions.
Non-financial assets
19
Term deposits;
Investment debt securities
(including Future Fund and
Government Funds);
International Monetary Fund
(IMF) quota; and
Residential
mortgage-backed securities.
Land, buildings, plant,
infrastructure and
equipment, investment
property, heritage and
cultural assets, biological
assets and assets held for
sale are non-financial
produced assets;
Specialist military equipment;
Intangibles include software
and other produced
intangibles;
Inventories; and
Prepayments.
Commentary on the financial statements
Table 10: Australian Government’s assets
2014-15
$b
2013-14
$b
Change
$b
Change
%
4.8
41.8
41.2
254.5
44.1
386.3
146.0
532.3
4.5
34.8
42.2
229.8
40.5
351.8
137.3
489.0
0.3
6.9
(1.0)
24.7
3.6
34.6
8.7
43.3
6.8
19.9
(2.3)
10.7
8.9
9.8
6.3
8.9
Financial assets
Cash and deposits
Advances paid
Other receivables and accrued revenue
Investments, loans and placements
Equity investments
Total financial assets
Non-financial assets
Total assets
The Australian Government’s total assets increased by $43.3 billion (8.9 per cent) since
30 June 2014.
This included a $34.6 billion (9.8 per cent) increase in financial assets to $386.3 billion at
30 June 2015, and a $8.7 billion (6.3 per cent) increase in non-financial assets to
$146.0 billion at 30 June 2015. This continues the trend of recent years where a greater
proportion of the Australian Government’s assets held are financial assets.
The key movements in financial assets between 30 June 2014 and 30 June 2015 included
the following:
•
an increase of $24.7 billion in investments, loans and placements. This included a
$14.8 billion increase in Australian dollar securities and foreign exchange
holdings held by the RBA and an increase of $11.2 billion in non-equity
investments held by the Future Fund. These increases were partially offset by a
$1.8 billion decrease in residential mortgage-backed securities held by the AOFM;
•
an increase of $6.9 billion in advances paid, mainly due to a $5.3 billion increase in
the HELP scheme reflecting increased loan numbers; and
•
an increase of $3.6 billion in equity investments, primarily resulting from an
increased holding of listed equities and listed managed investment schemes by
the Future Fund.
The key movements in non-financial assets between 30 June 2014 and 30 June 2015
included the following:
•
an increase of $3.5 billion for infrastructure, plant and equipment including an
increase of $3.1 billion in network assets for the rollout of the NBN;
•
an increase of $1.5 billion for other non-financial assets, primarily driven by an
increase in Defence prepayments for foreign military sales;
•
an increase of $1.4 billion for specialist military equipment;
20
Commentary on the financial statements
•
an increase of $0.9 billion for buildings primarily due to revaluations by Defence
and of overseas property purchases by the Department of Foreign Affairs and
Trade;
•
an increase in land of $0.6 billion mainly due to revaluations; and
•
an increase in heritage and cultural assets of $0.5 billion, mainly due to
revaluation of cultural institution collections.
Australian Government liabilities
The Australia Government’s total liabilities were $841.3 billion as at 30 June 2015. The
composition of liabilities is shown in Chart 11 below.
Chart 11: Composition of liabilities
21
Commentary on the financial statements
Included in the above categories are the following items:
Interest bearing liabilities
Provisions
Payables
Public debt (Treasury bonds,
Treasury Notes and Treasury
Indexed Bonds);
Australian Government’s
unfunded superannuation
liability;
Trade creditors, capital
creditors and unsettled
investment purchases;
Bills of exchange and
promissory notes issued to
international multilateral
organisations;
Annual leave, long service
leave liabilities, accrued
salaries and wages,
separations and redundancies,
workers compensation
provisions;
Amounts payable to grant
or subsidy recipients at
period-end;
IMF Special Drawing Rights
allocation reflecting Australia’s
cumulative liability to the IMF;
and
Finance leases and other
loans.
Social security, health and
education benefit provisions;
Grant provisions for university
superannuation, Natural
Disaster Relief and Recovery
Arrangements and subsidy
provisions administered
through the tax system;
Personal benefit
payables at period-end;
Unearned income and
prepayments received;
and
Unclaimed monies and
outstanding claims.
Provisions for asbestos,
decontamination, etc; and
Unearned income, unclaimed
monies, outstanding claims
and taxation refunds.
Table 11: Australian Government’s liabilities
2014-15
$b
455.5
385.8
841.3
Interest bearing liabilities
Provisions and payables
Total liabilities
2013-14
$b
397.6
356.2
753.8
Change
$b
57.9
29.6
87.5
Change
%
14.6
8.3
11.6
The Australian Government’s liabilities have increased by $87.5 billion (11.6 per cent)
since 30 June 2014.
This included a $57.9 billion (14.6 per cent) increase in interest bearing liabilities to
$455.5 billion at 30 June 2015 and a $29.6 billion (8.3 per cent) increase in provisions
and payables to $385.8 billion at 30 June 2015.
The decrease in the bond rate was the main contributor to the overall increase in
provisions. A number of Australian Government provisions are long-term in nature
and, as such, are subject to variations if the discount rate used in calculating the
present value of these liabilities changes. The bond rate change was the key
determinant of the $26.6 billion increase in the Australian Government’s unfunded
superannuation liabilities.
22
Commentary on the financial statements
The increase of $57.9 billion in interest bearing liabilities includes:
•
an increase of $57.4 billion in the issuance volume and market value of Australian
Government Securities held by the AOFM;
•
a decrease of $1.6 billion in other interest bearing liabilities due to a decrease of
amounts outstanding under repurchase agreements by the RBA of $3.5 billion;
partially offset by an increase in swap principal payables by the RBA and Future
Fund of $1.2 billion, and an increase of $0.6 billion in the IMF allocation of Special
Drawing Rights to Treasury; and
•
an increase of $1.2 billion in loans, primarily bills of exchange and promissory
notes issued to the IMF by the Treasury.
The increase in provisions and payables of $29.6 billion included:
•
an increase of $26.6 billion in the superannuation liability resulting from actuarial
revaluations, in particular a 0.4 percentage point decrease in the Government
bond rate used to discount expected future superannuation payments;
•
an increase of $4.7 billion in Australian currency (notes) on issue;
•
an increase of $1.4 billion in other employee liabilities, mainly resulting from
actuarial adjustments to the provision for military workers compensation of
$1.2 billion; partially offset by
•
a decrease in other provisions of $2.3 billion, mainly driven by $1.8 billion for the
Natural Disaster Relief and Recovery Arrangements provision reflecting the close
out of projects in Queensland.
23
Commentary on the financial statements
Statement of cash flows
Table 12: Cash flow
2014-15
$b
2013-14
$b
Change
$b
Change
%
Cash receipts
Operating activities
Investing activities in non-financial assets
Financing activities
Total cash receipts
385.8
2.4
60.3
448.5
369.5
0.7
89.4
459.6
16.3
1.7
(29.1)
(11.1)
4.4
242.9
(32.6)
(2.4)
Cash payments
Operating activities
Investing activities in non-financial assets
Investing activities in financial assets
Financing activities
Total cash paym ents
410.7
15.1
16.1
6.4
448.3
397.3
13.2
40.0
9.0
459.5
13.4
1.9
(23.9)
(2.6)
(11.2)
0.0
3.4
14.4
(59.8)
(28.9)
(2.4)
Net cash from discontinued activities
0.1
0.3
(0.2)
(63.3)
Net m ovem ent in cash
Cash at beginning of the year
Cash at end of year
0.3
4.5
4.8
0.4
4.1
4.5
(0.1)
0.4
0.3
(25.0)
9.8
6.7
(24.9)
(12.7)
(37.6)
(27.5)
(12.5)
(40.0)
2.6
(0.2)
2.4
(9.5)
1.6
(6.0)
Key fiscal aggregate
Operating activities
Investing activities in non-financial assets
Cash surplus/(deficit)
The Australian Government’s cash balance was $4.8 billion at 30 June 2015. In 2014-15
the Australian Government recorded a cash deficit of $37.6 billion, a decrease of
$2.4 billion compared to a cash deficit of $40.0 billion for 2013-14.6
6
The cash deficit reported above differs to the deficit reported in the 2014-15 Final Budget
Outcome (FBO) as the above result is for the ‘whole of government’, including public
corporations whereas the FBO focuses on the outcome for the GGS. In addition, the
2014-15 FBO excludes Future Fund earnings and includes the net acquisition of assets
acquired under finance leases and similar arrangements.
24
Commentary on the financial statements
Australian Government cash receipts and payments
The following charts provide a detailed break-down of Australian Government
receipts and payments for 2014-15, showing the relative composition of each dollar
received and each dollar paid.
Chart 12: Composition of each dollar of cash received in 2014-15
Taxes:
$351.6 billion (2013-14: $338.2 billion)
(78 cents of every dollar received in 2014-15, 74 cents in
2013-14)
Borrowing and
investment:
$62.7 billion (2013-14: $90.2 billion)
(14 cents of every dollar received in 2014-15, 19 cents in
2013-14)
Sales of goods and
services:
$18.5 billion (2013-14: $17.7 billion)
(4 cents of every dollar received in 2014-15, 4 cents in 2013-14)
Interest and dividends:
$8.2 billion (2013-14: $6.4 billion)
(2 cents of every dollar received in 2014-15, 1 cent in 2013-14)
Other:
$7.5 billion (2013-14: $7.1 billion)
(2 cents of every dollar received in 2014-15, 2 cents in 2013-14)
Taxation receipts remain the predominant source of Australian Government receipts
with 78 cents of every dollar that the Australian Government receives resulting from
tax collections in 2014-15.
25
Commentary on the financial statements
Chart 13: Composition of each dollar of cash paid in 2014-15
Grants and subsidies:
$144.4 billion (2013-14: $140.1 billion)
(32 cents of every dollar paid in 2014-15, 32 cents in 2013-14)
Personal benefits:
$130.9 billion (2013-14: $126.4 billion)
(29 cents of every dollar paid in 2014-15, 28 cents in 2013-14)
Payments for goods and
services:
$85.0 billion (2013-14: $79.8 billion)
(19 cents of every dollar paid in 2014-15, 17 cents in 2013-14)
Payments for employees
and other:
$36.0 billion (2013-14: $36.8 billion)
(9 cents of every dollar paid in 2014-15, 8 cents in 2013-14)
Financing and investing
activities:
$22.5 billion (2013-14: $48.9 billion)
(5 cents of every dollar paid in 2014-15, 11 cents in 2013-14)
Purchases of
non-financial assets:
$15.1 billion (2013-14: $13.2 billion)
(3 cents of every dollar paid in 2014-15, 3 cents in 2013-14)
Interest paid:
$14.4 billion (2013-14: $14.3 billion)
(3 cents of every dollar paid in 2014-15, 3 cents in 2013-14)
Grants and subsidies, personal benefits and payments for the supply of goods and
services are the main items of expenditure for the government, comprising 80 per cent
of all payments.
26
Commentary on the financial statements
Chart 14 provides a trend of the Australian Government’s cash receipts and cash
payments for operating activities and purchases/sales of non-financial assets since
2007-08.
Chart 14: Receipts and payments — operating and non-financial assets
450
$billion
$billion
450
400
400
350
350
300
300
250
250
2007-08
2008-09
2009-10
2010-11
Payments
2011-12
2012-13
2013-14
2014-15
Receipts
Future commitments
Table 13: Australian Government — future commitments
Capital commitments
2014-15
$b
2013-14
$b
Change
$b
Change
%
38.8
28.4
10.4
36.5
Other commitments
Operating leases
Grant commitments
Other commitments
Total other commitments
18.9
109.2
52.7
180.8
19.4
101.5
43.2
164.1
(0.5)
7.7
9.5
16.7
(2.5)
7.6
22.1
10.2
Total com m itm ents
219.6
192.5
27.1
14.1
less Commitments receivable
Net com m itm ents
2.1
217.5
4.8
187.7
(2.7)
29.8
(56.2)
15.9
The Australian Government is committed to future capital expenditure of $38.8 billion
as at 30 June 2015, an increase of $10.4 billion since 2013-14. The change is primarily in
relation to increases in various collective investment vehicles held by the Future Fund,
specialist military equipment, and infrastructure, plant and equipment.
Total other commitments increased by $16.7 billion, as a result of an increase in ‘other’
commitments of $9.5 billion, primarily due to employment programme commitments,
and grant commitments of $7.7 billion, mostly related to education funding
commitments.
27
Commentary on the financial statements
Contingent liabilities
Contingent liabilities are associated with events that are considered possible but not
sufficiently probable (or quantifiable) that they should be included in the balance
sheet. The Australian Government includes those contingent liabilities that were
quantifiable in accordance with accounting standards.
Table 14: Australian Government — contingent liabilities
Quantifiable contingent liabilities
Guarantees
Indemnities
Uncalled shares/capital subscriptions
Claims for damages/costs
Other contingencies
Total quantifiable contingent liabilities
2014-15
$b
2013-14
$b
Change
$b
Change
%
18.0
0.3
15.6
0.2
259.9
294.0
16.6
0.3
13.5
0.2
5.4
36.1
1.4
(0.0)
2.1
(0.0)
254.5
257.9
8.3
(5.1)
15.5
(16.6)
4,676.3
715.1
The Australian Government disclosed a total of $294.0 billion in quantifiable
contingent liabilities as at 30 June 2015.
‘Other’ contingencies increased by $254.5 billion, primarily as a result of the RBA
providing a Committed Liquidity Facility (CLF) to eligible authorised deposit-taking
institutions (ADIs) as part of Australia’s implementation of the Basel III liquidity
requirements. The CLF provides ADIs with a contractual commitment to funding
under repurchase agreements with the RBA, subject to certain conditions.
The total of uncalled shares and capital subscriptions included $15.5 billion
(2014: $13.4 billion) associated with the European Bank for Reconstruction and
Development, the International Bank for Reconstruction and Development, the
Multilateral Investment Guarantee Agency and the Asian Development Bank.
28
APPENDIX A
Historical information
The following table presents the key financial results for the Australian Government from the 2007-08 financial year.7
OPERATING STATEMENT
Revenue from transactions
Taxation revenue
Non-taxation revenue
Total revenue
29
Expenses from transactions
Gross operating expenses
Current and capital transfers
Superannuation interest expense
Interest expenses
Total expenses
Net operating balance
Net acquisition of
non-financial assets
Fiscal balance
7
2007-08
$b
2008-09
$b
2009-10
$b
2010-11
$b
2011-12
$b
2012-13
$b
2013-14
$b
2014-15
$b
286.0
29.1
315.1
278.3
31.5
309.8
268.0
30.9
298.9
288.8
33.5
322.3
316.5
33.9
350.4
334.4
36.0
370.4
348.2
30.6
378.9
354.9
33.3
388.2
88.3
189.3
6.0
5.9
289.5
95.9
225.7
6.7
6.4
334.8
103.6
232.5
6.7
7.9
350.7
110.9
238.4
7.0
11.7
368.0
119.4
249.3
7.4
13.8
389.8
124.6
248.6
6.7
14.0
393.9
122.6
266.7
8.2
15.6
413.1
127.9
275.4
9.0
16.8
429.0
25.6
(25.0)
(51.8)
(45.7)
(39.4)
(23.4)
(34.3)
(40.8)
3.3
5.0
7.6
6.7
6.9
4.5
9.0
5.6
22.3
(30.0)
(59.4)
(52.4)
(46.3)
(28.0)
(43.3)
(46.5)
Key financial results have been presented from 2007-08 following the introduction of the AASB 1049. The 2007-08 outcome was restated consistent
with this standard in the 2008-09 CFS.
Liabilities
Interest bearing liabilities
Provisions and payables
Total liabilities
Net w orth
30
CASHFLOW STATEMENT
Operating activities
Investing activities in
non-financial assets
Investing activities in
financial assets
Financing activities
Net m ovem ent in cash
2008-09
$b
2009-10
$b
2010-11
$b
2011-12
$b
2012-13
$b
2013-14
$b
2014-15
$b
244.1
95.2
339.2
266.9
100.3
367.2
268.3
109.0
377.2
261.7
115.3
377.0
268.2
122.4
390.6
303.1
127.8
430.9
351.8
137.3
489.0
386.3
146.0
532.3
86.2
185.4
271.5
124.2
227.5
351.7
183.8
247.4
431.2
222.0
258.2
480.2
287.7
359.8
647.4
315.4
325.9
641.4
397.6
356.2
753.8
455.5
385.8
841.3
67.7
15.5
(53.9)
(103.1)
(256.9)
(210.5)
(264.7)
(309.0)
32.6
(12.7)
(44.3)
(33.7)
(29.6)
(10.3)
(27.5)
(24.9)
(8.0)
(10.2)
(12.5)
(11.5)
(12.5)
(9.2)
(12.5)
(12.7)
(43.8)
(26.7)
6.4
(0.9)
(6.9)
(13.7)
(40.0)
(16.1)
18.9
(0.3)
49.4
(0.2)
51.9
1.6
46.0
(0.1)
47.5
(1.4)
33.2
0.0
80.5
0.4
53.9
0.3
Notes to the financial statements
BALANCE SHEET
Assets
Financial assets
Non-financial assets
Total assets
2007-08
$b
Commentary on the Financial Statements
APPENDIX B
LINKS TO OTHER PUBLICATIONS PUBLISHED BY THE AUSTRALIAN
GOVERNMENT ABOUT ITS PROJECTED AND ACTUAL FINANCIAL
POSITION FOR THE 2014-15 FINANCIAL YEAR
The Australian Government publishes a range of information about its projected and
actual financial position. Links to some of these documents are set out below. The
information in the following documents has been prepared for different purposes and
therefore does not form part of the CFS. Further, the documents listed below are not
subject to audit.
2014-15 Final Budget Outcome
The 2014-15 Final Budget Outcome (FBO) was prepared in a manner consistent with
the Charter of Budget Honesty Act 1998 (the Charter). The Charter requires that,
inter alia, the Government provide the FBO no later than three months after the end of
the financial year. Consistent with these requirements, the FBO encompasses
Australian Government GGS fiscal outcomes for the 2014-15 financial year and is
based on external reporting standards.
The FBO is available on the Australian Government
http://www.budget.gov.au/2014-15/content/fbo/html/index.htm.
website
at:
Australian Government (GGS) Monthly Financial Statements
The Australian Government (GGS) Monthly Financial Statements are prepared on a
basis consistent with the Budget as required under section 47 of the PGPA Act. The
statements are prepared in accordance with AASB 1049.
The Australian Government Monthly Financial Statements are available on the
Department of Finance website and the Minister for Finance website at:
http://www.finance.gov.au/publications/commonwealth-monthly-financial-stateme
nts/; and
http://www.financeminister.gov.au/media/2015/index.html.
Budget Strategy and Outlook and Mid-Year Economic and Fiscal Outlook
The Budget Strategy and Outlook — Budget Paper — 2014-15, the Mid-Year Economic and
Fiscal Outlook 2014-15 and the Budget Strategy and Outlook — Budget Paper — 2015-16
have been prepared in accordance with the Charter.
The aforementioned Budget Papers are available on the Australian Government
website at http://www.budget.gov.au/.
31
Commentary on the Financial Statements
Tax Expenditures Statement 2014
The Tax Expenditures Statement (TES) provides details of concessions, benefits,
incentives and charges provided through the tax system (tax expenditures) to taxpayers
by the Australian Government. The TES is available on the Treasury website at:
http://www.treasury.gov.au/PublicationsAndMedia/Publications/2015/TES-2014.
32