Department of Finance
FINANCIAL STATEMENTS
for the period ended 30 June 2014
Department of Finance
STATEMENT BY THE SECRETARY AND CHIEF FINANCIAL OFFICER
In our opinion, the attached financial statements for the year ended 30 June 2014 are based on properly maintained
financial records and give a true and fair view of the matters required by the Finance Minister’s Orders made under the
Financial Management and Accountability Act 1997, as amended.
…….................................
…………................................
Professor Jane Halton PSM
Secretary
Department of Finance
Andrew Harvey
Chief Financial Officer
Department of Finance
August 2014
August 2014
1
Department of Finance
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 June 2014
NET COST OF SERVICES
Expenses
Employee benefits
Suppliers
Depreciation and amortisation
Finance costs
Write-down and impairment of assets
Losses from asset sales
Insurance claims
Other expenses
Total expenses
Notes
30 June
2014
$'000
30 June
2013
$'000
3A
3B
3C
3D
3E
3F
3G
3H
168,079
222,292
26,847
30
118,922
108,394
8,008
181,736
196,457
25,819
51
1,132
1,805
92,849
7,892
652,572
507,741
143,022
86,258
6,589
48,180
9,662
111,559
82,705
5,154
47,666
5,470
7,636
293,711
260,190
5,966
5,966
41,271
41,271
299,677
301,461
(352,895)
(206,280)
261,688
274,448
(91,207)
68,168
5,856
5,542
(97,063)
62,626
11,306
11,306
4,588
4,588
(85,757)
67,214
Own-Source Income
Own-source revenue
Rendering of services
Insurance premiums
Reinsurance and other recoveries
Rental income
Interest
Other revenue
Total own-source revenue
4A
4B
4C
4D
4E
4F
Gains
Other gains
Total gains
4G
Total own-source income
Net cost of services
Revenue from Government
Surplus/(Deficit) before income tax on continuing
operations
4H
Income tax expense
5
Surplus/(Deficit) after income tax
OTHER COMPREHENSIVE INCOME
Items not subject to subsequent reclassification to net cost
of services
Changes in asset revaluation reserves
Total other comprehensive income after income tax
6
Total comprehensive income/(loss)
2
The above statement should be read in conjunction with the accompanying notes.
Department of Finance
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 June 2014
3
The above statement should be read in conjunction with the accompanying notes.
Department of Finance
STATEMENT OF FINANCIAL POSITION
as at 30 June 2014
ASSETS
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total financial assets
Non-financial assets
Land and buildings
Plant and equipment
Investment properties
Intangibles
Other non-financial assets
Total non-financial assets
Notes
30 June
2014
$'000
30 June
2013
$'000
9A
9B
9C
9,300
872,878
8,448
3,284
789,143
9,224
890,626
801,651
1,020,069
12,357
649,096
63,020
10,891
933,481
16,560
608,303
69,424
5,279
1,755,433
1,633,047
2,646,059
2,434,698
82,254
69,742
10,359
5,857
32,037
15,323
34,112
6,637
168,212
88,109
55,067
329,423
7,588
392,078
56,838
295,170
6,410
358,418
10A, 10C
10B, 10C
10D
10E, 10F
10G
Total assets
LIABILITIES
Payables
Suppliers
Unearned revenue
Return of equity
Other payables
Total payables
Provisions
Employee provisions
Outstanding insurance claims
Other provisions
Total provisions
11A
11B
11C
11D
12A
12B, 16
12C
Total liabilities
560,290
446,527
Net assets
2,085,769
1,988,171
EQUITY
Contributed equity
Asset revaluation surplus
Retained surplus
1,767,460
135,684
182,625
1,584,105
124,378
279,688
Total equity
2,085,769
1,988,171
4
The above statement should be read in conjunction with the accompanying notes.
Department of Finance
STATEMENT OF FINANCIAL POSITION
as at 30 June 2014
5
The above statement should be read in conjunction with the accompanying notes.
Department of Finance
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2014
Asset revaluation
reserves
Retained earnings
Contributed
equity/capital
Total equity
2014
$'000
2013
$'000
2014
$'000
2013
$'000
2014
$'000
2013
$'000
2014
$'000
2013
$'000
Opening balance
Balance carried forward from previous period
Adjusted opening balance
279,688
279,688
217,062
217,062
124,378
124,378
119,790
119,790
1,584,105
1,584,105
1,482,290
1,482,290
1,988,171
1,988,171
1,819,142
1,819,142
Comprehensive income
Surplus/(Deficit) for the period
Other comprehensive income
Total comprehensive income
(97,063)
(97,063)
62,626
62,626
11,306
11,306
4,588
4,588
-
-
(97,063)
11,306
(85,757)
62,626
4,588
67,214
-
-
-
-
(11,142)
(33,816)
(11,142)
(33,816)
-
-
-
-
10,921
308,319
1,876
(126,619)
183,355
8,290
154,455
(27,114)
101,815
10,921
308,319
1,876
(126,619)
183,355
8,290
154,455
(27,114)
101,815
182,625
279,688
135,684
124,378
1,767,460
1,584,105
2,085,769
1,988,171
Transactions with owners
Distributions to owners
Returns of capital
Returns of contributed equity
Contributions by owners
Departmental capital budget
Equity injection - appropriations
Restructuring (refer to Note 13)
Other transfers
Total transactions with owners
Transfers between equity components
Closing balance as at 30 June 2014
6
The above statement should be read in conjunction with the accompanying notes.
Department of Finance
CASH FLOW STATEMENT
for the period ended 30 June 2014
Notes
OPERATING ACTIVITIES
Cash received
Rendering of services
Appropriations
Insurance premiums
Reinsurance and other recoveries
Net GST received
Other
Total cash received
Cash used
Employees
Suppliers
Insurance claims
Net special account receipts transferred to OPA
Net GST paid
Total cash used
Net cash from/(used by) operating activities
14
INVESTING ACTIVITIES
Cash received
Proceeds from sale of property, plant and equipment
Total cash received
Cash used
Purchase of land and buildings
Purchase of plant and equipment
Purchase of intangibles
Purchase of investment properties
Total cash used
Net cash from/(used by) investing activities
FINANCING ACTIVITIES
Cash received
Contributed equity
Total cash received
Cash used
Capital repayments
Total cash used
Net cash from/(used by) financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the reporting period
Cash and cash equivalents at the end of the reporting
period
9A
30 June
2014
$'000
30 June
2013
$'000
212,364
236,743
86,258
62,859
8,554
153,050
260,006
82,705
6,106
3,698
8,006
606,778
513,571
168,157
229,908
72,341
88,159
327
183,119
214,126
54,738
47,837
-
558,892
47,886
499,820
13,751
-
260
260
231,633
949
7,505
34,677
274,764
112,597
7,555
12,157
24,916
157,225
(274,764)
(156,965)
267,789
183,509
267,789
183,509
34,895
34,895
42,000
42,000
232,894
141,509
6,016
3,284
(1,705)
4,989
9,300
3,284
7
The above statement should be read in conjunction with the accompanying notes.
Department of Finance
SCHEDULE OF COMMITMENTS
as at 30 June 2014
BY TYPE
Commitments receivable
Property leases1
Net GST recoverable on commitments
Total commitments receivable
30 June
2014
$'000
30 June
2013
$'000
178,963
75,011
253,974
206,433
49,786
256,219
346,070
94,027
346,070
94,027
16,527
22,093
478,514
16,269
511,310
435,030
18,757
475,880
Commitments payable
Capital commitments
Land and buildings2
Total capital commitments
Other commitments
Operating leases3
Other commitments:
Goods and services contracts
Net GST Payable
Total other commitments
Total commitments payable
857,380
569,907
(603,406)
(313,688)
BY MATURITY
Commitments receivable
Within 1 year
Between 1 to 5 years
More than 5 years
Total commitments receivable
72,457
103,778
77,739
253,974
51,417
119,442
85,360
256,219
Commitments payable
Capital commitments
Within 1 year
Between 1 to 5 years
Total capital commitments
231,487
114,583
346,070
50,808
43,219
94,027
5,511
8,904
2,112
7,289
12,464
2,340
16,527
22,093
Other commitments
Within 1 year
Between 1 to 5 years
More than 5 years
Total other commitments
234,497
253,236
7,050
494,783
146,694
299,354
7,739
453,787
Total commitments payable
857,380
569,907
(603,406)
(313,688)
Net commitments by type
Operating lease commitments
Within 1 year
Between 1 to 5 years
More than 5 years
Total operating lease commitments
Net commitments by maturity
Commitments are GST inclusive where relevant.
8
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance
SCHEDULE OF COMMITMENTS
as at 30 June 2014
lease commitments receivable includes rent to be received from the Australian Government’s non-Defence
Commonwealth owned property portfolio within Australia and any sub-lease revenue from other properties.
2 Land and buildings represent outstanding contractual commitments for construction projects.
3 Operating leases comprise:
1 Property
Nature of leases
General description of leasing arrangement
-
Leases for office accommodation
-
Leases are for Commonwealth cars and motor vehicles for Finance’s
employees. No contingent rentals exist. There are no purchase options
available to Finance.
-
Computer equipment for Finance is supplied through an outsourcing
arrangement. Computer equipment is either purchased or leased from
suppliers.
Leases for motor vehicles
Leases for computer equipment
Leases are for office accommodation for the Department of Finance
(Finance’s) business operations.
Lease terms and conditions are dependent on market conditions in each
location.
9
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance
SCHEDULE OF CONTINGENCIES
as at 30 June 2014
30 June
2014
$'000
30 June
2013
$'000
Contingent assets
Claims for damages or costs
Total contingent assets
57
57
57
57
Net contingent assets/(liabilities)
57
57
Contingencies are GST inclusive where relevant.
Details of the above contingent asset are disclosed in Note 15 Contingent assets and liabilities, along with information on
significant remote contingencies and contingencies that cannot be quantified.
In 2013-14, there were no guarantees provided to other entities (2012-13: no guarantees).
10
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance
ADMINISTERED SCHEDULE OF COMPREHENSIVE INCOME
for the period ended 30 June 2014
Notes
30 June
2014
30 June
2013
$'000
$'000
NET COST OF SERVICES
Expenses
Employee benefits
Superannuation
21A
21B
307,450
7,981,257
236,910
7,959,092
Suppliers
Grants
21C
21D
215,302
644
198,383
680
Nation-building Funds distribution
Depreciation and amortisation
21E
21F
2,049,866
21,504
2,118,065
15,570
Write-down and impairment of assets
Finance costs
21G
21H
2,530
161
75
129
Other expenses
Losses on financial investments
21I
21J
666
163,162
492
134,704
Losses from asset sales
Foreign exchange losses
Total expenses administered on behalf of Government
21K
21L
270,701
285
394,851
11,013,243
11,059,236
Income
Revenue
Non-taxation revenue
Rendering of services
22A
16,457
3,989
Interest
Dividends
22B
22C
142,904
157,312
133,060
467,852
Superannuation contributions
Other revenue
Total non-taxation revenue
Total revenue
22D
22E
1,457,615
7,419
1,499,161
18,180
1,781,707
1,781,707
2,122,242
2,122,242
Gains
Foreign exchange gains
Gains on financial investments
22F
22G
290,867
385,931
84,022
900,478
Other gains
Total gains
22H
1,679
678,477
16,943
1,001,443
Total income administered on behalf of Government
Net cost of services
2,460,184
(8,553,059)
3,123,685
(7,935,551)
Surplus/(Deficit) after income tax
(8,553,059)
(7,935,551)
(9,476,349)
28,686,266
333,827
(9,142,522)
319,440
29,005,706
(17,695,581)
21,070,155
OTHER COMPREHENSIVE INCOME
Items not subject to subsequent reclassification to net cost
of services
Movement in carrying amount of superannuation
Items subject to subsequent reclassification to net cost of
services
Changes in administered reserves
Total other comprehensive income
23A
Total comprehensive income/(loss)
11
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance
ADMINISTERED SCHEDULE OF ASSETS AND LIABILITIES
as at 30 June 2014
Notes
30 June
2014
30 June
2013
$'000
$'000
ASSETS
Financial assets
Cash and cash equivalents
25A
1,709,073
467,225
Trade and other receivables
Investments
25B
25C
183,124
14,255,610
486,327
15,899,059
Other financial assets
Total financial assets
25D
55,681
16,203,488
54,763
16,907,374
Non-financial assets
Leasehold improvements
Infrastructure, plant and equipment
26A, 26C
26B, 26C
26,706
72,812
41,341
62,809
Intangibles
Other non-financial assets
Total non-financial assets
26D, 26E
26F
2,491
3,615
3,161
3,458
105,624
110,769
16,309,112
17,018,143
96,462
1,499,360
334,074
1,513,734
1,595,822
1,847,808
Total assets administered on behalf of Government
LIABILITIES
Payables
Suppliers
Other payables
Total payables
27A
27B
Provisions
Employee provisions
28A
234,396
186,501
Superannuation provisions
Other provisions
Total provisions
28B
28C
138,661,191
18,240
124,947,502
20,365
138,913,827
125,154,368
140,509,649
127,002,176
(124,200,537)
(109,984,033)
Total liabilities administered on behalf of Government
Net administered assets/(liabilities)
12
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance
ADMINISTERED RECONCILIATION SCHEDULE
for the period ended 30 June 2014
Opening assets less liabilities as at 1 July
30 June
2014
30 June
2013
$'000
$'000
(109,984,033)
(132,900,831)
Net (cost of)/contribution by services
2,460,184
3,123,685
(11,013,243)
(11,059,236)
Other comprehensive income
Assets and make good valuation
Movement in carrying amount of superannuation
Revaluations transferred to/from reserves
7,885
(9,476,349)
325,942
15,579
28,686,266
303,861
Transfers (to)/from the Australian Government
Appropriation transfers from Official Public Account
Annual appropriations
Administered assets and liabilities appropriations
Special appropriations
Transfers to Official Public Account
Equity distribution
291,632
3,262
5,764,142
(3,808,813)
(15,889)
241,455
23,987
5,472,451
(3,257,795)
(511,328)
Official Public Account (Whole-of-Government) transfers
Transfers from other entities
Transfers to other entities
575,079,176
(573,834,433)
565,702,910
(565,825,037)
Closing assets less liabilities as at 30 June
(124,200,537)
(109,984,033)
Income
Expenses
13
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance
ADMINISTERED CASH FLOW STATEMENT
for the period ended 30 June 2014
30 June
2014
30 June
2013
$'000
$'000
Rendering of services
Superannuation contributions - employers
13,551
1,458,182
6,185
1,495,565
Superannuation funds contributions
Net gains from sale of financial instruments
1,836,607
385,931
1,563,828
189,905
Net realised exchange gains
Interest
136,534
84,022
124,596
Dividends
Other
Total cash received
457,312
7,398
167,851
10,704
4,295,515
3,642,656
Notes
OPERATING ACTIVITIES
Cash received
Cash used
258,751
233,388
Suppliers
Nation-building Funds distribution
219,523
2,049,866
188,220
2,118,065
Superannuation
Net realised exchange losses
5,580,524
270,701
5,305,705
-
644
1,355
680
492
8,381,364
(4,085,849)
7,846,550
(4,203,894)
-
137
Proceeds from sale of investments
Repayments of advances and loans
14,311,181
10,746
32,171,019
10,602
Matured government securities
Total cash received
3,300
14,325,227
3,385
32,185,143
Purchase of plant and equipment
Purchase of infrastructure
6,195
244
5,511
89
Purchase of buildings
Purchase of intangibles
4,077
11
18,385
-
12,451,879
12,462,406
29,894,214
29,918,199
1,862,821
2,266,944
Employees
Grants
Other
Total cash used
Net cash from/(used by) operating activities
29
INVESTING ACTIVITIES
Cash received
Proceeds from sale of plant and equipment
Cash used
Purchase of investments
Total cash used
Net cash from/(used by) investing activities
14
The above statement should be read in conjunction with the accompanying notes.
Department of Finance
ADMINISTERED CASH FLOW STATEMENT
for the period ended 30 June 2014
Notes
30 June
2014
30 June
2013
$'000
$'000
1,839,869
1,587,815
1,839,869
1,587,815
FINANCING ACTIVITIES
Cash received
Appropriations - contributed equity
Total cash received
Cash used
Equity distribution
Total cash used
Net cash from/(used by) financing activities
15,693
508,369
15,693
1,824,176
508,369
1,079,446
Net increase/(decrease) in cash held
(398,852)
(857,504)
467,225
744,278
(573,834,433)
(565,825,037)
575,064,779
1,230,346
565,513,205
(311,832)
(3,808,813)
4,219,167
(3,257,795)
4,150,078
410,354
892,283
1,709,073
467,225
Cash and cash equivalents at the beginning of the
reporting period
Official Public Account (Whole-of-Government)
Transfers to other entities
Transfers from other entities
Total cash from official public account
Finance administered transfers
Cash to Official Public Account - Appropriations
Cash from Official Public Account - Appropriations
Total cash to official public account
Cash and cash equivalents at the end of the reporting
period
25A
15
The above statement should be read in conjunction with the accompanying notes.
Department of Finance
SCHEDULE OF ADMINISTERED COMMITMENTS
as at 30 June 2014
30 June
2014
30 June
2013
$'000
$'000
14,822
14,822
15,793
15,793
-
3,260
-
3,260
Operating leases1
156,516
160,121
Goods and services contracts
Total other commitments
9,632
166,148
15,147
175,268
BY TYPE
Commitments receivable
Net GST recoverable on commitments
Total commitments receivable
Commitments payable
Capital commitments
Land and buildings
Total capital commitments
Other commitments
Total commitments payable
Net commitments by type
166,148
178,528
(151,326)
(162,735)
3,755
4,420
6,260
4,807
6,445
4,928
14,822
15,793
-
3,260
3,260
35,659
67,973
39,618
66,297
52,884
156,516
54,206
160,121
7,576
2,056
7,921
7,226
9,632
166,148
15,147
178,528
(151,326)
(162,735)
BY MATURITY
Commitments receivable
Within 1 year
Between 1 to 5 years
More than 5 years
Total commitments receivable
Commitments payable
Capital commitments
Within 1 year
Total capital commitments
Operating lease commitments
Within 1 year
Between 1 to 5 years
More than 5 years
Total operating lease commitments
Goods and services contracts
Within 1 year
Between 1 to 5 years
Total goods and services contracts
Total commitments payable
Net commitments by maturity
Commitments are GST inclusive where relevant.
16
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance
SCHEDULE OF ADMINISTERED COMMITMENTS (CONTINUED)
as at 30 June 2014
1Operating
leases comprise:
Nature of leases
General description of leasing arrangement
-
Leases for office
accommodation
-
Leases for motor vehicles
Leases
are for office accommodation for electorate offices for Senators and Members
of Parliament.
Lease
terms and conditions are dependent on market conditions in each location.
Leases
are for Senators, Members of Parliament and some of their staff. No
contingent rentals exist. There are no purchase options available to Finance.
Leases for computer equipment
Computer
equipment for electorate offices is supplied through an outsourcing
arrangement.
17
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance
SCHEDULE OF ADMINISTERED CONTINGENCIES
as at 30 June 2014
30 June
2014
30 June
2013
$'000
$'000
Severance pay
Total contingent liabilities
-
16,724
16,724
Net contingent assets/(liabilities)
-
(16,724)
Contingent liabilities
Administered contingencies are GST inclusive where relevant.
Details of contingent liabilities in the above table are disclosed in Note 30, along with information on significant remote
contingencies that cannot be quantified.
In 2013-14, there were no guarantees provided to other entities (2012-13: no guarantees).
18
The above schedule should be read in conjunction with the accompanying notes.
Notes to and forming part of the financial statements
Note 1
Significant accounting policies ......................................................................................................... 20
Note 2
Events after the reporting period ..................................................................................................... 34
Note 3
Expenses ......................................................................................................................................... 36
Note 4
Own-Source Income ........................................................................................................................ 38
Note 5
Income tax expense ......................................................................................................................... 39
Note 6
Other comprehensive income .......................................................................................................... 39
Note 7
Fair value measurement .................................................................................................................. 41
Note 8
Business operations ........................................................................................................................ 45
Note 9
Financial assets ............................................................................................................................... 49
Note 10 Non-financial assets ........................................................................................................................ 51
Note 11 Payables .......................................................................................................................................... 56
Note 12 Provisions ........................................................................................................................................ 57
Note 13 Restructuring ................................................................................................................................... 59
Note 14 Cash flow reconciliation ................................................................................................................... 60
Note 15 Contingent assets and liabilities ...................................................................................................... 61
Note 16 General insurance activities............................................................................................................. 62
Note 17 Senior executive remuneration ........................................................................................................ 70
Note 18 Remuneration of auditors ................................................................................................................ 74
Note 19 Financial instruments ....................................................................................................................... 74
Note 20 Financial assets reconciliation ......................................................................................................... 78
Note 21 Administered expenses ................................................................................................................... 79
Note 22 Administered income ....................................................................................................................... 81
Note 23 Administered other comprehensive income .................................................................................... 83
Note 24 Administered fair value measurement ............................................................................................. 85
Note 25 Administered financial assets .......................................................................................................... 90
Note 26 Administered non-financial assets ................................................................................................... 95
Note 27 Administered payables .................................................................................................................. 100
Note 28 Administered provisions ................................................................................................................. 101
Note 29 Administered cash flow reconciliation ............................................................................................ 103
Note 30 Administered contingent assets and liabilities ............................................................................... 104
Note 31 Financial instruments ..................................................................................................................... 105
Note 32 Administered financial assets reconciliation .................................................................................. 118
Note 33 Superannuation ............................................................................................................................. 119
Note 34 Appropriations ................................................................................................................................ 142
Note 35 Special accounts ............................................................................................................................ 154
Note 36 Compliance with statutory conditions for payments from the Consolidated Revenue Fund ......... 159
Note 37 Compensation and debt relief ........................................................................................................ 161
Note 38 Reporting of outcomes................................................................................................................... 162
Note 39 Competitive neutrality and cost recovery....................................................................................... 167
Note 40 Net cash appropriation arrangements ........................................................................................... 167
19
Notes to and forming part of the financial statements
Note 1
1.1
Significant accounting policies
Objectives of the Department of Finance
The Department of Finance (Finance) is an Australian Government controlled not-for-profit entity. The objectives of
Finance are detailed in the body of its Annual Report.
Finance is structured to meet the following three outcomes:
Outcome 1:
Informed decisions on Government finances and regulatory practices through: policy advice;
implementing frameworks; and providing financial advice, guidance and assurance.
Outcome 2:
Effective Government policy advice, administration and operations through: oversight of Government
Business Enterprises; Commonwealth property management and construction; risk management; and
providing ICT services.
Outcome 3:
Support for Parliamentarians, others with entitlements and organisations as approved by Government
through the delivery of entitlements and targeted assistance.
Following changes to the Administrative Arrangement Orders on 18 September 2013, the regulatory function was
transferred out of Finance. The revised wording for outcome 1, as set out in the Portfolio Budget Statements for 2014-15
is “Informed decisions on Government finances through: policy advice; implementing frameworks; and providing financial
advice, guidance and assurance”.
Finance’s activities contributing towards these outcomes are classified as either departmental or administered.
Departmental activities involve the use of assets, liabilities, incomes and expenses controlled or incurred by Finance in its
own right. Administered activities involve the management or oversight by Finance, on behalf of the Government, of items
controlled or incurred by the Government.
The continued existence of Finance in its present form and with its present programs is dependent on Government policy
and on continuing appropriations by Parliament for Finance’s administration and programs.
Details of administered activities conducted by Finance are provided at Note 1.25.
The Australian Government continues to have regard to developments in case law, including the High Court’s most recent
decision on Commonwealth expenditure in Williams v Commonwealth (2014) HCA 23, as they contribute to the larger
body of law relevant to the development of Commonwealth programs. In accordance with its general practice, the
Government will continue to monitor and assess risk and decide on any appropriate actions to respond to risks of
expenditure not being consistent with constitutional or other legal requirements.
1.2
Basis of preparation of the financial statements
The financial statements are general purpose financial statements and are required by section 49 of the Financial
Management and Accountability Act 1997.
The financial statements and notes have been prepared in accordance with:


Finance Minister's Orders (FMOs) for reporting periods ending on or after 1 July 2011, as amended; and
Australian Accounting Standards and Interpretations 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 are in accordance with the historical cost
convention, except for certain assets and liabilities 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 values are rounded to the nearest thousand dollars unless
otherwise specified.
Unless an alternative treatment is specifically required by an accounting standard or the FMOs, assets and liabilities are
recognised in the Statement of Financial Position when and only when it is probable that future economic benefits will flow
to Finance or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be
reliably measured. However, assets and liabilities arising under executory contracts are not recognised unless required by
an accounting standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments or the
Schedule of Contingencies (other than unquantifiable contingencies, which are reported at Note 15).
Unless an alternative treatment is specifically required by an accounting standard, income and expenses are recognised
in the Statement of Comprehensive Income when and only when the flow, consumption or loss of economic benefits has
occurred and can be reliably measured.
20
Notes to and forming part of the financial statements
1.3
Significant accounting judgement and estimates
In the process of applying the accounting policies listed in this note, Finance has made the following judgements that
have the most significant impact on the amounts recorded in the financial statements:

Leave provisions involve actuarial assumptions based on the likely tenure of existing staff, patterns of leave
claims and payouts, future salary movements and future discount rates. See Note 1.8 for further information.

The fair value of land and buildings and investment properties has been taken to be the market value of
similar properties or discounted cash flows as determined by an independent valuer. Further information can be
found in Note 1.19.

Finance recognises a liability for outstanding Comcover insurance claims. These liabilities are based on an
annual actuarial assessment. Further details on the valuation methodology are provided at Note 1.23 and Note
16.

Finance has made judgements in relation to the carrying value of internally developed software. The
carrying amount is based on the recoverability as assessed by management given the most recent information
available.

Finance has made judgements in relation to the valuation of administered investments and other financial
investments. Further information on administered investments is located at Note 1.25.

Finance recognises administered liabilities for the Australian Government’s unfunded civilian
superannuation schemes. These liabilities are based on an annual actuarial assessment. Further details on the
valuation methodology are provided at Note 1.26 and Note 33.

Finance has made judgements in relation to the valuation of post employment benefits such as entitlements
of former Prime Ministers, former Senators and Members and Life Gold Pass holders. The valuation is based
on a periodic actuarial assessment.
No other accounting assumptions or estimates have been identified that have a significant risk of causing a material
adjustment to carrying amounts of assets and liabilities within the next accounting period.
1.4
New Australian Accounting Standards
Adoption of new Australian Accounting Standard requirements
No accounting standard has been adopted earlier than the application date stated in the standard.
The following new accounting standards were issued prior to the signing of these statements by the Secretary and Chief
Financial Officer and are applicable to the current reporting period and had a material effect on Finance’s financial
statements:
AASB 13
Fair Value Measurements
AASB 119
Employee Benefits
All other new, revised or amending standards that were issued prior to the sign-off date and applicable to the current
reporting period did not have a financial impact, and are not expected to have a future financial impact on Finance.
21
Notes to and forming part of the financial statements
Future Australian Accounting Standard requirements
The following new standards issued by the AASB prior to sign-off date are expected to have a material impact on
Finance’s financial statements for future reporting periods:
Application
date for the
Department
Nature of impending changes in accounting policy and likely impact on
initial application
1 July 2014
This new Standard requires reporting of budgetary information and explanation
of significant variance between actual and budgeted amounts by not-for-profit
entities within the General Government Sector.
Likely impact: New requirement to report budgetary information and to explain
significant variances between budget and actuals are at the Department level.
AASB 9 Financial 1 July 2017
Instruments
This revised Standard represents the first phase of a three phase project to
replace AASB 139 Financial Instruments: Recognition and Measurement. The
amendments reduce the four categories of financial asset to two - amortised
cost and fair value. Under AASB 9, assets are to be measured at fair value
unless they are held to collect cash flows and solely comprise the payment of
interest and principal on specified dates. Gains and losses on assets carried at
fair value are taken to profit and loss, unless they are equity instruments not
held for trading and the entity initially elects to recognise gains/losses in other
comprehensive income.
Likely impact: May have an impact on the recognition and measurement of
financial instruments. Final outcome will be considered once the project is
completed.
Standard /
Interpretation
AASB 1055
Budgetary
Reporting
Other new accounting standards, revised standards or amending standards that were issued prior to sign-off date and
are applicable to future reporting periods are not expected to have a future financial impact on Finance.
1.5
Transactions with the Government as owner
Equity injections
Amounts appropriated that are designated as 'equity injections' for a year (less any formal reductions) and Departmental
Capital Budgets (DCBs) are recognised directly in contributed equity in that year.
Restructuring of administrative arrangements
Net assets received from or relinquished to another Australian Government agency or authority under a restructuring of
administrative arrangements are adjusted at their book value directly against contributed equity.
Other distributions to owners
The FMOs require that distributions to owners be debited to contributed equity unless in the nature of a dividend.
Proceeds from the sale of property are recognised as a return on equity. On an annual basis, the Property Special
Account is reviewed to ensure that an adequate cash balance is maintained and excess funds are returned to the
Official Public Account (OPA). In the 2013-14 financial year, by agreement, Finance returned $11.1 million to the OPA
(2012-13: $33.8 million). This represents sale proceeds, returns of excess funds and returns of unused appropriations.
1.6
Revenue
All revenues referred to in the notes to the financial statements are revenues relating to the core operating activities of
Finance. Revenues from general insurance activities and superannuation schemes are addressed in Notes 1.23 and
1.26, respectively. Details of revenue amounts are given in Note 4 (Departmental) and Note 22 (Administered).
Sales of goods and services
22
Notes to and forming part of the financial statements
Revenue from the sale of goods is recognised when the risks and rewards of ownership have been transferred to the
buyer, Finance retains no managerial involvement or effective control over the goods, the revenue and transaction costs
incurred can be reliably measured, and it is probable that the economic benefits associated with the transaction will flow
to Finance.
Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting
date. The revenue is recognised when the amount of revenue, stage of completion and transaction costs incurred can
be reliably measured and the probable economic benefits from the transactions will flow to Finance.
The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs
incurred to date bear to the estimated total costs of the transactions.
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.
Resources received free of charge
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 or a decrease of the liability.
Resources received free of charge are recorded as either revenue or gains depending on their nature.
Rent
Rental revenue from the non-Defence domestic property portfolio is recognised systematically over the period of the
lease.
Revenue from Government
Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are
recognised as Revenue from Government when Finance 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.
1.7
Gains
Resources received free of charge
Resources received free of charge are recognised as gains 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 or a decrease of the liability.
Resources received free of charge are recognised as either revenue or gains depending on their nature.
Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value
when the asset qualifies for recognition, unless received from another Government agency as a consequence of a
restructuring of administrative arrangements (refer to Note 13).
Sale of assets
Gains from disposal of assets are recognised when control of the asset has passed to the buyer.
1.8
Employee benefits
This policy applies to departmental, administered COMCAR, and other administered employee benefits. Other
administered employee benefits relate to the entitlements owed to Senators, Members of Parliament and their staff, the
administration of which is managed by the Ministerial and Parliamentary Services Division within Finance. Administered
employee liabilities relating to superannuation schemes are addressed at Note 1.26.
Wages and salaries
Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been
settled.
Liabilities for 'short-term employee benefits' (as defined in AASB 119 Employee Benefits) and termination benefits
expected within twelve months of the end of the reporting period are measured at their nominal amounts. The nominal
amount is calculated with regard to the rates expected to be paid on settlement of the liability.
23
Notes to and forming part of the financial statements
Other long-term employee benefit liabilities are measured as the net total of the present value of the defined benefit
obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any)
out of which the obligations are to be settled directly.
Leave
The liability for employee benefits includes provision for annual leave and long service leave. No provision is made for
personal leave as all personal leave is non-vesting and the average personal leave taken in future years by employees
of Finance is estimated to be less than the annual entitlement to the 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 Finance'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 a periodic actuarial assessment. The estimate of
the present value of the liability takes into account expected attrition rates and pay increases through promotion and
inflation.
Separation and redundancy
Provision is made for separation and redundancy benefit payments. Finance recognises a provision 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
Employees of Finance are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector
Superannuation Scheme (PSS), the Public Sector Superannuation Accumulation Plan (PSSap) or other superannuation
funds held outside the Commonwealth.
The CSS and PSS are defined benefit schemes for the Commonwealth. The PSSap is a defined contribution scheme.
The liability for the defined benefits of these schemes is recognised in the administered financial statements and notes
(refer Note 1.26) and are settled by the Australian Government in due course or as they become payable.
Finance makes employer contributions to the employees’ defined benefit superannuation schemes at rates determined
by an actuary to be sufficient to meet the current costs to the Government. Finance accounts for the contributions as if
they were contributions to defined contribution plans.
The superannuation liability recognised at 30 June represents outstanding contributions for the final fortnight of the year.
1.9
Leases
A distinction is made between finance leases and operating leases.
Finance leases
Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to
ownership of leased assets.
Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease
property or, if lower, the present value of minimum lease payments at the inception of the contract and a corresponding
liability is recognised at the same time and for the same amount.
The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease
unless the asset has been classified as an investment property. Lease payments are allocated between the principal
component and interest expense.
Finance has no finance leases in the current or comparative year.
Operating leases
An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially
all the risks and rewards incidental to ownership. Operating lease payments are expensed on a straight-line basis which
is representative of the pattern of benefits derived from the use of leased assets.
24
Notes to and forming part of the financial statements
Lease incentives
Lease incentives received in the form of 'free' leasehold improvements and rent free period are also recognised as
liabilities, and are reduced by allocating the lease payments between rental expense and a reduction of the liability when
rental payments occur.
1.10
Borrowing costs
All borrowing costs are expensed as incurred.
1.11
Foreign currency
Transactions denominated in a foreign currency are converted at the exchange rate on the date of the transaction.
1.12
Fair Value Measurement
Finance deems transfers between levels of the fair value hierarchy to have occurred at the end of the reporting period.
1.13
Cash
Cash and cash equivalents include cash on hand, cash held with outsiders and demand deposits in bank accounts with
an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant
risk of changes in value. Cash is recognised at its nominal amount. Cash or cash equivalent balances that are held for
the longer term for investment purposes are classified as investments.
1.14
Financial assets
Finance classifies its financial assets in the following categories:




financial assets at fair value through profit and loss;
held-to-maturity investments;
available-for-sale financial assets; and
loans and receivables.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial
recognition.
Financial assets are recognised when control over future economic benefits is established and the amount of the benefit
can be reliably measured.
Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or the
asset is transferred to another entity. In the case of a transfer to another entity, the risks and rewards of ownership are
also transferred.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset, or where appropriate, a shorter period.
Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value
through profit and loss.
Financial assets at fair value through profit and loss
Financial assets are classified as financial assets at fair value through profit and loss where the financial assets:



have been acquired principally for the purpose of selling in the near future;
are parts of an identified portfolio of financial instruments that Finance manages together and have a recent
actual pattern of short-term profit taking; or
are derivatives that are not designated and effective as a hedging instrument.
Financial assets at fair value through profit and loss are stated at fair value, with any resultant gain or loss recognised in
the profit and loss. The net gain or loss recognised in the profit and loss incorporates any interest earned on the financial
asset.
25
Notes to and forming part of the financial statements
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or are not classified in
any of the other categories.
Available-for-sale financial assets are recorded at fair value. Gains and losses arising from changes in fair value are
recognised directly in reserves (equity) with the exception of impairment losses. Interest is calculated using the effective
interest method and foreign exchange gains and losses on monetary assets are recognised directly in the profit and
loss. Where the asset is disposed of, or, is determined to be impaired, part (or all) of the cumulative gain or loss
previously recognised in the reserve is included in the profit and loss for the period.
Where a reliable fair value cannot be established for unlisted investments in equity instruments, these instruments are
valued at cost. Finance has no such investments.
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that Finance has the
positive intent and ability to hold to maturity are classified as held-to-maturity investments.
Held-to-maturity investments are recorded at amortised cost using the effective interest method less impairment, with
revenue recognised on an effective yield basis.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an
active market are classified as ‘loans and receivables’. The fair value of short-term receivables is the transaction cost or
the face value because there is no interest rate applicable and subsequent measurement is not required as the effect of
discounting is not material.
Impairment of financial assets
Financial assets are assessed for impairment at the end of each reporting period.

Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been
incurred for loans and receivables or held-to-maturity investments held at amortised cost, the amount of the loss
is measured as the difference between the asset's carrying amount and the present value of estimated future
cash flows discounted at the asset's original effective interest rate. The carrying amount is reduced by way of an
allowance account. The loss is recognised in the Statement of Comprehensive Income.

Available-for-sale financial assets - if there is objective evidence that an impairment loss on an
available-for-sale financial asset has been incurred, the amount of the difference between its cost, less principal
repayments and amortisation, and its current fair value, less any impairment loss previously recognised in
expenses, is transferred from equity to the Statement of Comprehensive Income.

Financial assets held at cost - if there is objective evidence that an impairment loss has been incurred, the
amount of the impairment loss is the difference between the carrying amount of the asset and the present value
of the estimated future cash flows discounted at the current market rate for similar assets.
1.15
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at fair value through profit and loss’ or other financial
liabilities (at amortised cost).
Financial liabilities are recognised and derecognised upon ‘trade date’.
Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss are initially measured at fair value. Subsequent fair value
adjustments are recognised in the profit and loss. The net gain or loss recognised in the profit and loss incorporates any
interest paid on the financial liability.
Other financial liabilities (at amortised cost)
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These
liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense
recognised on an effective yield basis.
26
Notes to and forming part of the financial statements
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability, or where appropriate, a shorter period.
Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent goods or services
have been received (and irrespective of having been invoiced).
1.16
Contingent liabilities and contingent assets
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
a liability or an asset 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 recognised when settlement is greater than
remote.
1.17
Financial guarantee contracts
Financial guarantee contracts are accounted for in accordance with AASB 139 Financial Instruments: Recognition and
Measurement. They are not treated as a contingent liability, as they are regarded as financial instruments outside the
scope of AASB 137 Provisions, Contingent Liabilities and Contingent Assets.
1.18
Acquisition of assets
Assets are recorded at cost on acquisition, except as stated below. The cost of acquisition includes the fair value of
assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus
transaction costs where appropriate.
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value
on the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the
latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in
the transferor’s or other agency's accounts immediately prior to the restructuring.
1.19
Property, Infrastructure, plant and equipment
Asset recognition threshold
Purchases of property, infrastructure, plant and equipment are recognised initially at cost in the Statement of Financial
Position, except for purchases costing less than $5,000. These are expensed in the year of acquisition, other than 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 the 'make good' provision for properties leased by Finance where
there exists an obligation to restore the property to its original condition. These costs are included in the value of
Finance's leasehold improvements with a corresponding provision for the ‘make good’ recognised.
Revaluations
Fair values for each class of asset are determined as shown below:
Asset class:
Land
Buildings (excluding leasehold improvements)
Leasehold improvements
Infrastructure, plant and equipment
Fair value measured at:
Market selling price
Market selling price or discounted cash flows
Depreciated replacement cost
Market selling price or depreciated replacement cost
Following initial recognition at cost, property, infrastructure, plant and equipment are carried at fair value less subsequent
accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to
ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date.
The regularity of independent valuations depend upon the volatility of movements in market values for the relevant
assets.
Revaluation adjustments are made on a class basis. Any revaluation increment is credited to the asset revaluation
reserve in equity except to the extent that it reverses a previous revaluation decrement of the same asset class that was
previously recognised in the Statement of Comprehensive Income.
27
Notes to and forming part of the financial statements
Revaluation decrements for a class of assets are recognised directly through the Statement of Comprehensive Income
except to the extent that they reverse a previous revaluation increment for that class.
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and
the asset restated to the revalued amount.
Depreciation
Depreciable property, infrastructure, plant and equipment assets are written down to their estimated residual values over
their estimated useful lives to Finance using, in all cases, the straight-line method of depreciation. Depreciation
commences from the time the assets are first held ready for use.
Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the
improvements or the unexpired period of the lease. The useful life for decommissioning, restoration and make good is
estimated from the date the liability arises to the date the obligation is expected to be met.
The useful life of each asset is the estimated period of time over which it is expected to be able to be used or the benefits
represented by it are expected to be derived by Finance.
Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary
adjustments are recognised in the current and future reporting periods as appropriate. Residual values are re-estimated
for a change in prices only when assets are revalued.
Depreciation rates applying to each class of depreciable asset are based on the following useful lives:
2014
Buildings on freehold land
3 to 100 years
2013
3 to 100 years
Leasehold improvements
Lesser of useful life or lease term
Lesser of useful life or lease term
Infrastructure, plant and equipment
2 to 45 years
2 to 45 years
The aggregate amount of depreciation and amortisation allocated for each class of asset during the reporting period is
disclosed in Note 3C (Departmental) and Note 21F (Administered).
Gain or loss on disposal
The gain or loss on disposal of land, buildings, leasehold improvements and infrastructure, plant and equipment is
determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds from
disposal, less selling costs.
Buildings under construction
Buildings under construction are classified as construction work in progress under land and buildings. They are
measured at cost, and are not depreciated.
Impairment of non-financial assets
All non-financial assets are assessed for impairment at each reporting date. 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.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is
the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of
an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced
if Finance were deprived of the asset, its value in use is taken to be its depreciated replacement cost.
Derecognition
An item of property or infrastructure, plant and equipment is derecognised upon disposal or when no further future
economic benefits are expected from its use or disposal.
1.20
Investment property
A number of Finance's non-Defence properties within Australia are classified as investment properties. These properties
are held at fair value, with any changes in the fair value recorded through the Statement of Comprehensive Income. Fair
28
Notes to and forming part of the financial statements
value is measured using market selling price or discounted cash flows. Investment properties are not depreciated and
are valued annually.
Where an investment property is acquired at no cost or for nominal cost, its cost is deemed to be its fair value as at the
date of acquisition.
Investment properties are derecognised either when they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on
disposal of an investment property is recognised in the Statement of Comprehensive Income in the year of disposal.
1.21
Intangible assets
Finance's intangible assets comprise internally developed and externally acquired software for internal use. These
assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Software is amortised on a straight-line basis over its anticipated useful life. The useful life of Finance’s software is 3 to
7 years (2012-13: 3 to 7 years).
All software assets are assessed for indications of impairment at each reporting date.
1.22
Unearned income
Deposits and prepayments for services yet to be rendered are recognised as a liability at the time of receipt. Revenues
are recognised in relation to these items at the time the service is provided.
1.23
General insurance activities
Comcover is the Commonwealth's self managed fund for insurable risks. Comcover operates under the section 20
Special Account provision of the Financial Management and Accountability Act 1997. Finance and other Australian
Government agencies in the General Government Sector have insured with the fund for risks other than workers’
compensation which is dealt with through continuing arrangements with Comcare.
Comcover’s agreements with insured agencies meet the substance of the definition of General Insurance Contracts
under AASB 1023 General Insurance Contracts and Finance has fully complied with AASB 1023 in relation to all
transactions, valuations of assets and liabilities and disclosures. Accounting policies in relation to these items are as
follows:
Premiums
Premiums are amounts charged to fund members. The earned portion of premiums received and receivable is
recognised as revenue. Premiums are treated as earned from the date of attachment of risk. The pattern of recognition
over the policy or indemnity period is based on time, which is considered to closely approximate the pattern of risks
underwritten. Unearned premiums are determined using the pro-rata method.
Outwards reinsurance
Finance no longer undertakes significant reinsurance. To the extent it does, premiums ceded to reinsurers are
recognised as an expense in accordance with the pattern of reinsurance service received. Reinsurance recoveries are
recognised as revenue for claims incurred. Recovery receivables are measured as the present value of the expected
future receipts, calculated on the same basis as the liability for outstanding claims.
Claims
The liability for outstanding claims covers the expected future payments in relation to claims reported but not yet paid,
claims incurred but not yet reported (“IBNR”), claims incurred but not enough reported (“IBNER”) and anticipated direct
and indirect costs of settling these claims.
The liability for outstanding claims is subject to an annual actuarial review. The general approach to the actuarial
estimation of outstanding claims is to analyse all available experience. Based on this review, the expected future
payments are determined and discounted to present value using the risk free rate.
The provision for the outstanding claims liability also contains a risk margin to reflect the inherent uncertainty in the
central estimate. Finance’s policy is to adopt a risk margin to increase the probability that the net liability is adequately
provided to a 75 per cent confidence level. General insurance disclosure and actuarial assumptions are included in
Note 16.
29
Notes to and forming part of the financial statements
1.24
Taxation / competitive neutrality
Finance is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).
Income tax equivalent amounts are recognised as noted below under Competitive Neutrality.
GST policy
Revenues, expenses and assets are recognised net of GST except where the amount of GST incurred is not
recoverable from the Australian Taxation Office. Receivables, payables, commitments and contingencies are reported
inclusive of GST.
Competitive neutrality
Finance applies the principles of the Australian Government's Competitive Neutrality Policy Statement to its significant
business operations, namely the non-Defence domestic property operations. The taxation equivalent regime is applied
as a competitive neutrality charge calculated annually based upon accounting income (adjusted for significant
non-taxable items) for Finance's non-Defence domestic property operations. The tax equivalent amounts shown in Note
3H and Note 5 are returned to the Official Public Account.
Finance recognises these transactions according to their nature. Rates and other equivalents are recognised as part of
other expenses and income tax equivalents are reported separately as income tax expense in the Statement of
Comprehensive Income.
1.25
Reporting of Administered activities
Administered assets, liabilities, revenues, expenses and cash flows are disclosed in the administered financial
statements and related notes.
Except where otherwise stated below, administered items are accounted for on the same basis using the same policies
as for departmental items, including the application of Australian Accounting Standards.
Administered items are controlled by the Government and managed or overseen by Finance on behalf of the
Government. Administered items include:







investments for former superannuation schemes and controlled entities;
civilian superannuation schemes for Australian Government employees;
Nation-building Funds;
entitlements and services provided to current and former Members of Parliament;
grants and benefits payable;
fees, fines and interest; and
loans.
Funding flows to and from the Official Public Account with entities within the General Government Sector (GGS) are
recognised in the Administered Cash Flow Statement and the Administered Reconciliation Schedule.
The purpose of separating administered and departmental items is to provide for the separate scrutiny of the items and
enable assessment of Finance's administrative efficiency in providing goods and services.
Administered items are distinguished from agency items in the financial statements by shading.
Administered cash transfers to and from the Official Public Account
Collections of revenue to the Government are transferred to the Official Public Account (OPA) maintained by Finance.
Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of the
Government. These transfers to and from the OPA are adjustments to the administered cash held by Finance on behalf
of the Government and reported as such in the Administered Cash Flow Statement and the Administered Reconciliation
Schedule.
Revenue
All administered revenues are revenues relating to ordinary activities performed by Finance on behalf of the Australian
Government. As such, administered appropriations are not revenues of Finance, who oversee distribution or
expenditure of the funds as directed.
Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments:
30
Notes to and forming part of the financial statements
Recognition and Measurement except for financial assets that are recognised at fair value through profit and loss.
Dividend revenue represents dividends received from entities, which mainly relate to administered investments of
Finance. Dividends are recognised when the right to receive the payment is established.
Grants
Finance administers a number of grant schemes on behalf of the Government. Grant liabilities are recognised to the
extent that:


the services required to be performed by the grantee have been performed; or
the grant eligibility criteria have been satisfied, but payments due have not been made.
A commitment is recorded when the Government enters into an agreement to make these grants but services have not
been performed or criteria satisfied. Where grant funds are paid in advance of performance or eligibility, a prepayment
is recognised. Payments made for non-reciprocal grants, where those grants are not subject to future criteria, are fully
expensed in the year of payment.
Administered investments
Administered investments in controlled entities are not consolidated because their consolidation is relevant only at the
Whole-of-Government level.
Administered investments other than those held for sale are measured at their fair value. Fair value has been taken to
be the present value of future cash flows or the net assets of the entities. Additional details relating to administered
investments can be found at Note 25C.
Loans and receivables
Concessional loans made to States and Territories have been measured at amortised cost using the effective interest
method as at the earliest practicable date to determine the retrospective effect of applying AASB 139 Financial
Instruments: Recognition and Measurement. A 10 year long term bond rate at the earliest practicable date for each loan
has been applied to calculate discounts on the concessional loans (refer Note 31L Concessional loans).
Where loans and receivables are not subject to concessional treatment, they are carried at amortised cost using the
effective interest method. Gains and losses due to impairment, derecognition and amortisation are recognised in the
Administered Schedule of Comprehensive Income.
Financial assets at fair value through profit and loss
Financial assets are classified as financial assets at fair value through profit and loss (FVPL) where the financial assets:



have been acquired principally for the purpose of selling in the near future;
are parts of an identified portfolio of financial instruments that Finance manages together and have a recent
actual pattern of short-term profit taking; or
are derivatives that are not designated and effective as a hedging instrument.
Financial assets at FVPL are stated at fair value, with any resultant gain or loss recognised in the profit and loss. The
net gain or loss recognised in the profit and loss incorporates any interest earned on the financial assets. Interest
earned on financial assets at FVPL is disclosed in Note 22G Gains on financial investments and are not included again
in Note 22B Interest.
Guarantees
The amounts guaranteed by the Australian Government have been disclosed in the Schedule of Administered
Contingencies and in Note 30. At the time of completion of the financial statements, all guarantees were remote and
there was no reason to believe that they would be called upon and recognition of a liability was therefore not required.
Indemnities
The maximum amounts payable under the indemnities given is disclosed in the Schedule of Administered
Contingencies and in Note 30. At the time of completion of the financial statements, there was no reason to believe that
the indemnities would be called upon and no recognition of a liability was therefore required.
1.26
Superannuation schemes
Finance recognises an administered liability for the present value of the Australian Government's expected future
31
Notes to and forming part of the financial statements
payments arising from the Parliamentary Contributory Superannuation Scheme, Judges' Pensions Scheme,
Governor-General Pension Scheme, death and disability benefits for Federal Circuit Court Judges and the unfunded
components of the Commonwealth Superannuation Scheme (CSS) and the Public Sector Superannuation scheme
(PSS). The funded components of these schemes are reported in the financial statements of the respective schemes.
Finance also has the responsibility to record the Australian Government's transactions in relation to the CSS and PSS
schemes. Accounting policies in relation to these items are as follows:
Employer contributions
Employer contributions received from Australian Government entities are recorded as administered revenues.
Benefits paid and employee contributions
Gross benefits paid less employee contributions and employer productivity contributions (offsets) received are
recognised as a net reduction in the liability.
Increases in the accrued benefits liability
Increases in the accrued benefits liability, pursuant to regular estimates of the liability taking account of actuarial
reviews, are recognised as an expense and classified as employee superannuation expense, except for actuarial gains
or losses which are recognised in equity. In accordance with AASB 119 Employee Benefits, the liability is calculated
annually as the present value of future benefit obligations less the fair value of scheme assets. The rate used to
discount future benefits is determined by reference to the Government bond rate at the reporting date because there is
not a deep market in high quality corporate bonds. In the case of discounting the superannuation liability, the market
yield on the appropriately dated Australian government bonds is used. Additional superannuation information can be
found at Note 33.
1.27
Nation-building Funds (NBF)
Investments
Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a
contract whose terms require delivery of the investment within the timeframe established by the market concerned.
Investments are initially measured at fair value, net of transaction costs that are directly attributable to the acquisition or
issue of the investment.
All investments are designated as financial assets at fair value through profit and loss on purchase with any resultant
gain or loss recognised in the profit and loss. The net gain or loss recognised in the profit and loss incorporates any
interest earned on the financial asset.
The following methods are adopted by the NBF in determining the fair value of investments:


Mortgage backed securities, bank bills, negotiable certificates of deposit, corporate debt securities and
other fixed income securities that are traded in active markets are valued at the quoted bid price; and
Derivative instruments including forward foreign exchange contracts, interest rate swap agreements and
credit default swaps are recorded at their fair value on the date the contract is entered into and are
subsequently re-measured to their fair values at each reporting date.
Revenue
Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments:
Recognition and Measurement except for financial assets that are recognised at fair value through profit and loss.
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 balance date. Allowances are made when
collectability of the debt is no longer probable.
Trade creditors
Trade creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be
settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of the
Fund having been invoiced).
32
Notes to and forming part of the financial statements
Foreign currency
(i) Functional and presentation currency
Items included in the financial statements of the NBF are measured using the currency of the primary economic
environment in which Finance operates ("the functional currency"). The financial statements are presented in Australian
dollars, which is the NBF’s functional and presentation currency.
(ii) Transactions and balances
All foreign currency transactions during the period are brought to account using the exchange rate in effect at the date
of the transaction. Foreign currency items at reporting date are translated at the exchange rate existing at reporting
date. Exchange differences are recognised in the profit and loss in the period in which they arise.
Derivative financial instruments
The NBF have entered into forward foreign exchange contracts to manage exposure to foreign exchange risk. The NBF
also use interest rate futures and swaps to manage their exposure to interest rate risk, and credit default swaps to
manage their exposure to credit risk and/or gain indirect exposure to credit risk. The use of derivative financial
instruments by the NBF is governed by the Nation-building Funds Act 2008.
The NBF have entered into To-Be-Announced (TBA) trades that are delivery obligations on underlying collateral (i.e.
mortgage pools) with pool numbers and precise amounts unknown at the trade dates and are therefore accounted for
as derivatives.
The NBF have not designated any derivatives as cash flow or fair value hedges. All derivatives are accounted for at fair
value through profit and loss.
1.28
Environmental liabilities
Finance recognises a provision for restoration and remediation when there is a present obligation as a result of a past
event, or it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation.
1.29
Comparative figures
Unless otherwise stated, comparative figures are provided and, where necessary, have been adjusted in accordance
with the Finance Minister's Orders.
1.30
Prior year adjustments
Minor changes were made to the comparatives in both the departmental and administered financial statements as a
result of the reclassification of some line items between notes to the financial statements. There was no change to the
comparative operating result or net assets reported.
33
Notes to and forming part of the financial statements
Note 2
Events after the reporting period
Departmental
Appropriations passed prior to 1 July 2012
On 1 July 2014, the Public Governance, Performance and Accountability Act 2013 (PGPA Act) replaced the Financial
Management and Accountability Act 1997 (FMA Act) and Commonwealth Authorities and Companies Act 1997
(CAC Act).
As part of the transition to the PGPA Act, funds from Appropriations Acts prior to 1 July 2012 are no longer valid.
No adjustment is required for Finance as the PGPA Act was not effective at 30 June 2014. If adjustments were to be
made, the appropriations below would be adjusted in Note 9B Trade and other receivables and Note 34C Unspent
annual appropriations by the following reductions:

Appropriation Act (No.1) 2011-2012 - $2,655,000.

Appropriation Act (No.2) 2011-2012 - $15,590,000.
Administered
Appropriations passed prior to 1 July 2012
On 1 July 2014, the Public Governance, Performance and Accountability Act 2013 (PGPA Act) replaced the Financial
Management and Accountability Act 1997 (FMA Act) and Commonwealth Authorities and Companies Act 1997
(CAC Act).
As part of the transition to the PGPA Act, funds from Appropriations Acts prior to 1 July 2012 are no longer valid.
No adjustment is required for Finance as the PGPA Act was not effective at 30 June 2014. If adjustments were to be
made, the appropriations below would be adjusted in Note 34C Unspent annual appropriations by the following
reductions:

Appropriation Act (No.1) 2011-2012 - $5,000.

Appropriation Act (No.2) 2011-2012 - $494,000.
Government Decisions
On 26 March 2014, the Government announced the intention to sell Medibank Private Limited.
On 13 May 2014, the Government announced the decisions below as part of the 2014-15 Budget:

Wind up of Australian River Co. Limited;

Cessation of the operations of Albury-Wodonga Development Corporation;

Merger of ComSuper and Commonwealth Superannuation Corporation;

Closure of Nation-building Funds and establishment of the Asset Recycling Fund and the Medical Research
Future Fund, and

Reduced entitlements provided under the Members of Parliament (Life Gold Pass) Act 2002.
The above assets are currently recorded as administered financial assets in Finance’s financial statements. Where
necessary, adjustments have been made to the value of the assets to reflect the quantifiable component of the impact
of these announcements. No adjustment has been made where the financial impact is not able to be reliably measured
or is unknown.
Medibank Private Limited (MPL)
The Government intends to proceed with the sale of MPL through an initial public offer in 2014-15. There is no
implication on Finance’s financial statements until the details of the sale are finalised. Consequentially, no adjustment to
the financial statements is required as the MPL sale details are not yet finalised.
Australian River Co. Limited (ARCo)
Upon winding up, the remaining assets and liabilities of ARCo are expected to be transferred to Finance. There is no
impact on Finance’s financial statements until ARCo’s operations are ceased. Consequentially, no adjustment to the
financial statements is required as ARCo is to be wound up post 30 June 2014.
34
Notes to and forming part of the financial statements
Albury-Wodonga Development Corporation (AWDC)
Upon cessation, the remaining property management function will be transferred to Finance. There is no impact on
Finance’s financial statements and no adjustment is required as at 30 June 2014.
Commonwealth Superannuation Corporation (CSC)
The Government intends to merge ComSuper and CSC by 1 July 2015. There is no impact on Finance’s financial
statements until the CSC-ComSuper merger is completed. Consequentially, no adjustment to the financial statements is
required as the CSC-ComSuper merger is to be completed post 30 June 2014.
Nation-building Funds (NBFs)
The Government announced in the 2014-15 Budget that the three NBFs, being the Building Australia Fund (BAF), the
Education Investment Fund (EIF) and the Health and Hospitals Fund (HHF) will be abolished in 2014-15, subject to the
passage of legislation. The Government also announced the establishment in 2014-15 of two new investment funds,
the Asset Recycling Fund (ARF) and the Medical Research Future Fund (MRFF), subject to the passage of legislation.
As part of these proposed changes, uncommitted funds from the BAF and the EIF will be transferred to the ARF,
subject to the passage of legislation. The uncommitted funds from the HHF will be transferred to the MRFF on 1
January 2015 subject to the passage of legislation. All committed funds from the three NBFs on 31 December 2014
will be transferred to the Consolidated Revenue Fund, from which the remaining commitments of the three funds will
be met.
No adjustment to the financial statements is required as this event will occurred after 30 June 2014.
Members of Parliament (Life Gold Pass)
The announcement made by the Government is subject to the passage of legislation. No adjustment to the
administered provisions is necessary as the relevant amendments will be made post 30 June 2014.
35
Notes to and forming part of the financial statements
Note 3
30 June
2013
$'000
123,364
130,112
10,553
16,253
2,476
14,664
769
168,079
9,567
18,072
4,315
18,364
1,306
181,736
103,500
17,792
31,777
11,983
12,942
37,039
215,033
73,530
22,411
31,230
13,512
16,066
32,815
189,564
1,302
1,171
1,302
1,171
1,378
212,353
1,385
187,008
213,731
215,033
188,393
189,564
5,234
2,025
4,815
2,078
7,259
222,292
6,893
196,457
12,185
2,569
4,489
11,134
2,796
4,000
19,243
17,930
7,604
7,604
7,889
7,889
26,847
25,819
Expenses
Note 3A Employee benefits
Wages and salaries
Superannuation
Defined contribution plans
Defined benefit plans
Separation and redundancies
Leave and other entitlements
Other employee expenses
Total employee benefits
Note 3B Suppliers
Goods and services supplied or rendered
Centralised procurement and contracting
Consultants and contractors
Communication and information technology
Other goods and services
Office and other outsource cost
Property operating expenses
Total goods and services supplied or rendered
Goods supplied in connection with
External parties
Total goods supplied
Services rendered in connection with
Related parties
External parties
Total services rendered
Total goods and services supplied or rendered
Other suppliers
Operating lease rentals – external parties
Minimum lease payments
Workers compensation expenses
Total other suppliers
Total suppliers
Note 3C Depreciation and amortisation
Depreciation
Buildings
Leasehold improvements
Plant and equipment
Total depreciation
Amortisation
Intangibles
Total amortisation
Total depreciation and amortisation
36
30 June
2014
$'000
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
30
30
51
51
58,550
717
-
5,022
40
252
8,357
42,100
4,601
377
38
-
118,922
1,132
Note 3F Losses from asset sales
Investment properties
Proceeds from sale
Carrying value of assets sold
-
(260)
2,065
Total losses from asset sales
-
1,805
128,585
(26,854)
2,316
4,347
108,394
76,274
16,859
(2,505)
2,221
92,849
5,000
5,000
2,813
195
8,008
2,343
549
7,892
Note 3D Finance costs
Notional interest
Total finance costs
Note 3E Write-down and impairment of assets
Financial assets
Impairment of financial instruments
Write-off of other financial assets
Non-financial assets
Write-off of intangible assets
Write-off of land and building
Write-off of plant and equipment
Revaluation decrement - investment properties
Revaluation decrement - land and buildings
Impairment of intangible assets
Total write-down and impairment of assets
Note 3G Insurance claims
Current claims incurred
Changes in outstanding claims liability
Effect of change in discount rate
Claims management costs
Total insurance claims
Note 3H Other expenses
Reinsurance equivalent payment
Competitive neutrality - rates and other taxes1
Other
Total other expenses
1 The
Property Special Account applies the Australian Government's Competitive Neutrality Policy. This includes indirect
taxes, such as payroll tax, council rates, stamp duty and land tax, as if they had applied to the Property Special Account.
These amounts have been paid or are payable by Finance to the Official Public Account.
37
Notes to and forming part of the financial statements
Note 4
30 June
30 June
2014
2013
$'000
$'000
Own-Source Income
Own-Source Revenue
Note 4A Rendering of services
Rendering of services - related parties
Centralised procurement and contracting
Property services
Recovery of costs from other entities
Other services
Rendering of services - external parties
Centralised procurement and contracting
104,126
4,478
20,371
48
65,089
6,451
18,182
2,045
13,999
143,022
19,792
111,559
Note 4B Insurance premiums
Comcover Special Account - insurance premiums
86,258
82,705
Total insurance premiums
86,258
82,705
844
5,731
14
6,589
786
4,424
(56)
5,154
10,071
468
15,407
177
37,566
75
48,180
32,043
39
47,666
-
5,470
5,470
Note 4F Other revenue
Commission
Resources received free of charge
Other
7,970
1,468
224
6,251
1,385
-
Total other revenue
9,662
7,636
Total rendering of services
Note 4C Reinsurance and other recoveries
Current claims incurred
Changes in outstanding claims liability
Effect of change in discount rate
Total reinsurance and other recoveries
Note 4D Rental income
Operating lease - investment properties
Related parties
External parties
Operating lease - other properties
Related parties
External parties
Total rental income
Note 4E Interest
Notional interest
Total interest
38
Notes to and forming part of the financial statements
30 June
30 June
2014
2013
$'000
$'000
Gains
Note 4G Other gains
Change in fair value of investment properties
Change in fair value of buildings
Assets first found
Other
5,414
275
277
4,260
36,485
525
1
Total other gains
5,966
41,271
261,688
261,688
274,448
274,448
5,856
5,856
5,542
5,542
Note 4H Revenue from Government
Appropriations
Departmental appropriations
Total revenue from Government
Note 5
Income tax expense
Income tax expense
Competitive neutrality - Commonwealth tax equivalent expense1
Total income tax expense
Property Special Account applies the Australian Government’s Competitive Neutrality Policy. Income tax payable
includes income tax payable under the Income Tax Assessment Act 1997 as if the Act had applied to the Property
Special Account. These amounts have been paid or are payable by Finance to the Official Public Account.
1The
Note 6
Other comprehensive income
Changes in asset revaluation reserves
Non-financial assets revaluation reserve adjustment:
Land
Buildings
Leasehold improvements
Infrastructure, plant and equipment
Make good provision
Total other comprehensive income
39
14,587
(3,281)
11,306
(2,718)
3,283
2,757
841
425
4,588
Notes to and forming part of the financial statements
40
Notes to and forming part of the financial statements
Note 7
Fair value measurement
The following tables provide an analysis of assets and liabilities that are measured at fair value.
The different levels of the fair value hierarchy are defined below.
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Note 7A Fair value measurement
Fair value measurements at the end of the reporting period by hierarchy for assets and liabilities in 2014
Fair value measurements at the end of the
reporting period using1
Fair value
$'000
Level 1
inputs
$'000
Level 2
inputs
$'000
Level 3
inputs
$'000
Non-financial assets
Land
Buildings
Leasehold improvements
Infrastructure, Plant and Equipment
Investment properties
Total non-financial assets
336,333
678,276
5,460
12,357
649,096
1,681,522
-
336,333
675,976
2,560
649,096
1,663,965
2,300
5,460
9,797
17,557
Total fair value measurements
1,681,522
-
1,663,965
17,557
1
All listed items are recurring fair value measurements and there were no financial assets, payables, or provisions
measured at fair value or for which fair value disclosure is required. Recurring fair value measurements occur when
there is ongoing requirement to disclose balances at fair value.
Fair value measurements – highest and best use differs from current use for non-financial assets (NFAs)
The highest and best use for all non-financial assets is the same as their current use.
Note 7B Level 1 and Level 2 transfers for recurring fair value measurements
There have been no transfers between levels of the hierarchy during the year. The policy for determining when
transfers between levels are deemed to have occurred can be found in Note 1.12.
41
Notes to and forming part of the financial statements
Note 7C Valuation technique and inputs for Level 2 and Level 3 fair value measurements
Level 2 and Level 3 fair value measurements - valuation technique and the inputs used for assets and
liabilities 2014
Inputs
Level
Fair value
VT1
Inputs
used2
Inputs range3
Weighted
average3
AMT
AMT
AMT
AMT
AMT
RCN;
CEB
RCN;
CEB
AMT
RCN;
CEB
AMT
AMT
AMT
N/A
N/A
N/A
N/A
N/A
N/A;
50 years
N/A;
6.67% - 28.57%
N/A
N/A;
8.45% - 33.33%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A;
50 years
N/A;
11.18%
N/A
N/A;
20.48%
N/A
N/A
N/A
$'000
Non-financial assets
Land
2
2
2
2
2
3
201,103
135,230
417,850
253,320
4,806
2,300
IA
MA
IA
CA
MA
DRC
Leasehold improvements
3
5,460
DRC
Plant and Equipment
2
3
2,560
9,797
MA
DRC
Investment properties
2
2
2
582,953
36,681
29,462
Buildings
1 There
IA
CA
MA
has been no change to the valuation techniques used (VT). The following valuation techniques were used:

Cost Approach (CA): The amount required currently to replace the service capacity of an asset.

Depreciated Replacement Cost (DRC): The amount a market participant would be prepared to pay to acquire or
construct a substitute asset of comparable utility, adjusted for obsolescence.

Income Approach (IA): Converts future amounts (cash flows or income and expenses) to a single current (i.e.
discounted) amount. The fair value measurement is determined on the basis of the value indicated by current
market expectations about those future amounts.

Discounted Net Cash Flow Approach (DNCF): The net cash flows over an appropriate timeframe together with a
terminal value for the asset at the end of the forecast period, discounted back to the measurement date, resulting in
a net present value for the asset.

Market Approach (MA): Market approach seeks to estimate the current value of an asset with reference to recent
market evidence including transactions of comparable assets within local second-hand markets.
2 The
following valuation inputs were used to calculate fair values:

Replacement Cost of New Assets (RCN): the amount a market participant would pay to acquire or construct a new
substitute asset of comparable utility.

Consumed Economic Benefits (CEB) or Obsolescence of Assets: physical deterioration, functional or technical
obsolescence and conditions of the economic environment specific to the asset.

Adjusted Market Transactions (AMT): market transactions of comparable assets, adjusted to reflect differences in
price sensitive characteristics.
3 Significant unobservable inputs are used for level 3 items. The input range indicates the variability of inputs used and
reflects annual variability. The weighted average of inputs used within this range is also provided.
42
Notes to and forming part of the financial statements
Note 7C Valuation technique and inputs for Level 2 and Level 3 fair value measurements (continued)
Recurring Level 3 fair value measurements - valuation processes
Leasehold improvements, plant and equipment
Finance engaged a professional valuer to undertake a comprehensive valuation of these classes of non-financial assets
as at 30 June 2013. Finance tested the procedures of the valuation model during 2013-14 and engaged professional
valuers to provide assurance that the models developed comply with requirements of AASB 13.
Assets that do not transact with enough frequency and transparency to develop objective opinions of value from
observable market evidence have been measured utilising the cost approach. Under the cost approach, the estimated
cost to replace the asset has been calculated and then adjusted to take into account obsolescence (accumulated
depreciation). The obsolescence has been determined based on professional judgement regarding physical, economic
and external obsolescence factors relevant to the asset under consideration.
Land, buildings and investment properties
Finance engaged a professional valuer to undertake a comprehensive valuation of these classes of non-financial assets
as at 30 June 2014.
Assets identified as having insufficient observable market inputs or requiring significant adjustments were assessed
using the cost approach.
Recurring Level 3 fair value measurements – sensitivity analysis
Leasehold improvements, plant and equipment
The significant unobservable inputs used in the fair value measurements of these asset classes relate to obsolescence
(accumulated depreciation). A significant increase (or decrease) in this input would result in significantly lower (or higher)
fair value measurements.
Land, buildings and investment properties
The significant unobservable inputs and/or adjusted market inputs used in the fair value measurement of this asset class
relate to obsolescence. A significant increase (or decrease) in the input or adjustments would result in significantly lower
(or higher) fair value measurements.
Recurring Level 3 fair value measurements – sensitivity analysis financial assets and liabilities
There were no financial assets or liabilities measured at fair value, or for which fair value disclosure is required.
43
Notes to and forming part of the financial statements
Note 7D Reconciliation for recurring Level 3 fair value measurements
Recurring Level 3 fair value measurements - reconciliation for assets 2014
Opening balance 1 July 2013
Total gains/(losses) recognised in net cost of services 1
Reclassifications
Purchases
Closing balance 30 June 2014
1
Land
$'000
-
Building
$'000
2,320
(20)
2,300
Non-financial assets
Leasehold
improvements
$'000
8,222
(2,574)
(220)
32
5,460
Plant &
Equipment
$'000
13,407
(3,610)
9,797
These gains/(losses) are presented in the Statement of Comprehensive Income under depreciation and amortisation and write-down and impairment of assets.
Finance's policy for determining when transfers between levels are deemed to have occurred can be found in Note 1.12.
Recurring Level 3 fair value measurements - reconciliation for liabilities
There were no recurring level 3 fair value measurements for liabilities.
44
Total
$'000
23,949
(6,204)
(220)
32
17,557
Notes to and forming part of the financial statements
Note 8
Business operations
Note 8A Departmental operations
Budget Funded
Operations1
Insurance and Risk
Management
(Comcover)2
30 June
30 June
2014
2013
$'000
$'000
Departmental Special Account Operations
Coordinated
Property and
Procurement
Construction3
Contracting4
30 June
30 June 30 June
30 June
2014
2014
2013
2013
$'000
$'000
$'000
$'000
30 June
2014
$'000
Statement of Comprehensive Income
224,819
Expenses
14,785
Own-source income
239,364
14,373
182,598
94,277
109,419
94,584
124,400
64,508
70,077
101,372
120,532
126,095
Net cost of services
Revenue from government
Surplus/(deficit) before tax
Income tax
210,034
198,947
(11,087)
-
224,991
209,184
(15,807)
-
88,321
10,055
(78,266)
-
14,835
13,092
(1,743)
-
59,892
51,735
(8,157)
5,856
(31,295)
47,359
78,654
5,542
Surplus (deficit) after tax
(11,087)
(15,807)
(78,266)
(1,743)
(14,013)
14,660
14,682
-
-
(458)
(410)
-
9,878
418
12,993
(1,117)
Add back unfunded
expenses:
Depreciation
Bond rate impact - employee
provision
Write-down and impairment of
assets
Funded surplus/(deficit)
45
30 June
2013
$'000
Total
Business
Services5
Departmental
Operations
30 June
2014
$'000
30 June
2013
$'000
30 June
2014
$'000
30 June
2013
$'000
88,877
91,132
223
12
4
-
652,572
299,677
507,741
301,461
(5,563)
951
6,514
-
(2,255)
4,813
7,068
-
211
(211)
-
4
(4)
-
352,895
261,688
(91,207)
5,856
206,280
274,448
68,168
5,542
73,112
6,514
7,068
(211)
(4)
(97,063)
62,626
-
-
-
-
-
-
14,660
14,682
-
-
-
-
-
-
-
(458)
(410)
-
-
-
-
-
-
-
-
9,878
418
(78,266)
(1,743)
(14,013)
73,112
6,514
7,068
(211)
(4)
(72,983)
77,316
Notes to and forming part of the financial statements
Note 8A Departmental operations (continued)
Departmental Special Account Operations
Budget Funded
Operations1
Statement of Financial
Position
Assets
Financial assets
Non-financial assets
Total assets
Insurance and Risk
Management
(Comcover)2
30 June
30 June
2014
2013
$'000
$'000
30 June
2014
$'000
30 June
2013
$'000
123,796
340,413
464,209
98,776
152,000
250,776
382,396
382,396
Property and
Construction3
Coordinated
Procurement
Contracting4
30 June
30 June
2014
2013
$'000
$'000
30 June
2014
$'000
30 June
2013
$'000
425,286
425,286
289,044
1,414,659
1,703,703
234,878
1,480,797
1,715,675
94,704
361
95,065
Total
Business
Services5
Departmental
Operations
30 June
2014
$'000
30 June
2013
$'000
30 June
2014
$'000
30 June
2013
$'000
41,815
250
42,065
686
686
896
896
890,626
1,755,433
2,646,059
801,651
1,633,047
2,434,698
Liabilities
Payables
Provisions
Total liabilities
59,217
48,958
22,573
49,402
4,233
330,446
3,018
296,288
52,764
9,915
57,084
9,892
51,997
2,759
5,434
2,836
1
-
-
168,212
392,078
88,109
358,418
108,175
71,975
334,679
299,306
62,679
66,976
54,756
8,270
1
-
560,290
446,527
Net Assets
356,034
178,801
47,717
125,980
1,641,024
1,648,699
40,309
33,795
685
896
2,085,769
1,988,171
Equity
356,034
178,801
47,717
125,980
1,641,024
1,648,699
40,309
33,795
685
896
2,085,769
1,988,171
Budget Funded Operations – Finance contributes to shaping and delivering the Government’s agenda by providing advice and services, particularly in relation to expenditure and financial management,
and government operations. Budget Funded Operations are funded from annual appropriations.
2
Comcover – Finance provides insurance and risk management services to General Government Sector entities through the Comcover self-managed insurance fund.
3
Property and Construction – Finance delivers services and provides advice related to the Australian Government’s non-Defence property portfolio, including construction and project delivery services. This
portfolio is managed with an aim of optimising return on investment, whilst recognising public interest considerations, the requirement for tenant satisfaction and the need to maintain the condition of the
property portfolio.
4
Coordinated Procurement Contracting – Finance is responsible for initiating and managing a range of whole-of-government contracts and providing advice on and coordinating government advertising
campaigns.
5
Business Services – Finance is responsible for sentencing and disposing of records associated with the former Department of Administrative Services and managing and settling any personal injury and
other legal claims. This special account is winding up pending finalisation of a legal case.
1
46
Notes to and forming part of the financial statements
Note 8B: Administered operations
Commonwealth
Nation-building
Superannuation
Funds1
Schemes2
Ministerial &
Parliamentary
authorities
Services3
and
Other administered
companies4
operations5
Total administered
operations
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
2,495,476
2,662,288
7,987,138
7,963,796
506,842
409,664
-
-
23,787
23,488
11,013,243
11,059,236
Administered schedule of comprehensive Income:
Expenses
Income
Net cost of services
781,827
1,073,493
1,457,847
1,508,163
8,877
24,835
157,312
467,852
54,321
49,342
2,460,184
3,123,685
1,713,649
1,588,795
6,529,291
6,455,633
497,965
384,829
(157,312)
(467,852)
(30,534)
(25,854)
8,553,059
7,935,551
(1,713,649)
(1,588,795)
(6,529,291)
(6,455,633)
(497,965)
(384,829)
157,312
467,852
30,534
25,854
(8,553,059)
(7,935,551)
Surplus/(deficit) after
tax
Administered schedule of assets and liabilities
Assets
Financial assets
Non-Financial assets
Total assets
9,741,775
11,704,468
51,924
54,283
57,266
36,117
4,532,827
4,506,884
1,819,696
605,652
16,203,488
16,907,404
-
-
-
-
33,351
48,408
-
-
72,273
62,331
105,624
110,739
9,741,775
11,704,468
51,924
54,283
90,617
84,525
4,532,827
4,506,884
1,891,969
667,983
16,309,112
17,018,143
85,059
318,409
96
188
65,829
51,686
-
-
1,444,838
1,477,525
1,595,822
1,847,808
-
-
138,661,191
124,947,502
239,503
192,017
-
-
13,133
14,849
138,913,827
125,154,368
85,059
318,409
138,661,287
124,947,690
305,332
243,703
-
-
1,457,971
1,492,374
140,509,649
127,002,176
9,656,716
11,386,059
(138,609,363)
(124,893,407)
(214,715)
(159,178)
4,532,827
4,506,884
433,998
(824,391)
(124,200,537)
(109,984,033)
Liabilities
Payables
Provisions
Total liabilities
Net Assets
47
Notes to and forming part of the financial statements
1.
Note 8B Administered operations (continued)
1
Nation-building Funds - Finance is responsible for authorising milestone payments from the Building Australia Fund, Education Investment Fund and the Health and Hospitals Fund
which are recommended by the relevant Portfolio Department for approved infrastructure projects. The investments of the assets of these Funds are managed by the Future Fund
Board of Guardians.
2
Superannuation - Finance provides advice on the superannuation arrangements for Australian Government employees, including in respect of the financial impacts of
superannuation benefit payments, the unfunded superannuation liability and associated administered expenses. Finance also administers defined benefit superannuation payments
for former parliamentarians, Governors-General, Federal Judges and Federal Circuit Court Judges. ComSuper administers these benefit payments on behalf of Finance by drawing
down on Finance's special and annual appropriations.
3
Ministerial & Parliamentary Services - Finance provides Ministers, Senators, Members and Office-holders and former Parliamentarians and their respective staff employed under the
Members of Parliament (Staff) Act 1984 with a range of facilities, services and advice to assist them in undertaking their duties. Finance also provides car-with-driver and associated
transport services for senators, members and other office holders.
4
Commonwealth authorities and companies – Finance provides shareholder oversight of government business enterprises and other commercial entities.
5

Other administered operations - Finance provides a range of other services, including:Whole of Government - Official Public Account - Finance receives administered receipts and makes appropriation payments to Commonwealth agencies. A portion of these funds
are drawn on by the Australian Office of Financial Management to make investments on behalf of the Government;

Efficient and effective online and network services including the Intragovernment Communications Network (ICON), the ministerial communications network and TelePresence;

Concessional loans to State & Territory governments and Government securities consisting of assets of former superannuation schemes administered by the Australian
Government; and

Administration of Act of Grace and Same Sex Relationship Act payments.
48
Notes to and forming part of the financial statements
Note 9
Financial assets
30 June
2014
$'000
30 June
2013
$'000
Note 9A Cash and cash equivalents
Cash at bank
Cash on hand
Cash held in Comcover Special Account
Cash held in Property Special Account
Cash held in Coordinated Procurement Contracting Special Account
1,516
12
1,526
6,048
198
1,671
12
244
695
662
Total cash and cash equivalents
9,300
3,284
47,264
216
13,673
134
47,480
13,807
274,338
359,147
48,180
687
119,454
220,873
288,582
35,382
896
91,518
801,806
637,251
21,396
2,910
24,306
17,666
118,550
2,583
138,799
873,592
789,857
(714)
(714)
(714)
(714)
Total trade and other receivables (net)
872,878
789,143
Trade and other receivables (net) expected to be recovered
No more than 12 months
More than 12 months
74,172
798,706
147,168
641,975
Total trade and other receivables (net)
872,878
789,143
Note 9B Trade and other receivables
Goods and services receivables in connection with
Related parties
External parties
Total goods and services receivables
Appropriations receivables
Property Special Account
Comcover Special Account
Coordinated Procurement Contracting Special Account
Business Services Special Account
Other departmental undrawn
Total appropriations receivables
Other receivables
Reinsurance and other recoveries
Insurance debtor
GST receivable from the Australian Taxation Office
Total other receivables
Total trade and other receivables (gross)
Less impairment allowance
Goods and services
Total impairment allowance
Credit terms for goods and services were within 30 days (2012-13: 30 days).
49
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
870,417
787,713
88
1,186
173
1,728
873,592
560
12
31
1,541
789,857
Impairment allowance aged as follows
Not overdue
More than 90 days
(714)
(714)
Total impairment allowance
(714)
(714)
Other
receivables
$'000
Goods and
services
$'000
Total
$'000
-
714
714
714
714
Other
receivables
$'000
Goods and
services
$'000
Total
$'000
17,985
(17,985)
59
717
(62)
18,044
717
(18,047)
-
714
714
30 June
2014
$'000
30 June
2013
$'000
4,387
4,061
8,448
4,803
4,421
9,224
4,747
3,701
8,448
5,163
4,061
9,224
Note 9B Trade and other receivables (continued)
Trade and other receivables (gross) aged as follows
Not overdue
Overdue by:
0 to 30 days
31 to 60 days
61 to 90 days
More than 90 days
Total trade and other receivables (gross)
Reconciliation of the Impairment Allowance
Movements in relation to 2014
Opening balance
Increase/decrease recognised in net surplus
Amounts written off
Closing balance
Movements in relation to 2013
Opening balance
Increase/decrease recognised in net surplus
Amounts written off
Closing balance
Note 9C Other financial assets
Accrued revenue - goods and services
Lease incentives
Total other financial assets
Other financial assets expected to be recovered
No more than 12 months
More than 12 months
Total other financial assets
50
Notes to and forming part of the financial statements
Note 10
Non-financial assets
Note 10A Land and buildings
Land
Fair value
Total land
Buildings on freehold land
Work in progress
Fair value
Total buildings on freehold land
Leasehold improvements
Work in progress
Fair value
Accumulated depreciation
Total leasehold improvements
Total land and buildings
Note 10B Plant and equipment
Work in progress
Fair value
Accumulated depreciation
Total plant and equipment
30 June
2014
$'000
30 June
2013
$'000
336,333
321,471
336,333
321,471
253,320
424,956
138,362
465,426
678,276
603,788
31
7,717
(2,288)
351
7,871
-
5,460
1,020,069
8,222
933,481
587
15,998
(4,228)
12,357
9,207
7,353
16,560
The assets above have been valued on a fair value basis in accordance with the revaluation policy set out in Note 1.19.
The land and buildings revaluations were conducted by independent valuers as at 30 June 2014. Plant and equipment
were revalued as at 30 June 2013.
No land and buildings or plant and equipment are under finance lease.
No indicators of impairment were found for land and buildings or plant and equipment. There is no accumulated
impairment from previous years.
No land and buildings or plant and equipment are expected to be disposed of within the next 12 months.
Revaluation of non-financial assets
A revaluation increment for land of $14.6 million (2012-13: decrement of $2.7 million), a decrement for buildings on
freehold land of $3.3 million (2012-13: increment of $3.3 million), no adjustment for leasehold improvements (2012-13:
increment of $2.8 million) and an adjustment for plant and equipment of $nil (2012-13: increment of $0.9 million) were
credited to the asset revaluation reserve by asset class and included in the equity section of the Statement of Financial
Position.
A revaluation decrement for buildings on freehold land of $42.1 million was recognised in the operating result (2012-13:
increment of $36.5 million).
51
Notes to and forming part of the financial statements
Note 10C Reconciliation of the opening and closing balances of property, plant and equipment 2014
As at 1 July 2013
Gross book value
Total as at 1 July 2013
Land
$’000
Buildings
$’000
Leasehold
improvements
$’000
Total land
& buildings
$’000
Plant &
equipment
$’000
Total
$’000
321,471
321,471
603,788
603,788
8,222
8,222
933,481
933,481
16,560
16,560
950,041
950,041
Additions
Purchase or internally developed
Assets first found
Revaluations and impairments recognised in other comprehensive income
Revaluations recognised in net cost of services
Reclassification
Depreciation
Disposals
Transfers to agencies - other
Write-offs
Total as at 30 June 2014
275
14,587
-
258,288
(3,281)
(42,100)
(32)
(12,185)
32
(220)
(2,569)
258,320
275
11,306
(42,100)
(252)
(14,754)
949
41
(4,489)
259,269
275
11,306
(42,100)
(211)
(19,243)
336,333
(126,167)
(35)
678,276
(5)
5,460
(126,167)
(40)
1,020,069
(452)
(252)
12,357
(126,619)
(292)
1,032,426
Total as at 30 June 2014 represented by
Gross book value
Accumulated depreciation and impairment
336,333
-
678,276
-
7,748
(2,288)
1,022,357
(2,288)
16,585
(4,228)
1,038,942
(6,516)
Total as at 30 June 2014
336,333
678,276
5,460
1,020,069
12,357
1,032,426
52
Notes to and forming part of the financial statements
Note 10C Reconciliation of the opening and closing balances of property, plant and equipment 2013
As at 1 July 2012
Gross book value
Accumulated depreciation and impairment
Total as at 1 July 2012
Land
$’000
Buildings
$’000
Leasehold
improvements
$’000
Total land &
buildings
$’000
Plant &
equipment
$’000
Total
$’000
323,630
323,630
483,414
483,414
13,697
(5,498)
8,199
820,741
(5,498)
815,243
15,718
(4,532)
11,186
836,459
(10,030)
826,429
Additions
Purchase or internally developed
Assets first found
Revaluations and impairments recognised in other comprehensive income
Revaluations recognised in net cost of services
Reclassification
Depreciation
Disposals
From disposal of entities or operations (including restructuring)
Other
Total as at 30 June 2013
74
485
(2,718)
-
117,234
3,283
36,485
(21,603)
(11,134)
68
40
2,757
(46)
(2,796)
117,376
525
3,322
36,485
(21,649)
(13,930)
8,104
841
21,649
(4,000)
125,480
525
4,163
36,485
(17,930)
321,471
(3,891)
603,788
8,222
(3,891)
933,481
(21,182)
(38)
16,560
(25,073)
(38)
950,041
Total as at 30 June 2013 represented by
Gross book value
321,471
603,788
8,222
933,481
16,560
950,041
Total as at 30 June 2013
321,471
603,788
8,222
933,481
16,560
950,041
53
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
Note 10D Investment properties
Land and buildings
Land at fair value
Buildings at fair value
93,655
555,441
94,970
513,333
Total investment properties
649,096
608,303
Reconciliation of the opening and closing balances of investment properties
As at 1 July
608,303
582,857
43,736
-
23,251
(2,065)
Additions
By assets under construction
Transfer to land and buildings
Disposals
Movements recognised in operating results
Revaluation increment/(decrement)
Total as at 30 June
(2,943)
4,260
649,096
608,303
Rental income from investment properties was $10.5 million in 2013-14 (2012-13: $15.6 million). Operating expenses in
relation to these properties were $6.3 million in 2013-14 (2012-13: $6.5 million).
All formal revaluations are independent and are conducted in accordance with the revaluation policy stated in Note 1.19.
In 2013-14, the formal revaluations were conducted by Savills.
The net revaluation decrement of $2.9 million (2012-13: increment of $4.3 million) was recorded through the Statement
of Comprehensive Income.
Impairment losses of $nil (2012-13: $nil) were recorded through the Statement of Comprehensive Income.
Note 10E Intangibles
Computer software
Internally developed – in progress
Internally developed – in use
Purchased
Accumulated amortisation
Accumulated impairment losses
Total intangibles
52,597
44,834
14,797
(41,817)
(7,391)
43,964
54,281
25,242
(51,273)
(2,790)
63,020
69,424
Impairment losses of $4.6 million (2012-13: $nil) was recorded through the Statement of Comprehensive Income.
No intangibles are expected to be sold or disposed of within the next 12 months.
54
Notes to and forming part of the financial statements
Note 10F Reconciliation of the opening and closing balances of intangibles 2014
As at 1 July 2013
Gross book value
Accumulated amortisation and impairment
Total as at 1 July 2013
Additions
Purchase or internally developed
Reclassifications
Amortisation
Impairments recognised in net cost of services
Disposals
Restructuring
From disposal of entities or operations (including restructuring)
Write-offs
Total as at 30 June 2014
Total as at 30 June 2014 represented by
Gross book value
Accumulated depreciation and impairment
Total as at 30 June 2014
Computer
software
internally
developed
$’000
Computer
software
purchased
$’000
Total
$’000
98,245
(34,939)
25,242
(19,124)
123,487
(54,063)
63,306
6,118
69,424
10,595
211
(5,866)
(4,601)
110
(1,738)
-
10,705
211
(7,604)
(4,601)
(73)
(4,967)
58,605
(20)
(55)
4,415
(93)
(5,022)
63,020
97,431
(38,826)
14,797
(10,382)
112,228
(49,208)
58,605
4,415
63,020
Computer
software
internally
developed
$’000
Computer
software
purchased
$’000
Total
$’000
86,025
(29,569)
23,958
(17,142)
109,983
(46,711)
56,456
6,816
63,272
14,841
(5,573)
1,618
(2,316)
16,459
(7,889)
(2,041)
(377)
63,306
6,118
(2,041)
(377)
69,424
98,245
(34,939)
25,242
(19,124)
123,487
(54,063)
63,306
6,118
69,424
Reconciliation of the opening and closing balances of intangibles 2013
As at 1 July 2012
Gross book value
Accumulated amortisation and impairment
Total as at 1 July 2012
Additions
Purchase or internally developed
Amortisation
Disposals
Restructuring
Other
Total as at 30 June 2013
Total as at 30 June 2013 represented by
Gross book value
Accumulated depreciation and impairment
Total as at 30 June 2013
55
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
Note 10G Other non-financial assets
Prepayments
10,891
5,279
Total other non-financial assets
10,891
5,279
8,811
2,080
4,316
963
10,891
5,279
Note 11A Suppliers
Trade creditors and accruals
82,254
32,037
Total suppliers
82,254
32,037
Suppliers in connection with
Related parties
External parties
43,773
38,481
2,148
29,889
Total suppliers
82,254
32,037
Note 11B Unearned revenue
Related parties
External parties
Total unearned revenue
68,654
1,088
69,742
13,933
1,390
15,323
Unearned revenue expected to be settled
No more than 12 months
More than 12 months
Total unearned revenue
69,520
222
69,742
14,976
347
15,323
Note 11C Return of equity
Property special account - cash returns
Total return of equity
10,359
10,359
34,112
34,112
10,359
34,112
10,359
34,112
Other non-financial assets expected to be recovered
No more than 12 months
More than 12 months
Total other non-financial assets
No indicators of impairment were found for other non-financial assets.
Note 11
Payables
Settlement is usually made within 30 days.
Return of equity expected to be settled
No more than 12 months
Total return of equity
56
Notes to and forming part of the financial statements
30 June
30 June
2014
2013
$'000
$'000
Note 11D Other payables
Salaries and wages
Separations and redundancies
Lease incentives
Property management services
Other
3,729
140
1,484
504
3,406
596
196
1,317
1,122
Total other payables
5,857
6,637
Other payables expected to be settled
No more than 12 months
More than 12 months
5,773
84
6,510
127
Total other payables
5,857
6,637
Note 12A Employee Provisions
Long service leave
Other leave
30,475
24,592
31,505
25,333
Total employee provisions
55,067
56,838
Employee provisions expected to be settled
No more than 12 months
More than 12 months
43,321
11,746
48,158
8,680
Total employee provisions
55,067
56,838
351,956
(22,533)
329,423
314,497
(19,327)
295,170
110,428
218,995
106,499
188,671
329,423
295,170
Note 12
Provisions
Note 12B Outstanding insurance claims provisions
Outstanding claims - general insurance business
Gross expected future claims payable
Discount to present value
Total outstanding insurance claims
Outstanding insurance claims expected to be settled
No more than 12 months
More than 12 months
Total outstanding insurance claims
57
Notes to and forming part of the financial statements
30 June
Note 12C Other provisions
Provision for remediation costs
Make good costs1
30 June
2014
2013
$'000
$'000
790
800
5,911
887
5,610
-
Total other provisions
7,588
6,410
Other provisions expected to be settled
No more than 12 months
More than 12 months
4,833
2,755
5,250
1,160
Total other provisions
7,588
6,410
Property remediation
Excess lease space3
costs2
As at 1 July 2013
Additional provisions made
Amounts used
Unwinding of discount or change in discount
rate
Total as at 30 June 2014
1Finance
Make good
costs
$’000
800
(40)
Property
remediation
costs
$’000
5,610
301
-
Excess
lease space
$’000
887
-
Total
$’000
6,410
1,188
(40)
30
790
5,911
887
30
7,588
currently has three agreements for the leasing of premises that have provisions requiring Finance to restore the
premises to their original condition at the conclusion of the lease. Finance has made a provision to reflect the present
value of these obligations.
2 The Australian Government domestic property portfolio managed by Finance has approximately 105 properties. A small
number of properties have potential remediation issues identified that are currently the subject of further investigation. A
provision for remediation costs is raised when conditions for legal or constructive obligation have been met and there is a
reliable estimate of the obligation available at 30 June 2014.
3 Finance has reviewed the leasing of all premises for surplus space and has recognised a provision in relation to one
premise. Finance has made a provision to reflect the present value of this surplus space.
58
Notes to and forming part of the financial statements
Note 13
Restructuring
Note 13A Departmental restructuring
2014
2014
AUSPIC photographic
Deregulation function
Services
DPS1
PM&C2
$'000
$'000
FUNCTIONS RELINQUISHED
Assets relinquished
Financial assets
Non-financial assets
Total assets relinquished
-
93
93
Liabilities relinquished
Payables
Provisions
Total liabilities relinquished
-
1,969
1,969
Net (assets)/liabilities relinquished3
-
1,876
There were no functions assumed by Finance during the reporting period.
1
The transfer of the AUSPIC Photographic Services function to the Department of Parliamentary Services effective 12
September 2013. Assets transferred had no value in Finance’s financial statements.
2 The transfer of the deregulation function to the Department of the Prime Minister and Cabinet effective 18 September
2013.
3 The net (assets)/liabilities relinquished to all entities in 2013-14 were ($1.9 million) (2012-13: $nil). In respect of
functions relinquished, the net book value of assets and liabilities were transferred to the entity for no consideration.
Note 13B Administered restructuring
FUNCTION RELINQUISHED
Assets relinquished
Financial assets
Non-financial assets
Total assets relinquished
Net (assets)/liabilities relinquished3
2014
2013
Administration of multi-function
devices
Moorebank
Intermodal
Company
DPS1
$'000
DoIT2
$'000
196
5,000
196
5,000
(196)
(5,000)
1
The transfer of the administration of multi-function devices to the Department of Parliamentary Services effective 1 July
2013.
2 The
3
transfer of the Moorebank Intermodal Company to the former Department of Infrastructure and Transport (DoIT).
The net (assets)/liabilities relinquished in 2013-14 were ($0.2) million (($5.0) million in 2012-13). In respect of functions
relinquished, the net book values of assets and liabilities were transferred for no consideration.
59
Notes to and forming part of the financial statements
Note 14
30 June
30 June
2014
2013
$'000
$'000
Cash flow reconciliation
Reconciliation of cash and cash equivalents as per statement of
financial position to cash flow statement
Cash and cash equivalents as per
Cash flow statement
Statement of financial position
Discrepancy
Reconciliation of net cost of services to net cash from/(used by)
operating activities
Net (cost of)/contribution by services
Revenue from Government
Income tax expense
Adjustments for non-cash items
Net losses from sale of assets
Revaluation increment - investment properties
Revaluation increment - buildings
Assets first found
Depreciation/amortisation
Non-financial assets write-down
Movements in assets and liabilities
Assets
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in other financial assets
(Increase)/Decrease in other non-financial assets
Liabilities
Increase/(Decrease) in employee provisions
Increase/(Decrease) in other provisions
Increase/(Decrease) in outstanding insurance claims
Increase/(Decrease) in other payables - unearned revenue
Increase/(Decrease) in other payables - other
Increase/(Decrease) in supplier payables
Net cash from/(used by) operating activities
60
9,300
9,300
3,284
3,284
-
-
(352,895)
261,688
(5,856)
(206,280)
274,448
(5,542)
(5,414)
(275)
26,847
60,372
2,394
(4,260)
(36,485)
(525)
25,819
375
(32,284)
776
(5,612)
(24,247)
190
(1,695)
198
1,178
34,253
54,419
(780)
11,271
(1,542)
51
38,111
(44,131)
(4,803)
1,873
47,886
13,751
Notes to and forming part of the financial statements
Note 15
Contingent assets and liabilities
Claims for damages or
costs
Total
2014
$'000
2013
$'000
2014
$'000
2013
$'000
Contingent assets
Balance from previous period
Total contingent assets
57
57
57
57
57
57
57
57
Net contingent assets/(liabilities)
57
57
57
57
Quantifiable contingent assets
Sharjade v Darwinia - Breach of Heads of Agreement between parties
The contingent asset is estimated to be $0.057 million. The Sharjade claim was decided in the Commonwealth’s favour
in the NSW Court, Supreme Court and the appeal dismissed in the High Court. Finance is now seeking to recover costs
supported by a bank guarantee.
Unquantifiable contingent assets
Davis Samuel case
Finance is seeking to recover funds which were misappropriated during 1998. The judgement, handed down on 1 August
2013, found in favour of Finance in its claims against the defendants. Final orders are yet to be made. The Court
extended the time for appeals to 28 days after final orders are made.
Judges of the Federal Circuit Court of Australia Pension Recovery of Costs
The Judges of the Federal Circuit Court of Australia legal challenge relating to superannuation entitlements (Baker & Ors
v The Commonwealth) heard in the Federal Court was decided in favour of the Commonwealth in August 2012. The
Court ordered that the applicants should pay the Commonwealth’s costs. At this stage the costs have not been
recovered and the amount to be recovered cannot be reliably quantified at this stage.
Unquantifiable contingent liabilities
General remediation costs
The Australian Government domestic property portfolio managed by Finance has approximately 105 properties. A small
number of properties have potential remediation issues identified that are currently the subject of further investigation.
Except to the extent a provision for remediation costs has been raised in Note 12C, to date the majority of these
properties have not had a provision recognised as neither the conditions for legal or constructive obligation have been
met nor is there a reliable estimate of the obligation available at 30 June 2014.
Comcover insurance claims
The Department of Finance (Finance) through Comcover, the Australian Government’s general insurance fund, provides
insurance and risk management services to the Australian Government general government sector. In the normal course
of business, Finance has contingent liabilities from claims that are subject to litigation. At the date of this report, the
outcomes of any such claims are not likely to have a material effect on the net assets of Finance. Provisions are made
for obligations that are probable and quantifiable.
Current construction projects
There is a potential liability for costs relating to delays or rectification of some projects.
Davis Samuel case
Finance was subject to a counter claim for damages in legal action before the ACT Supreme Court. The judgement,
handed down on 1 August 2013, dismissed the counter claim. Final orders are yet to be made. The Court extended the
time for appeals to 28 days after final orders are made.
Significant remote contingencies
Finance does not have any significant remote contingencies.
61
Notes to and forming part of the financial statements
Note 16
General insurance activities
Accounting estimates and judgements
(a)
The ultimate liability arising from claims made under the insurance contracts
The outstanding claims liability is the estimated cost of claims incurred but not settled at the balance date. This provision
consists of estimates of both the expected ultimate cost of claims notified to Finance as well as the expected ultimate
cost of claims incurred but not reported (IBNR) to Finance. The estimated cost of claims includes indirect expenses that
are expected to be incurred in settling those claims.
Finance takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. The
claim estimates and judgements are regularly evaluated and updated based on historical experience and other factors.
However, given the uncertainty in the estimation process, it is likely that the final outcome will prove to be different from
the original liability established.
Long tail classes of business such as Liability and Professional Indemnity, where claims settlement may not happen for
many years after the event giving rise to the claim, typically display greater variability between initial estimates and final
settlement due to delays in notifications becoming claims, uncertainty in respect of court awards and future claims
inflation.
The outstanding claims liability is determined based on three building blocks being:



a central estimate of the future cash flows;
discounting for the effect of the time value of money; and
a risk margin for uncertainty.
Future cash flows
In calculating the estimated cost of unpaid claims, Finance uses a variety of estimation techniques. These techniques are
generally based upon statistical analyses of historical experience, which assumes that the development pattern of the
current claims will be reasonably consistent with experience.
Allowance is made, however, for changes or uncertainties that may create distortions in the underlying statistics or that
might cause the cost of unsettled claims to increase or decrease when compared with the cost of previously settled
claims including:





changes in the economic, legal, political and social environment;
changes in the mix of business;
changes in medical and technological development;
changes in benefit structures or policy coverage; and
changes in claims management practice.
Different actuarial valuation models are used for different claims types and lines of business. The selection of the
appropriate actuarial model takes into account the characteristics of a claim type and class of business and the extent of
the development of each past accident period.
Future cash flows are calculated gross of all recoveries. A separate estimate is made of the amounts that will be
recoverable from third parties (including decreasing adjustments) and from reinsurers, based upon the gross provisions.
An allowance for future claims handling expense is also added to the future cash flows.
Discounting
Projected future claims payments, both gross and net of reinsurance and other recoveries, and associated claims
handling costs are discounted to a present value at the balance date using risk free discount rates.
62
Notes to and forming part of the financial statements
Note 16
General insurance activities (continued)
Risk Margin
The central estimate of the future cash flows is an estimate which is intended to contain no deliberate or conscious over
or under estimation and is commonly described as providing the mean of the distribution of future cash flows. It is
considered appropriate to add a risk margin to the central estimate in order for the outstanding claims liability to have an
increased probability of sufficiency.
Uncertainties surrounding the outstanding claims liability estimation process include those relating to the data, actuarial
models and assumptions, the statistical uncertainty associated with a general insurance claims runoff process, and risks
external to Finance. These uncertainties are examined for each class of business and expressed as a volatility measure
relative to the net central estimate. Considerations of Finance’s risk appetite are also made in the determination of risk
margin.
The risk margin is assessed by examining the historical variability of the claims experience, considering industry studies
and benchmarks, and applying actuarial judgement, especially in respect of uncertainties not reflected in the claims data.
This assessment is performed for each class of business. Diversification benefit is allowed for, with consideration given
to industry studies and benchmarks.
(b)
Actuarial methods
The risks covered by Finance can be classified into the following groups:
 Short Tail classes
o
Property
o
Commercial motor vehicle
o
Miscellaneous (including accident and other classes)

Long Tail classes
o
Public liability (including Directors and Officers and medical malpractice)
o
Professional indemnity
o
Aviation and marine liability
Both public liability and professional indemnity risks are on a ‘claims made’ basis, whereas all other risks are on a ‘claims
incurred’ basis.
Short Tail classes
These portfolios contain claims that are typically reported and settled within one year of being incurred. At least two
actuarial methods are used to estimate the outstanding claims with the final estimate based on actuarial advice.
Separate analyses are carried out for small and large claims.
The methods adopted are standard actuarial methods that are based on claim numbers and average claim sizes,
incurred claims development patterns or initial expected loss ratios. Projected payments are discounted to allow for the
time value of money.
Long Tail classes
These portfolios contain claims that are typically reported and settled more than one year after being incurred. A range of
actuarial methods are used with at least two different methods being applied to most portfolios. Separate analyses were
carried out for the incurred costs of claims capped at a defined limit and any incurred costs above the cap.
The estimates of outstanding claims are derived from methods that are based on claim numbers and average claim
sizes, incurred claims development patterns or initial expected loss ratios. The above capped component is highly
variable due to the sparse claims experience. It is less suited to estimation by statistical analysis and hence any
assessment of its contribution to the outstanding claims liability carries a greater judgemental component.
Claims inflation is incorporated into the resulting projected payments for each portfolio, to allow for both general
economic inflation as well as any superimposed inflation detected in the modelling of payments experience.
Superimposed inflation arises from non-economic factors such as developments of legal precedent. Some methods
applied do not make specific allowance for inflation as it is included implicitly in other assumptions. Projected payments
are discounted to allow for the time value of money.
63
Notes to and forming part of the financial statements
Note 16
General insurance activities (continued)
(c)
Key actuarial assumptions
The key actuarial assumptions for the determination of the outstanding claims liabilities are set out in the table below.
Assumption
Classes
Claims handling expense
Discount rate
All classes
All classes
Public liability and professional
indemnity aviation and marine liability
Property, motor vehicle and
miscellaneous
All classes
Public liability and professional
indemnity aviation and marine liability
Property, motor vehicle and
miscellaneous
Property, public liability and
professional indemnity
Public liability (above cap)
Professional indemnity (above cap)
Professional indemnity
Property (large claims)
Public liability
Weighted average expected term
to settlement (years)
Claims inflation
Projected ultimate cost of very
large claims/events
Bornhuetter-Ferguson loss ratio
Average claim size
(capped component)
2014
2013
3.6%
2.5% to 5.2%
1.9%
2.4% to 5.2%
2.37 to 2.87
2.41 to 2.56
0.35 to 1.59
0.38 to 1.62
2.47
2.21
4.0%
4.0% to 4.3%
2.8%
3.0%
$156,259,166
$115,420,118
30% to 55%
75% to 86%
14% to 40%
75% to 77%
30% to 55%
75% to 85%
15% to 40%
77% to 90%
$12,757
$14,025
Figures are in current values at the time of estimation, i.e. assumptions as at 30 June 2014 are in 30 June 2014 values,
whilst those as at 30 June 2013 are in 30 June 2013 values.
The projected ultimate cost of very large claims/events refer to claims/events that have significant open reserves as at
the reporting date.
In addition to specific allowances for known claims and events, there is a general allowance for very large claims that
have not yet emerged. This allowance is incorporated within the Bornhuetter-Ferguson loss ratio and the cost
development pattern for Professional Indemnity (above cap).
(d)
Process used to determine actuarial assumptions
Claims handling expense
Claims handling expenses are calculated by reference to Finance’s claims handling remuneration agreement for direct
expenses and internal costs for indirect expenses.
Discount rate
Projected payments are discounted at a risk free rate to allow for the time value of money. Discount rates are derived
from market yields on Commonwealth Government securities at the reporting date.
Claims inflation
Claims inflation is incorporated into the resulting projected payments to allow for both expected levels of economic
inflation and superimposed inflation. Economic inflation is based on economic indicators such as the consumer price
index and/or increases in average weekly earnings. Results of the investigations of past claims inflation in excess of
wage inflation, referred to as superimposed inflation, indicated no evidence of superimposed inflation.
Average weighted term to settlement
The average weighted term to settlement is calculated by class of business and is based on historic payment patterns.
Average claim size (capped component of public liability class)
The average claim size assumptions for the capped component of claims costs have been based on the results of an
investigation into Comcover claims experience.
Bornhuetter-Ferguson loss ratios
The Bornhuetter-Ferguson loss ratios have been based on investigations of Comcover’s claims experience, with
consideration also given to differences in premium levels between different years.
Very large claims
There have been numerous claims reported over which there is a degree of uncertainty. The ultimate cost of these
claims has been determined with regard to the circumstances of the claims and available data.
64
Notes to and forming part of the financial statements
Note 16
(e)
General insurance activities (continued)
Sensitivity analysis
Finance has conducted a sensitivity analysis to quantify the impact of changes in the key underlying assumptions on the Statement of Comprehensive Income. The sensitivity analyses
have been performed for each variable independently of all other changes and are net of reinsurance and other recoveries. The table below describes how a change in each
assumption will affect the Statement of Comprehensive Income.
Movement
+1%
-1%
+1%
-1%
+1%
-1%
30 June
2014
$'000
(3,182)
3,182
6,947
(7,296)
(5,714)
5,537
30 June
2013
$'000
(2,876)
2,876
5,813
(6,090)
(4,377)
4,252
All Classes
All Classes
+10%
-10%
(10,705)
10,705
(8,464)
8,464
Public liability
Public liability
+10%
-10%
(3,916)
3,916
(3,763)
3,763
Professional indemnity
Professional indemnity
+10%
-10%
(5,812)
5,812
(4,490)
4,490
Average claim size (capped component)
Public liability
Public liability
+10%
-10%
(785)
785
(1,048)
1,048
Bornhuetter-Ferguson loss ratios (capped)
Professional indemnity
Professional indemnity
Property
Property
+10%
-10%
+10%
-10%
(167)
167
(862)
862
(132)
132
(787)
787
Assumption
Classes
Claims handling expense
All Classes
All Classes
All Classes
All Classes
Public liability and professional indemnity
Public liability and professional indemnity
Discount rate
Claims inflation
Outstanding claims cost of very large claims/events
Bornhuetter-Ferguson loss ratios (above cap)
Bornhuetter-Ferguson loss ratios (large claims)
The movement in assumptions for claims handling expenses, discount rate and claims inflation are the absolute movement in the assumption (e.g. +1% increases the claims handling
expenses from 3.6% to 4.6%) while the movement for other assumptions is a pro-rata change to the assumption.
The most significant change to the net outstanding claims liability is the allowance for very large claims/events.
65
Notes to and forming part of the financial statements
Note 16
(f)
General insurance activities (continued)
Net claims incurred table
2013-14
2012-13
Current
year
$'000
Prior year
$'000
Total
$'000
Current year
$'000
Prior year
$'000
Total
$'000
Direct business expenses
Gross claims incurred and related expenses - undiscounted
Reinsurance and other recoveries - undiscounted
Net claims incurred - undiscounted
139,833
(850)
(32,581)
(5,710)
107,252
(6,560)
82,724
(791)
19,745
(4,280)
102,469
(5,071)
138,983
(38,291)
100,692
81,933
15,465
97,398
Discount and discount movement - gross claims incurred
Discount and discount movement - reinsurance and other recoveries
Net discount movement
(11,248)
6
(11,242)
8,043
(35)
8,008
(3,205)
(29)
(3,234)
(6,450)
4
(6,446)
(5,390)
(88)
(5,478)
(11,840)
(84)
(11,924)
Net claims incurred
127,741
(30,283)
97,458
75,487
9,987
85,474
13,919
-
13,919
6,087
-
6,087
Other underwriting expenses
Other underwriting expenses
Claims background
Claims paid 2013-14 policy year
Claims paid prior policy years
Claims not settled
Estimated claims incurred but not reported
66
$'000
9,994
59,800
125,914
203,509
Notes to and forming part of the financial statements
Note 16
(g)
General insurance activities (continued)
Outstanding claims liability
Gross central estimate
Risk margin
Gross outstanding claims liability
Risk margin adopted
Probability of adequacy of the risk margin
Gross outstanding claims liability - current
Gross outstanding claims liability - non-current
Total gross outstanding claims liability
Reinsurance and other recoveries - current
Reinsurance and other recoveries - non current
Total reinsurance and other recoveries receivable
Net outstanding claims liability
2014
$'000
2013
$'000
275,921
53,502
329,423
244,166
51,004
295,170
19.4%
75.0%
20.9%
75.0%
110,428
218,995
329,423
106,499
188,671
295,170
18,233
3,163
21,396
12,952
4,714
17,666
308,027
277,504
The following average inflation rates and discount rates were used in measuring the outstanding claims liability.
Claims expected to be paid:
Not later than one year
Later than one year
Inflation rate
Discount rate
2.8% to 4.0%
2.5% to 2.5%
Inflation rate
Discount rate
2.8% to 4.0%
2.5% to 5.2%
Reconciliation of changes in net discounted liability
Balance as at 1 July 2013
Current year claims incurred
Change in prior years outstanding claims liability
Current year claims paid
Prior years claims paid
Effect of change in discount rate
Balance as at 30 June 2014
67
Gross
$'000
Reinsurance
and other
recoveries
$'000
295,170
128,585
(26,854)
(9,994)
(59,800)
2,316
329,423
(17,666)
(844)
(5,731)
356
2,503
(14)
(21,396)
Net
$'000
277,504
127,741
(32,585)
(9,638)
(57,297)
2,302
308,027
Notes to and forming part of the financial statements
Note 16
(h)
General insurance activities (continued)
Claims development table
Prior
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
At end of accident year
58,575
69,131
60,543
55,992
61,744
140,720
75,473
80,736
135,239
One year later
74,992
72,995
56,296
50,162
55,743
120,360
82,113
71,952
Two years later
73,810
64,753
52,022
53,726
52,540
109,972
76,571
Three years later
64,399
59,706
55,135
48,509
80,620
97,721
Four years later
64,386
60,625
51,773
49,955
73,591
Five years later
61,741
61,793
51,729
50,293
Six years later
53,449
60,866
48,234
Seven years later
53,005
59,858
Eight years later
53,222
Estimate of gross ultimate claims costs
53,222
59,858
48,234
50,293
73,591
97,721
76,571
71,952
135,239
(53,002)
(50,292)
(42,584)
(40,631)
(35,593)
(65,414)
(32,558)
(24,362)
(9,994)
29,510
220
9,566
5,650
9,662
37,998
32,307
44,013
47,590
125,245
153
8
243
198
305
1,207
765
1,242
1,480
4,594
10,195
(385)
(3)
(322)
(190)
(332)
(1,510)
(1,592)
(3,021)
(3,930)
(11,248)
(22,533)
29,278
225
9,487
5,658
9,635
37,695
31,480
42,234
45,140
118,591
329,423
Current estimate of ultimate claims cost
Cumulative payments to date
Gross outstanding claims liability undiscounted
Claim handling expense
Discounting impact
341,761
Total gross outstanding claims liability discounted
68
Notes to and forming part of the financial statements
Note 16
General insurance activities (continued)
Prior
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
At end of accident year
56,126
64,329
58,590
54,512
61,063
139,980
73,251
79,945
134,389
One year later
72,476
68,745
55,193
49,437
55,036
119,463
80,737
71,270
Two years later
68,035
58,046
50,998
53,002
51,670
108,989
75,064
Three years later
62,476
55,802
53,913
47,664
79,640
96,694
Four years later
61,263
56,381
49,633
49,045
72,201
Five years later
58,654
56,869
49,580
49,381
Six years later
49,954
54,699
46,221
Seven years later
46,442
54,615
Eight years later
46,659
Estimate of net ultimate claims costs
46,659
54,615
46,221
49,381
72,201
96,694
75,064
71,270
134,389
(46,438)
(47,753)
(40,571)
(39,722)
(34,203)
(64,436)
(31,056)
(23,751)
(9,638)
11,103
221
6,862
5,650
9,659
37,998
32,258
44,008
47,519
124,751
153
8
243
198
305
1,207
765
1,242
1,480
4,594
10,195
(161)
(3)
(218)
(190)
(332)
(1,510)
(1,592)
(3,021)
(3,928)
(11,242)
(22,197)
11,095
226
6,887
5,658
9,632
37,695
31,431
42,229
45,071
118,103
308,027
Current estimate of ultimate claims cost
Cumulative payments to date
Net outstanding claims liability undiscounted
Claim handling expense
Discounting impact
320,029
Total net outstanding claims liability discounted
69
Notes to and forming part of the financial statements
Note 17
30 June
30 June
2014
2013
$
$
Senior executive remuneration
Note 17A Senior executive remuneration expenses for the reporting period
Short-term employee benefits
Salary
Executive vehicle scheme
Other benefits
Total short-term employee benefits
13,547,737
1,632,779
361,540
17,073,679
1,832,866
560,032
15,542,056
19,466,577
Post-employment benefits
Superannuation
Total post-employment benefits
3,361,038
3,472,578
3,361,038
3,472,578
Other long-term benefits
Annual leave
Long service leave
Total other long-term benefits
1,230,569
474,311
1,645,591
945,297
1,704,880
2,590,888
433,226
433,226
538,387
538,387
21,041,200
26,068,430
Termination benefits
Separation and redundancies
Total termination benefits
Total senior executive remuneration expenses
1. Note 17A is prepared on an accrual basis.
2. Note 17A excludes acting arrangements and part-year service where total remuneration expensed as a senior
executive was less than $195,000.
70
Notes to and forming part of the financial statements
Note 17B Average annual reportable remuneration paid to substantive senior executives during the reporting period
Average annual reportable remuneration paid to substantive senior executives in 2014
Substantive
senior
Average annual reportable remuneration1
executives
No.
Total reportable remuneration (including part-time arrangements)
Less than $195,000
$195,000 to $224,999
$225,000 to $254,999
$255,000 to $284,999
$285,000 to $314,999
$315,000 to $344,999
$345,000 to $374,999
$375,000 to $404,999
$405,000 to $434,999
$1,275,000 to $1,304,999
Total number of substantive senior executives
1
16
27
23
12
6
2
2
2
1
1
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Total
reportable
remuneration
$
90,047
179,984
204,855
226,698
250,362
289,848
293,011
336,105
343,206
868,830
15,116
32,066
34,027
42,099
48,113
39,518
62,986
66,496
65,017
435,988
673
287
5,331
5,160
-
105,163
212,050
239,555
269,084
298,475
334,697
361,157
402,601
408,223
1,304,818
92
This table reports substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the
band. No bonuses were paid to senior executives during the current or previous financial year.
2 'Reportable salary' includes the following:
a) gross payments;
b) reportable fringe benefits (at the net amount prior to 'grossing up' for tax purposes);
c) reportable employer superannuation contributions; and
d) exempt foreign employment income.
3 The 'contributed superannuation' amount is the average cost to the entity for the provision of superannuation benefits to substantive senior executives in that reportable remuneration
band during the reporting period.
4 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.
71
Notes to and forming part of the financial statements
Note 17B Average annual reportable remuneration paid to substantive senior executives during the reporting period (continued)
Average annual reportable remuneration paid to substantive senior executives in 2013
Average annual reportable remuneration1
Total reportable remuneration (including part-time arrangements)
Less than $195,000
$195,000 to $224,999
$225,000 to $254,999
$255,000 to $284,999
$285,000 to $314,999
$315,000 to $344,999
$345,000 to $374,999
$375,000 to $404,999
$645,000 to $674,999
Total number of substantive senior executives
1
Substantive
senior
executives
No.
27
31
24
14
5
3
2
3
1
110
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Total reportable
remuneration
$
94,080
177,477
200,654
224,982
245,010
277,666
308,020
324,506
556,203
16,199
31,524
35,405
42,378
50,511
52,237
54,598
63,799
104,242
240
2,080
-
110,279
209,001
236,059
267,600
297,601
329,903
362,618
388,305
660,445
This table reports substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the
band. No bonuses were paid to senior executives during the current or previous financial year.
2 'Reportable salary' includes the following:
a) gross payments;
b) reportable fringe benefits (at the net amount prior to 'grossing up' for tax purposes);
c) reportable employer superannuation contributions; and
d) exempt foreign employment income.
3 The 'contributed superannuation' amount is the average cost to the entity for the provision of superannuation benefits to substantive senior executives in that reportable remuneration
band during the reporting period.
4 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.
72
Notes to and forming part of the financial statements
Note 17C Average annual reportable remuneration paid to other highly paid staff during the reporting period
Average annual reportable remuneration paid to other highly paid staff in 2014
Average annual reportable remuneration1
Total reportable remuneration (including part-time arrangements)
$195,000 to $224,999
$225,000 to $254,999
$255,000 to $284,999
Total number of other highly paid staff
Other highly
paid staff
No.
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Total reportable
remuneration
$
5
1
2
8
176,891
226,856
235,023
28,119
26,040
29,489
3,440
-
208,450
252,896
264,512
Other highly
paid staff
No.
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Total reportable
remuneration
$
4
6
1
11
156,463
211,755
241,627
49,252
26,229
31,969
1,343
2,717
-
207,058
240,701
273,596
Average annual reportable remuneration paid to other highly paid staff in 2013
Average annual reportable
remuneration1
Total reportable remuneration (including part-time arrangements)
$195,000 to $224,999
$225,000 to $254,999
$255,000 to $284,999
Total number of other highly paid staff
1
This table reports staff: a) who were employed by the entity during the reporting period; b) whose reportable remuneration was $195,000 or more for the reporting period; and c) were
not required to be disclosed in Table B or director disclosures.
Each row is an averaged figure based on headcount for individuals in the band.
A number of the staff captured in this table acted as SES (2013-14: 2, 2012-13: 2) or were deployed overseas and received foreign employment income (2013-14: 6, 2012-13: 8). No
bonuses were paid to other highly paid staff during the current or previous financial year.
2
'Reportable salary' includes the following: a) gross payments; b) reportable fringe benefits (at the net amount prior to 'grossing up' for tax purposes); c) reportable employer
superannuation contributions; and d) exempt foreign employment income.
3
The 'contributed superannuation' amount is the average cost to the entity for the provision of superannuation benefits to other highly paid staff in that reportable remuneration band
during the reporting period.
4
'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.
73
Notes to and forming part of the financial statements
30 June
30 June
2014
2013
$'000
$'000
668
710
668
710
1,378
1,378
Note 19A Categories of financial instruments
Financial assets
Loans and receivables
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total loans and receivables
9,300
46,766
4,387
60,453
3,284
13,093
4,751
21,128
Total financial assets
60,453
21,128
82,254
1,837
32,037
1,612
84,091
33,649
84,091
33,649
Note 19B Net gains or losses on financial assets
Loans and receivables
Impairment
Net gains/(losses) on loans and receivables
-
(717)
(717)
Net gains/(losses) on financial assets
-
(717)
Note 18
Remuneration of auditors
Financial statement audit services were provided free of charge to Finance by the
Australian National Audit Office (ANAO).
Fair value of services received
Financial statement audit services
Whole-of-Government financial statements audit services
Total fair value of services received
No other services were provided by the auditors of the financial statements.
Note 19
Financial instruments
Financial liabilities
Financial liabilities measured at amortised cost
Suppliers
Other payables
Total financial liabilities measured at amortised cost
Total financial liabilities
The net expense from financial assets not at fair value from profit and loss for 2013-14 is $nil (2012-13: $0.7 million).
Note 19C Net gains or losses on financial liabilities
There were no net gains or losses from financial liabilities not at fair value through profit and loss for the current and
comparative years.
74
Notes to and forming part of the financial statements
Note 19D Fee income and expense
There was no net income or expense relating to financial instruments for the current and comparative years.
Note 19E Fair value of financial instruments
The carrying values of Finance's financial assets and liabilities are a reasonable approximation of their fair values.
Note 19F Financial liabilities designated at fair value through profit and loss
Finance has no financial liabilities designated at fair value through profit and loss.
Note 19G Financial assets reclassified
No financial assets were reclassified in the current or prior year.
75
Notes to and forming part of the financial statements
Note 19H Credit risk
Finance is exposed to minimal credit risk. The maximum exposure to credit risk is to the risk that arises from the
potential default of a debtor. This amount is equal to the total amount of financial assets (2014: $60.5 million and 2013:
$21.1 million). Finance’s maximum exposure to credit risk at reporting date in relation to each class of recognised
financial assets is the carrying amount of those assets as indicated in the statement of financial position.
Credit terms for trade and other receivables are generally net 30 days. Loans are made under contract with varying
terms to maturity and fixed interest rates.
The credit risk is assessed as minimal. Finance holds no collateral to mitigate against credit risk.
The following table illustrates Finance's gross exposure to credit risk, excluding any collateral or credit
enhancements.
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total
Financial liabilities
Suppliers
Other payables
Total
30 June
2014
$'000
30 June
2013
$'000
9,300
46,766
4,387
3,284
13,093
4,751
60,453
21,128
(82,254)
(1,837)
(32,037)
(1,612)
(84,091)
(33,649)
Credit quality of financial assets not past due or individually determined as impaired
Not past due
nor impaired
2014
$'000
Not past due
nor impaired
2013
$'000
Past due or
impaired
2014
$'000
Past due or
impaired
2013
$'000
9,300
44,305
4,387
57,992
3,284
11,663
4,751
19,698
2,461
2,461
1,430
1,430
Ageing of financial assets that were past due but not impaired for 2014
0 to 30
31 to 60
61 to 90
days
days
days
$'000
$'000
$'000
90+
days
$'000
Total
$'000
173
173
1,014
1,014
2,461
2,461
61 to 90
days
$'000
90+
days
$'000
Total
$'000
31
31
827
827
1,430
1,430
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total
Trade and other receivables
Total
88
88
1,186
1,186
Ageing of financial assets that were past due but not impaired for 2013
0 to 30
31 to 60
days
days
$'000
$'000
Trade and other receivables
Total
76
560
560
12
12
Notes to and forming part of the financial statements
There are no financial assets that have been assessed as impaired.
Note 19I Liquidity risk
Finance's financial liabilities are trade creditors, other payables, and other interest bearing liabilities. The exposure to
liquidity risk is based on the notion that Finance will encounter difficulty in meeting its obligations associated with
financial liabilities. This is highly unlikely due to appropriation funding, mechanisms available to Finance (e.g. Advance
to the Finance Minister) and internal policies and procedures put in place to ensure there are appropriate resources to
meet its financial obligations.
Finance is appropriation funded from the Australian Government. Finance manages its funds to ensure it has
adequate funds to meet payments as they fall due. In addition, Finance has policies in place to ensure payments are
made when due and has no experience of default.
The following tables illustrate the maturities for financial liabilities.
Maturities for non-derivative financial liabilities 2014
On
Within 1
demand
year
$'000
$'000
82,254
Suppliers
1,837
Other payables
Total
84,091
1 to 2
years
$'000
-
2 to 5
years
$'000
-
>5
years
$'000
-
Total
$'000
82,254
1,837
84,091
Maturities for non-derivative financial liabilities 2013
On
Within 1
demand
year
$'000
$'000
1 to 2
years
$'000
2 to 5
years
$'000
>5
years
$'000
Total
$'000
-
-
-
32,037
1,612
33,649
Suppliers
Other payables
Total
16,908
231
17,139
15,129
1,381
16,510
Finance has no derivative financial liabilities in either the current or prior year.
Note 19J Market risk
Finance holds basic financial instruments that are not exposed to significant market risks. Finance is not exposed to
currency risk or other price risk.
The only interest bearing items on the statement of financial position are loans and other interest bearing liabilities.
Loans bear interest at a fixed rate and will not fluctuate due to changes in the market interest rate.
Note 19K Assets pledged/or held as collateral
Finance has not pledged any assets as collateral, nor does it hold any assets as collateral.
Note 19L Concessional loans
Finance has no concessional loans.
77
Notes to and forming part of the financial statements
Note 20
30 June
30 June
2014
2013
$'000
$'000
Financial assets reconciliation
Notes
Total financial assets as per statement of financial position
Less: Non-financial instrument components
Appropriations receivable
Reinsurance and other recoveries
GST receivable from the Australian Taxation Office
Accrued lease revenue
Insurance debtor receivable
Lease incentives
Total non-financial instrument components
Total financial assets as per financial instruments note
78
9B
9B
9B
9C
9B
9C
890,626
801,651
801,806
21,396
2,910
4,061
830,173
637,251
17,666
2,583
52
118,550
4,421
780,523
60,453
21,128
Notes to and forming part of the financial statements
Note 21
30 June
2014
$'000
30 June
2013
$'000
Administered expenses
Note 21A Employee benefits
165,360
168,262
Superannuation
Defined contribution plans
22,981
22,478
Defined benefit plans
Leave and other entitlements
10,198
15,221
10,262
15,450
Separations and redundancies
Fringe benefits tax
20,011
9,652
3,817
8,644
Other employee expenses
Increase in post employment benefits liability
7,693
56,334
7,997
-
307,450
236,910
Commonwealth Superannuation Scheme
3,152,987
2,750,776
Public Sector Superannuation Scheme
Parliamentary Contributory Superannuation Scheme
4,678,380
56,161
5,061,556
57,349
4,471
88,500
672
88,000
Wages and salaries
Total employee benefits
Note 21B Superannuation
Governor-General Pension Scheme
Judges' Pensions Scheme
758
739
7,981,257
7,959,092
Printing and stationery
31,823
23,163
Fees and charges
Travel expenses
22,951
54,058
25,509
57,300
Property operating expenses
COMCAR operating expenses
16,336
3,496
11,379
3,637
Communication and other office expenses
Outsourcing costs
22,901
8,926
19,002
13,257
Other goods and services
11,739
6,048
172,230
159,295
34,072
24,577
34,072
24,577
1,739
136,419
2,122
132,596
138,158
134,718
40,808
37,109
2,264
43,072
1,979
39,088
215,302
198,383
Federal Circuit Court Judges Death and Disability Scheme
Total superannuation
Note 21C Suppliers
Goods and services supplied or rendered
Total goods and services supplied or rendered
Goods supplied in connection with
External parties
Total goods supplied
Services rendered in connection with
Related parties
External parties
Total services rendered
Other suppliers
Operating lease rentals – external parties
Minimum lease payments
Workers compensation expenses
Total other suppliers
Total suppliers
79
Notes to and forming part of the financial statements
30 June
2014
30 June
2013
$'000
$'000
644
680
644
680
1,198,989
225,862
981,610
407,181
625,015
729,274
2,049,866
2,118,065
16,939
10,199
1,481
2,594
1,819
3,362
21,014
15,380
490
190
490
190
21,504
15,570
20
9
1,964
66
Note 21D Grants
Private sector
Non-profit organisations
Total grants
Note 21E Nation-building Funds distribution
Distribution to portfolio special accounts from
Building Australia Fund
Education Investment Fund
Health and Hospital Fund
Total Nation-building Funds distribution
Note 21F Depreciation and amortisation
Depreciation
Leasehold improvements
Infrastructure
Plant and equipment
Total depreciation
Amortisation
Intangibles
Total amortisation
Total depreciation and amortisation
Note 21G Write-down and Impairment of assets
Financial assets
Impairment of receivables
Non-financial assets
Write-off of land and building
Plant and equipment
546
-
2,530
75
Note 21H Finance costs
Notional interest
161
129
Total finance costs
161
129
666
492
666
492
163,162
134,704
-
163,162
134,704
Total write-down and impairment of assets
Note 21I Other expenses
Act of Grace payments
Total other expenses
Note 21J Losses on financial investments
Realised losses in fair value investments
Unrealised losses in fair value of investments
Total losses on financial investments1
1 To
be read in conjunction with notes 21L, 22B, 22F and 22G. The overall operating result of the Nation-building Funds
is consistent with the investment mandates for the funds.
80
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
Note 21K Losses from asset sales
Infrastructure, plant and equipment
Proceeds from sale
-
(137)
Carrying value of assets sold
-
422
-
285
270,701
-
394,851
270,701
394,851
Total losses from asset sales
Note 21L Foreign exchange losses
Nation-building Funds (NBF) non-speculative losses
Realised
Unrealised
Total foreign exchange losses1
1 To
be read in conjunction with notes 21J, 22B, 22F and 22G. The overall operating result of the NBF is consistent with
the investment mandates for the funds.
Note 22
Administered income
Revenue
Non-Taxation Revenue
Note 22A Rendering of services
Rendering of services in connection with
Related parties
External parties
Total rendering of services
16,457
-
3,989
-
16,457
3,989
Note 22B Interest
Government securities
Housing agreements
NBF investments2
Deposits
State and Territory Governments
Total interest
393
545
16,403
105,029
16,871
88,994
20,542
537
26,054
596
142,904
133,060
2 To
be read in conjunction with notes 21J, 21L, 22F and 22G. The overall operating result of the Nation-building Funds
is consistent with the investment mandates for the funds.
Note 22C Dividends
Australian Government entities3
157,312
467,852
Total dividends
157,312
467,852
3 Medibank’s
Board expects to pay Finance a special dividend totalling $200 million in the next financial year. This was
not declared as at 30 June 2014.
81
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
Note 22D Superannuation contributions
Commonwealth Superannuation Scheme
Public Sector Superannuation Scheme
Parliamentary Contributory Superannuation Scheme
Total superannuation contributions
188,814
214,634
1,267,394
1,407
1,282,680
1,847
1,457,615
1,499,161
234
8,995
4,106
3,079
3,900
5,285
7,419
18,180
290,867
84,022
-
290,867
84,022
Note 22E Other revenue
Recovery of superannuation overpayments
Resources received free of charge
Other
Total other revenue
Gains
Note 22F Foreign exchange gains
NBF non-speculative gains
Realised
Unrealised
Total foreign exchange gains1
1 To
be read in conjunction with notes 21J, 21L, 22B and 22G. The overall operating result of the NBF is consistent with
the investment mandates for the funds.
Note 22G Gains on financial investments
Realised gains on fair value investments
Interest - bank bills and negotiable certificates of deposit
Interest - mortgage backed securities
57,633
38,693
104,426
52,308
Interest - corporate debt securities
Interest - Government debt securities
66,851
6,187
120,561
35,982
Interest - asset backed securities
Interest - other income fixed securities
Total realised gains on fair value of investments
2,727
12,296
4,995
6,337
184,387
324,609
Net realised gains in fair value of investments
Net unrealised gains in fair value of investments
201,544
-
575,869
385,931
900,478
Total gains on financial investments2
2 To
be read in conjunction with notes 21J, 21L 22B and 22F. The overall operating result of the NBF is consistent with
the investment mandates for the funds.
Note 22H Other gains
Assets first found
Reversal of prior year items
Decrease in Act of Grace provision
Decrease in Same Sex Relationships Act provision
Decrease in post employment benefits liability
Total other gains
82
410
142
386
1,059
68
581
270
-
15,706
1,679
16,943
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
-
14,006
7,799
834
1,819
86
325,942
(1,080)
303,861
Movement in carrying amount of superannuation 1
(9,476,349)
28,686,266
Total administered other comprehensive income
(9,142,522)
29,005,706
Note 23
Administered other comprehensive income
Note 23A Administered other comprehensive income
Changes in administered reserves
Non-financial assets revaluation reserve adjustment:
Buildings
Plant and equipment
Infrastructure
Make good provision
Gains (losses) on available for sale financial assets
1 Movements
in the carrying amount of the net superannuation provision are due to:

Actual
return on scheme assets less interest income $1,201.7m (2012-13: $1,490.9m);

Actuar
ial gains / (losses) arising from changes in demographic assumptions ($3,559.6m) (2012-13: $nil);

Actuar
ial gains / (losses) arising from changes in financial assumptions ($4,903.4m) (2012-13: $30,931.8m); and

Actuar
ial gains / (losses) arising from liability experience ($2,215.0m) (2012-13: ($3,260.9m)).
The effect of these changes for each scheme are analysed in Note 33 (e), Reconciliation of the Net Defined Benefit
Liability.
83
Notes to and forming part of the financial statements
84
Notes to and forming part of the financial statements
Note 24
Administered fair value measurement
The following tables provide an analysis of assets and liabilities that are measured at fair value.
The different levels of the fair value hierarchy are defined below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Note 24A Fair value measurement
Fair value measurements at the end of the reporting period by hierarchy for assets and liabilities
Fair value measurements at the end of the
reporting period using1
Financial assets
Investments
Commonwealth authorities and companies
Nation-building Funds (NBF)
Derivatives
Trade and other receivables
Advances and loans
Total financial assets
Non-financial assets
Leasehold improvements
Plant and equipment
Infrastructure
Total non-financial assets
Total fair value measurements - assets
Payables
Derivatives
Total fair value measurements - liabilities
Fair value
$'000
Level 1
inputs
$'000
Level 2
inputs
$'000
Level 3
inputs
$'000
4,532,827
6,417,812
117,175
-
6,417,812
117,175
4,532,827
-
243,295
-
243,295
-
11,311,109
-
6,778,282
4,532,827
26,706
13,423
59,389
99,518
-
11,259
11,259
26,706
2,164
59,389
88,259
11,410,627
-
6,789,541
4,621,086
81,774
-
81,774
-
81,774
-
81,774
-
1
All listed items are recurring fair value measurements and there were no provisions measured at fair value or for
which fair value disclosure is required. Recurring fair value measurements occur when there is an ongoing
requirement to disclose balances at fair value.
Fair value measurements - highest and best use differs from current use for non-financial assets (NFAs)
The highest and best use for all non-financial assets is the same as their current use.
85
Notes to and forming part of the financial statements
Note 24B Level 1 and Level 2 transfers for recurring fair value measurements
There were no transfers between levels for recurring fair value measurements. The policy for determining when
transfers between levels are deemed to have occurred can be found in Note 1.12.
Note 24C Valuation technique and inputs for Level 2 and Level 3 fair value measurements
Level 2 and 3 fair value measurements - valuation technique and the inputs used for assets and liabilities in
2014
Inputs
Inputs
Inputs
Weighted
Fair value
VT1
level
used 2
range3
average3
$'000
Financial assets
Investments
Commonwealth authorities
and companies
3
3
99,347
4,433,480
NET
DNCF
2
2
6,417,812
117,175
2
N/A
2.5%-5%
10%-10.75%
N/A
N/A
N/A
PI
FX
NET
CF Growth;
WACC
N/A
N/A
243,295
DCF
N/A
N/A
N/A
3
26,706
DRC
Plant and equipment
2
3
11,259
2,164
MA
DRC
Infrastructure
3
59,389
DRC
RCN;
CEB
AMT
AMT;
CEB
RCN;
CEB
N/A
4.76%-120%
N/A
N/A
6.56%-20%
$49-$83m
2%-2.5%
N/A
10.45%
N/A
N/A
11.37%
$64m
2.2%
Payables
Derivatives
2
81,774
FX
N/A
N/A
N/A
NBF
Derivatives
Trade and other receivables
Advances and loans
Non-financial assets
Leasehold improvements
1
N/A
N/A
N/A
There has been no change to the valuation techniques used (VT). The following valuation techniques were used:

Depreciated Replacement Cost (DRC): The amount a market participant would be prepared to pay to acquire or
construct a substitute asset of comparable utility, adjusted for obsolescence.

Discounted Cash Flows (DCF): The present value of future cash flows over an appropriate timeframe.

Discounted Net Cash Flows (DNCF) of companies: The net cash flows over an appropriate timeframe together with
a terminal value for the asset at the end of the forecast period, discounted back to the measurement date, resulting
in a net present value for the asset.

Market Approach (MA): Market approach seeks to estimate the current value of an asset with reference to recent
market evidence including transactions of comparable equipment within local second-hand markets.

Net assets of valued companies (NET): The value of the company’s assets less the value of its liabilities as
reported in the latest available audited accounts or internal management accounts.

Price index (PI): Values are based on observable market data relating to prices, industry accepted pricing models
and broker/dealer quotes.
86
Notes to and forming part of the financial statements

Foreign exchange (FX) spot and forward rates: Values are based on either quoted or market foreign exchange
rates in an active market or exchange.
Note 24C Valuation technique and inputs for Level 2 and Level 3 fair value measurements (continued)
2 The
following valuation inputs were used to calculate fair values:

Net assets of valued companies (NET): the value of the company’s assets less the value of its liabilities.

Cash Flow Growth (CF Growth): the rate at which cash flows will increase over a given period.

Weighted Average Cost of Capital (WACC): the average rate of return a company is expected to pay to all its
security holders to finance its assets.

Replacement Cost of New Assets (RCN): the amount a market participant would pay to acquire or construct a new
substitute asset of comparable utility.

Consumed Economic Benefits (CEB) or Obsolescence of assets: physical deterioration, functional or technical
obsolescence and conditions of the economic environment specific to the asset.

Adjusted Market Transactions (AMT): market transactions of comparable assets, adjusted to reflect differences in
price sensitive characteristics.
3 Significant
unobservable inputs are used for level 3 items. This indicates the variability of inputs used and reflects
annual variability. The weighted average of inputs used within this range is also provided.
Recurring Level 3 fair value measurements - valuation processes
Financial assets
Commonwealth authorities and companies
Commonwealth authorities and companies that have been valued using a discounted net cash flow technique are
assumed to be a cash generating unit. Cash flow projections for a forecast period and terminal year are based on
management corporate plans and have been discounted using a Weighted Average Cost of Capital (WACC). WACC is
calculated based on a number of inputs derived from either professional judgement or observable historical market data
of comparable entities.
Commonwealth authorities and companies valued using the net assets approach have been based on either the latest
available audited accounts of those entities or internal management accounts.
Non-financial assets
Finance engaged a professional valuer to undertake a comprehensive valuation of these classes of non-financial assets
as at 30 June 2013. Finance engaged professional valuers to provide assurance that the 30 June 2013 valuation models
comply with the requirements of AASB 13.
Leasehold improvements, plant and equipment
Assets that do not transact with enough frequency and transparency to develop objective opinions of value from
observable market evidence have been measured utilising the cost approach. Under the cost approach, the estimated
cost to replace the asset have been calculated and then adjusted to take into account obsolescence (accumulated
depreciation). The obsolescence has been determined based on professional judgement regarding physical, economic
and external obsolescence factors relevant to the asset under consideration.
Infrastructure
Finance manages a secure fibre network within the Australian Capital Territory known as the Intra-Government
Communications Network (ICON). Replacement cost has been established based on contemporary technology and
construction approaches. Significant judgement concerning the nature of the physical environment has been made to
establish the adopted replacement cost.
87
Notes to and forming part of the financial statements
Note 24C Valuation technique and inputs for Level 2 and Level 3 fair value measurements (continued)
Recurring Level 3 fair value measurements - sensitivity of inputs
Commonwealth authorities and companies - Discounted net cash flow technique
The significant unobservable input used in fair value measurement of Commonwealth authorities and companies is the
expected growth in the period post the corporate plan. A 0.5% change in these forecasts would have a +/-$46m effect on
the 2013-14 valuation. In addition, a terminal value growth factor is applied and a change in the assumed terminal value
growth of 0.5% will change the 2013-14 valuation by +/-$118m.
The valuation model uses WACC which is a significant unobservable input. A 0.5% change in the WACC impacts the
valuation by up to +/-$225m.
Commonwealth authorities and companies - Net assets
Net assets of valued authorities and companies are based on unobservable inputs. A change in net assets of these
entities will result in a proportionate change in fair values.
Leasehold improvements and plant and equipment
The significant unobservable inputs used in the fair value measurements of these asset classes relate to obsolescence
(accumulated depreciation). A significant increase (or decrease) in this input would result in significantly lower (or higher)
fair value measurements.
Infrastructure
The significant unobservable input used in the fair value measurement of this asset class relates to replacement cost. A
significant increase (or decrease) in this input would result in a significantly higher (or lower) fair value measurement.
Recurring Level 3 fair value measurements – sensitivity analysis for financial assets and liabilities
There are no reasonably possible alternative inputs available for financial assets reported as level 3 in the fair value
hierarchy. No financial liabilities measured at fair value are reported as level 3.
88
Notes to and forming part of the financial statements
Note 24D Reconciliation for recurring Level 3 fair value measurements
Recurring Level 3 fair value measurements - reconciliation for assets 2014
Financial assets
Opening balance 1 July 2013
Total gains/(losses) recognised in net cost of services 1
Total gains/(losses) recognised in other comprehensive income
Purchases
Reclassifications
Closing balance 30 June 2014
1These
Commonwealth
authorities and
companies
$'000
4,206,884
325,943
4,532,827
Total
$'000
4,206,884
325,943
4,532,827
Non-financial assets
Leasehold
improvements
$'000
41,341
(18,903)
4,077
191
26,706
Plant &
equipment
$'000
3,112
(948)
2,164
gains/(losses) are presented in the Statement of Comprehensive Income under depreciation and amortisation, write-down and impairment of assets and other gains.
Finance’s policy for determining when transfers between levels are deemed to have occurred can be found in Note 1.12.
Recurring Level 3 fair value measurements - reconciliation for liabilities
There were no recurring level 3 fair value measurements for liabilities.
89
Infrastructure
$'000
52,245
(1,071)
7,799
416
59,389
Total
$'000
96,698
(20,922)
7,799
4,493
191
88,259
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
Official Public Account balances
Official Public Account1
27,320,693
19,107,219
Official Overnight Account2
1,483,460
1,497,857
(27,100,000)
(20,150,000)
1,704,153
1
455,076
1
Note 25
Administered financial assets
Note 25A Cash and cash equivalents
Official Term Deposit Contra Account3
Total Official Public Account balances
Cash on hand
Department of Finance's bank accounts
Total cash and cash equivalents
1
4,919
12,148
1,709,073
467,225
The Official Public Account receives administered receipts and provides cash supported by appropriations to
Commonwealth entities.
2
The Official Overnight Account is used for funds swept from Commonwealth administered payments bank accounts
and departmental payments and receipts bank accounts. These funds are used for overnight investments and are
returned to agencies’ transactional bankers the next morning (Note 27B).
3
The Official Term Deposit Contra Account is a contra account drawn on by the Australian Office of Financial
Management (AOFM) to make term deposits. The balance in this account is negative. AOFM is responsible for
managing investments on behalf of the Government, including term deposits.
90
Notes to and forming part of the financial statements
Note 25B Trade and other receivables
30 June
30 June
2014
$'000
2013
$'000
8,362
5,834
363
8,725
1,198
7,032
157,360
162,611
157,360
162,611
Goods and services receivables in connection with
Related parties
External parties
Total goods and services receivables
Advances and loans1
State and Territory Governments
Total advances and loans
Other receivables
Dividends receivable
GST receivable from Australian Taxation Office
Unsettled investment sales
Superannuation overpayment recovery
Total other receivables
Total trade and other receivables (gross)
-
300,000
1,392
15,663
2,340
11,397
17,055
2,965
316,702
183,140
486,345
(16)
(18)
Less impairment allowance
Goods and services
Total impairment allowance
Total trade and other receivables (net)
(16)
(18)
183,124
486,327
Trade and other receivables (net) expected to be recovered
No more than 12 months
More than 12 months
Total trade and other receivables (net)
1
31,310
328,969
151,814
157,358
183,124
486,327
No security is held for State and Territory loans. In 2013-14, principal of $10.7 million (2012-13: $10.4 million) was
repaid. The average effective interest rate is 4.67% (2012-13: 4.68%). Repayments are based on a reducing balance
method.
91
Notes to and forming part of the financial statements
30 June
30 June
2014
$'000
2013
$'000
182,571
485,647
198
80
427
9
44
231
89
173
183,124
486,345
-
-
16
18
16
18
30 June
30 June
2014
$'000
2013
$'000
18
(22)
16
(5)
20
(2)
9
16
18
Note 25B Trade and other receivables (continued)
Trade and other receivables (gross) aged as follows
Not overdue
Overdue by
0 to 30 days
31 to 60 days
61 to 90 days
More than 90 days
Total trade and other receivables (gross)
Impairment allowance aged as follows
Not overdue
Overdue by
More than 90 days
Total impairment allowance
Credit terms for goods and services were within 30 days (2012-13: 30 days).
Reconciliation of the Impairment Allowance
Goods and services
Opening balance
Amounts written off
Amounts recovered and reversed
Increase/(decrease) recognised in net cost of services
Closing balance
92
Notes to and forming part of the financial statements
30 June
2014
30 June
2013
$'000
$'000
Negotiable certificates of deposit
Corporate debt securities
2,879,329
1,930,994
2,175,764
3,131,395
Mortgage backed securities
Government debt securities
1,238,928
203,877
1,741,947
458,502
164,684
-
292,435
9,957
6,417,812
7,810,000
52,676
7,688
40
64,459
675
15,912
117,175
24,275
3,184,375
9,719,362
3,851,179
11,685,454
3,421
4,532,827
6,721
4,206,884
4,536,248
4,213,605
14,255,610
15,899,059
No more than 12 months
9,720,062
11,688,754
More than 12 months
4,535,548
4,210,305
14,255,610
15,899,059
Note 25C Investments
Nation-building Funds (NBF) investments at fair value1
Interest bearing securities
Asset backed securities
Bank bills
Total interest bearing securities
Derivatives
Currency contracts
Forward contracts on mortgage backed securities
Interest swap agreements
Total derivatives
Cash and cash equivalents held by the NBF
Total NBF investments at fair value
Other investments
Government securities2
Commonwealth authorities and companies3
Total other Investments
Total investments
Investments expected to be recovered
Total investments
1
The Nation-building Funds Act 2008 (the Act), established three financial asset funds to provide financing sources in
critical areas of infrastructure such as transport, communications, energy, water, education, research and health. The
Building Australia Fund, Education Investment Fund and Health and Hospitals Fund are financial asset funds consisting
of cash and investments.
2 These
consist of assets of former superannuation schemes administered by the Australian Government.
3 All
of the investments in Commonwealth authorities and companies are 100% owned by the Commonwealth. The
names of each of the Commonwealth authorities and companies held, and their principal activities, are as follows:

Commonwealth Superannuation Corporation – Trustee of Commonwealth superannuation schemes.

Australian Submarine Corporation Pty Ltd – provision of ongoing capability for the through life support of the Collins
class submarine and shipbuilder for the Air Warfare Destroyers.

Australian River Co. Ltd – charter and sub-charter of vessels.

Medibank Private Ltd – provision of health insurance services and health services.
93
Notes to and forming part of the financial statements
Note 25C

Investments (continued)
Albury-Wodonga Development Corporation – operates as a majority property-owner and land developer in the
Albury-Wodonga region. It continues to dispose of its property assets in an orderly manner to provide a financial
return to Government in preparation for its winding up.
Finance has classified Commonwealth authorities and companies as 'available-for-sale financial assets'. These are
measured at fair value as at 30 June 2014. Fair value has been taken to be either the present value of future cash flows
or net assets of the entity. Fair value measurement techniques, inputs used and other details have been disclosed in
Note 24.
30 June
2014
30 June
2013
$'000
$'000
45,671
9,392
46,238
8,517
353
265
8
55,681
54,763
No more than 12 months
55,681
54,763
Total other financial assets
55,681
54,763
Note 25D Other financial assets
Accrued employer superannuation contributions
Accrued interest
Lease incentives
Other
Total other financial assets
Other financial assets expected to be recovered
94
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
41,378
39,855
1,751
(16,423)
1,486
-
26,706
41,341
59,389
52,245
59,389
52,245
9,259
7,780
Work in progress
Accumulated depreciation
Total plant and equipment
6,752
(2,588)
2,784
-
13,423
10,564
Total infrastructure, plant and equipment
72,812
62,809
Note 26
Administered non-financial assets
Note 26A Leasehold improvements
Leasehold improvements
Fair value
Work in progress
Accumulated depreciation
Total leasehold improvements
Note 26B Infrastructure, plant and equipment
Infrastructure
Fair value
Total infrastructure
Plant and equipment
Fair value
The assets above have been valued on a fair value basis in accordance with the revaluation policy set out in Note 1.19.
Leasehold improvements and plant and equipment revaluations were conducted by independent valuers as at 30 June
2013. Infrastructure was revalued by independent valuers as at 30 June 2014.
No indicators of impairment were found for leasehold improvements, infrastructure or plant and equipment.
No leasehold improvements, infrastructure or plant and equipment are expected to be disposed of within the next
12 months.
Revaluation of non-financial assets
A revaluation increment for infrastructure of $7.8 million (2012-13: $1.8 million), an adjustment for leasehold
improvements $nil (2012-13: increment of $14.0 million) and an adjustment for plant and equipment $nil (2012-13:
increment of $0.8 million) were credited to the asset revaluation reserve by asset class and included in the Administered
Reconciliation Schedule.
95
Notes to and forming part of the financial statements
Note 26C Reconciliation of the opening and closing balances of property, plant and equipment 2014
Leasehold
improvements
Infrastructure
Plant &
equipment
Total
infrastructure,
plant &
equipment
$’000
$’000
$’000
$’000
$’000
Gross book value
41,341
52,245
10,564
62,809
104,150
Total as at 1 July 2013
41,341
52,245
10,564
62,809
104,150
4,077
416
6,195
6,611
10,688
-
410
-
410
410
-
7,799
7,799
7,799
191
(16,939)
(1,481)
(2,594)
(4,075)
191
(21,014)
-
-
(196)
(196)
(196)
(1,964)
26,706
59,389
(546)
13,423
(546)
72,812
(2,510)
99,518
43,129
59,389
16,011
75,400
118,529
(16,423)
-
(2,588)
(2,588)
(19,011)
26,706
59,389
13,423
72,812
99,518
Total
As at 1 July 2013
Additions
By purchase
Assets first found
Revaluations and impairments recognised in other comprehensive income
Reclassification
Depreciation expense
Restructuring
Disposals
Write-offs
Total as at 30 June 2014
Total as at 30 June 2014 represented by
Gross book value
Accumulated depreciation and impairment
Total as at 30 June 2014
96
Notes to and forming part of the financial statements
Note 26C Reconciliation of the opening and closing balances of property, plant and equipment 2013
As at 1 July 2012
Gross book value
Accumulated depreciation and impairment
Total as at 1 July 2012
Leasehold
improvements
$’000
Infrastructure
$’000
Plant &
equipment
$’000
Total
infrastructure,
plant & equipment
$’000
50,585
(31,380)
51,990
-
16,435
(8,256)
68,425
(8,256)
119,010
(39,636)
19,205
51,990
8,179
60,169
79,374
18,385
14,006
89
1,819
5,511
834
5,600
2,653
23,985
16,659
10
(10,199)
(1,653)
(10)
(3,528)
(10)
(5,181)
(15,380)
(66)
-
(422)
(422)
(488)
Total
$’000
Additions:
By purchase
Revaluations and impairments recognised in other comprehensive income
Reclassification
Depreciation expense
Disposals:
Other disposals
Total as at 30 June 2013
Total as at 30 June 2013 represented by
Gross book value
41,341
52,245
10,564
62,809
104,150
41,341
52,245
10,564
62,809
104,150
Total as at 30 June 2013
41,341
52,245
10,564
62,809
104,150
97
Notes to and forming part of the financial statements
30 June
2014
30 June
2013
$'000
$'000
3,110
2,041
11
32
1,260
32
Accumulated amortisation
Total computer software
(662)
2,491
(172)
3,161
Total intangibles
2,491
3,161
Note 26D Intangibles
Computer software
Internally developed - in use
Internally developed - in progress
Purchased
No indicators of impairment were found for intangible assets. No impairment losses have been recorded through the
Statement of Comprehensive Income in the current or prior year.
No intangibles are expected to be sold or disposed of within the next 12 months.
98
Notes to and forming part of the financial statements
Note 26E Reconciliation of the opening and closing balances of intangibles 2014
Computer
software
internally
developed
$’000
Computer
software
purchased
$’000
Total
$’000
As at 1 July 2013
Gross book value
3,301
32
3,333
Accumulated amortisation and impairment
Total as at 1 July 2013
(165)
3,136
(7)
25
(172)
3,161
11
-
11
Additions
By purchase or internally developed
Depreciation
Reclassification
Total as at 30 June 2014
(484)
(191)
(6)
-
(490)
(191)
2,472
19
2,491
Total as at 30 June 2014 represented by
Gross book value
Accumulated amortisation and impairment
3,121
(649)
32
(13)
3,153
(662)
Total as at 30 June 2014
2,472
19
2,491
Computer
software
internally
developed
$’000
Computer
software
purchased
$’000
Total
$’000
Gross book value
2,037
32
2,069
Accumulated amortisation and impairment
Total as at 1 July 2012
(758)
1,279
(1)
31
(759)
1,310
Depreciation
Disposals
(184)
(6)
(190)
Note 26E Reconciliation of the opening and closing balances of intangibles 2013
As at 1 July 2012
From disposal of entities or operations
(including restructuring)
2,041
-
2,041
Total as at 30 June 2013
3,136
25
3,161
Total as at 30 June 2013 represented by
Gross book value
Accumulated amortisation and impairment
3,301
(165)
32
(7)
3,333
(172)
Total as at 30 June 2013
3,136
25
3,161
99
Notes to and forming part of the financial statements
30 June
30 June
2014
$'000
2013
$'000
3,615
3,458
3,615
3,458
3,595
3,443
Note 26F Other non-financial assets
Prepayments
Total other non-financial assets
Total other non-financial assets expected to be recovered
No more than 12 months
20
15
3,615
3,458
Trade creditors and accruals
14,687
19,344
Unsettled investments purchases
Derivative financial liabilities
81,775
34,927
279,803
96,462
334,074
5,336
2,269
External parties
Total supplier payables expected to be settled within 12 months
91,126
96,462
331,805
334,074
Total suppliers
96,462
334,074
5,942
4,986
5,190
1,483,460
5,697
1,497,857
4,664
-
3,970
152
104
934
138
1,499,360
1,513,734
1,495,236
1,510,519
4,124
3,215
1,499,360
1,513,734
More than 12 months
Total other non-financial assets
Note 27
Administered payables
Note 27A Suppliers
Total suppliers
Supplier payables expected to be settled within 12 months
Related parties
Settlement is usually made within 30 days.
Note 27B Other payables
Salaries and wages
GST annotation loan
Overnight cash balance payable 1
Lease incentives
Separations and redundancies
Unearned revenue
Other
Total other payables
Other payables expected to be settled
No more than 12 months
More than 12 months
Total other payables
1
The Official Overnight Account is used for funds swept from Commonwealth administered payments bank accounts
and departmental payments and receipts bank accounts. These funds are used for overnight investments and are
payable to agencies’ transactional bankers the next morning.
100
Notes to and forming part of the financial statements
30 June
2014
$'000
30 June
2013
$'000
Leave
Life Gold Pass Holders' entitlements
30,007
49,670
38,446
46,052
Severance travel entitlements
Former Prime Ministers' entitlements
689
132,360
1,294
100,709
Note 28
Administered provisions
Note 28A Employee Provisions
21,670
-
234,396
186,501
No more than 12 months
More than 12 months
16,063
218,333
13,865
172,636
Total employee provisions
234,396
186,501
Severance pay
Total employee provisions
Employee provisions expected to be settled
Note 28B Superannuation
Parliamentary Contributory Superannuation Scheme
Commonwealth Superannuation Scheme
Public Sector Superannuation Scheme
Governor-General Pension Scheme
Judges' Pensions Scheme
Federal Circuit Court Judges Death and Disability Scheme
Total superannuation
1,075,654
1,059,819
71,556,269
64,861,867
68,842,889
53,921,497
22,518
1,143,400
19,382
1,102,200
1,483
138,661,191
1,715
124,947,502
Superannuation provisions expected to be settled
No more than 12 months
More than 12 months
Total superannuation
5,870,896
4,082,816
132,790,295
138,661,191
120,864,686
124,947,502
The actuarial valuation at 30 June 2014 reflects adjustments for benefit accruals for additional years of service by
current contributors, a nominal interest charge and payments to eligible recipients throughout the year.
The Future Fund, a financial asset fund, was established by the Government for the purpose of accumulating assets to
help meet this expected future Australian Government superannuation obligation. The balance of the Future Fund is
reported in the financial statements of the Future Fund Management Agency.
Additional superannuation information can be found at Note 33.
101
Notes to and forming part of the financial statements
Note 28C Other provisions
Same Sex Relationships Act
Act of Grace
Make good1
Excess lease
Total other provisions
30 June
2014
30 June
2013
$'000
1,248
$'000
1,317
11,792
4,884
13,539
5,509
316
-
18,240
20,365
3,242
14,998
2,357
18,008
18,240
20,365
Other provisions expected to be settled
No more than 12 months
More than 12 months
Total other provisions
Same Sex
Relationships Act
Act of
Grace
Make good
Excess
lease
Total
$’000
1,317
(68)
$’000
13,539
651
(1,059)
$'000
5,509
223
(86)
$’000
316
-
$’000
20,365
1,190
(1,213)
(1)
-
(1,339)
-
(767)
(156)
-
(2,107)
(156)
-
-
161
-
161
1,248
11,792
4,884
316
18,240
Total as at 1 July 2013
Additional provisions made
Valuation adjustment
Amounts used
Amounts reversed
Unwinding of discount or change in discount
rate
Total as at 30 June 2014
1Finance
currently has 101 agreements for the leasing of premises which have provisions requiring Finance to restore
the premises to their original condition at the conclusion of the lease. Finance has made a provision to reflect the
present value of this obligation.
102
Notes to and forming part of the financial statements
30 June
2014
$'000
Note 29
30 June
2013
$'000
Administered cash flow reconciliation
Reconciliation of cash and cash equivalents as per administered schedule of assets
and liabilities to Administered Cash Flow Statement
Cash and cash equivalents as per
1,709,073
467,225
1,709,073
-
467,225
-
(8,553,059)
(7,935,551)
21,504
15,570
163,162
(410)
(575,869)
-
(290,867)
2,510
394,851
351
296,723
(300,510)
(918)
(157)
(13,277)
(951)
Increase/(Decrease) in employee provisions
47,895
(12,846)
Increase/(Decrease) in supplier payables
Increase/(Decrease) in other payable
(7,470)
23
1,459
5,796
4,237,340
(2,125)
4,217,215
(132)
(4,085,849)
(4,203,894)
Schedule of administered cash flows
Schedule of administered assets and liabilities
Discrepancy
Reconciliation of net cost of services to net cash from/(used by)
operating activities
Net (cost of)/contribution by services
Adjustments for non-cash items
Depreciation/amortisation
Unrealised loss/(gains) on fair value investments
Assets first found
Unrealised foreign exchange loss/(gains)
Losses from assets sale
Movements in assets and liabilities
Assets
(Increase)/Decrease in net receivables
(Increase)/Decrease in other financial assets
(Increase)/Decrease in other non financial assets
Liabilities
Increase/(Decrease) in superannuation provisions
Increase/(Decrease) in other provisions
Net cash from/(used by) operating activities
103
Notes to and forming part of the financial statements
Note 30
Administered contingent assets and liabilities
Indemnities
2014
2013
Other
2014
2013
Total
2014
2013
$'000
$'000
$'000
$'000
$'000
$'000
-
-
16,724
(21,670)
10,973
-
16,724
(21,670)
10,973
-
Obligation discharged
Re-measurement
Total contingent liabilities
-
-
4,946
5,751
4,946
5,751
-
-
-
16,724
-
16,724
Net contingent assets/(liabilities)
-
-
-
(16,724)
-
(16,724)
Contingent liabilities
Balance from previous period
Transfer to provisions
Quantifiable contingent liabilities
Severance Pay Benefit
The staff employed under the Members Of Parliament Staff (MOP(S)) Act 1984 are eligible for severance pay benefits in
accordance with Enterprise Agreement 2012-15 clause 71.2 (persons whose employment is terminated under Part III or
IV of the MOP(S) Act other than through resignation). The severance pay liability estimate will be triggered for relevant
MOP(S) Act employees when an employing member dies or ceases to hold office. When an employee is terminated as a
result of the employing member ceasing to hold office (i.e. under subsections 16(1), 16(2) or 23(1) of the MOP(S) Act),
the base severance pay benefit payable under clause 71 will be increased by 30%. The actuarial valuation model of
April 2014 estimated an accrued severance pay liability of $21.7 million as of 30 June 2014 ($16.7 million as of 30 June
2013).
During 2013-14 Finance has reviewed its accounting policy and has reclassified Severance Pay Benefit from contingent
liabilities to provisions.
Unquantifiable contingencies
Finance does not have any unquantifiable administered contingent assets or liabilities.
Significant remote contingencies
Finance does not have any significant administered remote contingencies.
104
Notes to and forming part of the financial statements
Note 31
Financial instruments
30 June
30 June
2014
$'000
2013
$'000
3,421
6,721
3,421
6,721
1,709,073
2,458
467,225
1,811
15,663
11,397
3,184,375
3,851,179
9,657
157,360
8,525
162,611
5,078,586
4,502,748
4,532,827
4,532,827
4,206,884
4,206,884
Note 31A Categories of financial instruments
Financial Assets
Held-to-maturity investments
Government securities
Total held-to-maturity investments
Loans and receivables
Cash and cash equivalents
Trade receivables
Unsettled investment sales
Nation-building Funds (NBF) investments - cash and cash
equivalents1
Accrued interest revenue
Loans to State and Territory Governments
Total loans and receivables
Available-for-sale financial assets
Commonwealth authorities and companies
Total available-for-sale financial assets
Financial assets at fair value through profit or loss (designated)
117,175
24,275
6,417,812
6,534,987
7,810,000
7,834,275
16,149,821
16,550,628
14,687
19,344
81
34,927
263
14,768
54,534
Total derivative financial liabilities
Total financial liabilities at fair value through profit or loss (designated)
81,775
81,775
279,803
279,803
Total financial liabilities
96,543
334,337
NBF - derivatives
NBF - interest bearing securities
Total financial assets at fair value through profit or loss (designated)
Total financial assets
Financial Liabilities
Financial liabilities measured at amortised cost
Suppliers
Unsettled investments purchases
Other payables
Total financial liabilities measured at amortised cost
Financial liabilities at fair value through profit or loss (designated)
1
The NBF have posted cash with a futures & swap broker to cover exchange traded futures and swap positions as
required under clearing house rules. As at 30 June 2014, the NBF have posted $6.4 million (2013: $3.9 million) in
margins to cover open positions. This cash remains a financial asset of the NBF, however any alternate use of this cash
is restricted.
The NBF have entered into various derivative contracts which require the NBF to post or receive collateral with
counterparties under certain circumstances based on minimum transfer limits. The NBF provide cash as collateral when
legally required and the counterparties also post collateral when legally required. Any cash provided as collateral
remains a financial asset of the NBF, however any alternate use of this cash is restricted as it is held by the
counterparty. Any cash received by the Fund from counterparties is not included in the net assets of the NBF. As at 30
June 2014 the NBF have $26.0 million cash posted as collateral with counterparties, (2013: $212.5 million) and have
received $0 in cash (2013:$0)
105
Notes to and forming part of the financial statements
30 June
2014
30 June
2013
$'000
$'000
393
545
393
545
16,940
17,467
20,542
(20)
26,054
(9)
37,462
43,512
157,312
467,852
325,942
483,254
303,861
771,713
Foreign exchange gains
Foreign exchange losses
290,867
(270,701)
84,022
(394,851)
Total gains on fair value investments
Losses on disposal of fair value of investments
385,931
(163,162)
900,478
(134,704)
Interest revenue - NBF investments
Net gains/(losses) on financial assets at fair value through profit or loss
(designated)
105,029
88,994
347,964
543,939
Net gains/(losses) on financial assets at fair value through profit or loss
347,964
543,939
Net gains/(losses) on financial assets
869,073
1,359,709
Note 31B Net gains or losses on financial assets
Held-to-maturity investments
Interest revenue
Net gain/(losses) on held-to-maturity investments
Loans and receivables
Interest revenue
Interest - deposits
Impairment
Net gains/(losses) on loans and receivables
Available-for-sale financial assets
Dividend revenue
Gain/(loss) recognised in equity
Net gains/(losses) from available-for-sale financial assets
Financial assets at fair value through profit or loss (designated)
The net interest income / (expense) from financial assets not at fair value through profit and loss is $37.6 million
(2012-13: $44.1 million).
Note 31C Net gains or losses on financial liabilities
There was no income and expense from financial liabilities in the current or prior year.
Note 31D Fee income and expense
There was no net income or expense from financial liabilities not at fair value through profit and loss for the current
and comparative years.
Loans or receivables designated at fair value through profit or loss
There were no administered loans or receivables designated at fair value through profit and loss.
106
Notes to and forming part of the financial statements
Note 31E Fair value of financial instruments
Financial assets and liabilities held at fair values or for which fair value disclosure is required have been disclosed
under Note 24 Fair value measurements.
Fair value measurements categorised by fair value hierarchy
Carrying
amount
2014
Fair value
2014
Carrying
amount
2013
Fair value
2013
$'000
$'000
$'000
$'000
3,421
3,421
6,721
6,721
Cash and cash equivalents
1,709,073
1,709,073
467,225
467,225
Trade receivables
Unsettled investment sales
2,458
15,663
2,458
15,663
1,811
11,397
1,811
11,397
3,184,375
9,657
3,184,375
9,657
3,851,179
8,525
3,851,179
8,525
Loans to State and Territory Governments
Available-for-sale financial assets
157,360
243,295
162,611
254,903
Commonwealth authorities and companies
Total financial assets
4,532,827
9,614,834
4,532,827
9,700,769
4,206,884
8,716,353
4,206,884
8,808,645
14,687
14,687
19,344
19,344
81
81
34,927
263
34,927
263
81,775
96,543
81,775
96,543
279,803
334,337
279,803
334,337
Financial assets
Held-to-maturity investments
Government securities
Loans and receivables
NBF investments - cash and cash
equivalents
Accrued interest revenue
Financial Liabilities
Financial liabilities measured at amortised
cost
Suppliers
Unsettled investments purchases
Other payables
Financial liabilities at fair value through
profit or loss (designated)
Total derivative financial liabilities
Total financial liabilities
Note 31F Financial liabilities designated at fair value through profit and loss
There are no changes in the fair value of financial liabilities designated as fair value through profit and loss. All
changes in fair value are attributable to changes in market conditions.
Note 31G Financial assets reclassified
There were no financial assets reclassified during the current or prior year.
107
Notes to and forming part of the financial statements
Note 31H Credit risk
The administered activities of Finance are exposed to a moderate level of credit risk in its financial investments
portfolio and a low risk in other financial assets such as trade receivables, advances and loans to state, territory and
local governments and shares in government controlled and funded entities. Finance has assessed the risk of default
on payment and has not identified any amounts to be allocated to a doubtful debts account.
The following table illustrates Finance’s gross exposure to credit risk, excluding any collateral held or credit
enhancement.
2014
2013
$'000
$'000
1,709,073
175,481
467,225
175,819
3,184,375
3,851,179
6,534,987
3,421
7,834,275
6,721
9,657
11,616,994
8,525
12,343,744
Gross exposure to credit risk
Cash and cash equivalents
Trade and other receivables
NBF investments - cash and cash
equivalents
NBF investments
Government securities
Accrued revenue
Total
As at 30 June 2014 the NBF had an exposure of greater than 10% of its net assets to interest bearing securities
issued by domestic banks. Exposures to individual counterparties greater than 5% of the net assets of the Funds are
separately identified for Building Australia Fund (BAF), Education Investment Fund (EIF) and Health and Hospital
Fund (HHF) in the table below.
Credit risk exposures of debt instruments held by the NBF
BAF
EIF
HHF
Total NBF
2014
$'000
2014
$'000
2014
$'000
2014
$'000
Commonwealth Bank of Australia
948,732
852,227
582,627
2,383,586
Westpac Banking Corporation
National Australia Bank
473,835
524,233
364,657
364,361
245,385
268,266
1,083,877
1,156,860
585,920
113,394
391,624
223,586
244,012
116,984
1,221,556
453,964
2,646,114
2,196,455
1,457,274
6,299,843
BAF
2013
EIF
2013
HHF
2013
Total NBF
2013
$'000
$'000
$'000
$'000
1,007,364
414,337
913,334
213,717
618,577
254,207
2,539,275
882,261
472,266
399,467
247,504
272,684
280,762
258,438
1,000,532
930,589
354,860
2,648,294
512,280
2,159,519
211,039
1,623,023
1,078,179
6,430,836
Credit rating - Interest Bearing Securities issued by:
Australia and New Zealand Banking Group
The Northern Trust Company
Total
Credit rating - Interest Bearing Securities issued by:
Commonwealth Bank of Australia
Westpac Banking Corporation
National Australia Bank
Australia and New Zealand Banking Group
The Northern Trust Company
Total
The NBF utilise credit default swaps to gain exposure to, and to hedge, credit risk. The NBF's counterparties for credit
default swaps include major banking firms and their affiliates. Outstanding positions are marked to market and
collateralisation of out of the money positions is required. The total notional value of the open credit default swap
positions are BAF $nil 2013-14 ($11.3m 2012-13), EIF $nil 2013-14($7.8m 2012-13) and HHF $nil 2013-14 ($7.1m
2012-13). The fair market value of open swap positions are BAF $nil 2013-14 (-$.05m 2012-13), EIF $nil 2013-14($0.04m 2012-13) and HHF $nil 2013-14 (-$0.03m 2012-13).
108
Notes to and forming part of the financial statements
Note 31H Credit risk (continued)
Credit exposure by credit rating
The following table provides information regarding the credit risk exposures of the debt instruments held by the NBF
according to the credit ratings of the underlying debt instruments.
Credit risk exposures of debt instruments held by the NBF
BAF
2014
EIF
2014
HHF
2014
Total NBF
2014
$'000
$'000
$'000
$'000
514,406
32,630
569,986
94,078
307,189
41,915
1,391,581
168,623
1,096,106
357,281
934,836
347,700
604,148
232,038
2,635,090
937,019
A+
A
261,213
148,086
557,937
229,368
233,588
82,256
1,052,738
459,710
AAa1
70,415
6,653
112,821
9,098
44,482
4,459
227,718
20,210
Aa2
Aa3
2,025
3,815
2,024
6,358
2,025
3,119
6,074
13,292
A1
A2
2,186
1,937
1,865
1,195
1,937
5,246
2,842
2,698
1,295
6,835
1,144,481
801,575
551,307
2,497,363
23,357
60,917
106,711
52,315
48,682
27,439
178,750
140,671
3,726,413
3,831,307
2,185,137
9,742,857
BAF
2013
EIF
2013
HHF
2013
Total NBF
2013
$'000
$'000
$'000
$'000
938,927
116,153
709,831
94,475
482,224
60,114
2,130,982
270,742
1,301,919
513,206
1,420,920
421,268
758,659
299,103
3,481,498
1,233,577
A+
A
241,714
504,351
201,622
288,054
130,094
271,191
573,430
1,063,596
AAa2
185,716
7,666
155,743
6,811
97,094
5,152
438,553
19,629
Aa3
A2
1,203
6,529
1,126
4,353
679
3,627
3,008
14,509
37,618
26,941
19,398
83,957
876,715
8,767
551,878
7,768
570,523
4,994
1,999,116
21,529
125,624
125,374
76,054
327,052
18,461
16,993
8,917
44,371
Credit rating
Long-term rated securities
AAA
AA+
AA
AA-
A3
Short-term rated securities
A-1+
Other
US Government Guaranteed
Other non-debt financial instruments
Total debt securities held by the NBF
Credit rating
Long-term rated securities
AAA
AA+
AA
AA-
A3
Short-term rated securities
A-1+
A-1
Other
US Government Guaranteed
Other non-debt financial instruments
109
Notes to and forming part of the financial statements
Total debt securities held by the NBF
4,884,569
4,033,157
2,787,823
11,705,549
Credit quality of financial assets not past due or individually determined as impaired
Not past
due nor Not past due
Past due or
impaired
impaired
nor impaired
Past due or
impaired
Note 31H Credit risk (continued)
2014
$'000
2013
$'000
2014
$'000
Cash and cash equivalents
1,709,073
467,225
-
-
Trade and other receivables
NBF investments - cash and cash equivalents
174,944
3,184,375
175,139
3,851,179
537
-
680
-
NBF investments
Government securities
6,534,987
3,421
7,834,275
6,721
-
-
9,657
11,616,457
8,525
12,343,064
537
680
Ageing of financial assets that were past due but not impaired for 2014
0 to 30
31 to 60
61 to 90
days
days
days
$'000
$'000
$'000
198
80
44
Trade and other receivables
90+
days
$'000
215
Total
$'000
537
215
537
2013
$'000
Financial assets
Accrued revenue
Total
Total
80
44
Ageing of financial assets that were past due but not impaired for 2013
0 to 30
31 to 60
Trade and other receivables
Total
110
198
61 to 90
90+
days
$'000
days
$'000
days
$'000
days
$'000
Total
$'000
427
427
9
9
89
89
155
155
680
680
Notes to and forming part of the financial statements
Note 31I Liquidity risk
Finance's administered financial liabilities are trade creditors and other payables. The exposure to liquidity risk is
based on the notion that Finance will encounter difficulty in meeting its obligations associated with administered
financial liabilities. This is highly unlikely due to appropriation funding and mechanisms available to Finance (e.g.
Advance to the Finance Minister) and internal policies and procedures put in place to ensure there are appropriate
resources to meet its financial obligations.
Finance's administered activities are appropriated from the Australian Government and Finance manages its budgeted
administered funds to ensure it has adequate funds to meet payments as they fall due. In addition, Finance has
policies in place to ensure timely payments are made when due and has no past experience of default. Finance has
$81.8 million (2012-13: $279.8 million) derivative financial liabilities, of which $81.8 million (2012-13: $279.8 million)
are recoverable within 12 months.
The following table illustrates the maturities for financial liabilities.
Maturities for non-derivative financial liabilities 2014
On
Within 1
1 to 2
2 to 5
>5
demand
$'000
year
$'000
years
$'000
years
$'000
years
$'000
Total
$'000
Suppliers
Unsettled investments
1,202
-
13,485
-
-
-
-
14,687
-
Other payables
Total
1,202
81
13,566
-
-
-
81
14,768
Maturities for non-derivative financial liabilities 2013
On
demand
Within 1
year
1 to 2
years
2 to 5
years
>5
years
Total
$'000
4,736
$'000
14,608
$'000
-
$'000
-
$'000
-
$'000
19,344
143
34,927
120
-
-
-
34,927
263
4,879
49,655
-
-
-
54,534
Maturities for derivative financial liabilities 2014
On
Within 1
Suppliers
Unsettled investments
Other payables
Total
1 to 2
2 to 5
>5
demand
$'000
year
$'000
years
$'000
years
$'000
years
$'000
Total
$'000
BAF
EIF
-
33,719
33,208
-
-
-
33,719
33,208
HHF
Total
-
14,848
81,775
-
-
-
14,848
81,775
On
demand
Within 1
year
1 to 2
years
2 to 5
years
>5
years
Total
$'000
-
$'000
115,282
$'000
-
$'000
-
$'000
-
$'000
115,282
-
100,042
64,479
-
-
-
100,042
64,479
-
279,803
-
-
-
279,803
Maturities for derivative financial liabilities 2013
BAF
EIF
HHF
Total
111
Notes to and forming part of the financial statements
Note 31J Market risk
Other than balances held by the Nation-building Funds, administered investments and Consolidated Revenue Fund
(CRF) balances, Finance holds basic financial instruments that are not exposed to certain market risks. In regards to
the Nation-building Funds, administered investments and the CRF, Finance is exposed to interest rate risk and foreign
currency risk.
The following table is a sensitivity analysis of the risk Finance is exposed to.
Sensitivity analysis of the risk that Finance is exposed to for 2014
Effect on
Net cost of
services
Equity
%
$'000
$'000
Deposit rate
Deposit rate
+0.6%
-0.6%
4,871
(4,871)
-
Commonwealth authorities and companies
Discount rate
Discount rate
+0.6%
-0.6%
-
(332,120)
390,146
BAF
Discount rate
Discount rate
+0.6%
-0.6%
14,474
(13,201)
-
EIF
Discount rate
Discount rate
+0.6%
-0.6%
15,808
(14,745)
-
HHF
Discount rate
Discount rate
+0.6%
-0.6%
10,174
(9,596)
-
Exchange rate
+11.5%
2,735
-
Exchange rate
Exchange rate
-11.5%
+11.5%
(2,735)
3,097
-
Exchange rate
Exchange rate
-11.5%
+11.5%
(3,097)
2,836
-
Exchange rate
-11.5%
(2,836)
-
Risk variable
Change in
risk variable
Interest rate risk1
Overnight cash deposits with the RBA
Currency risk2
BAF
EIF
HHF
112
Notes to and forming part of the financial statements
Note 31J Market risk (continued)
Sensitivity analysis of the risk that Finance was exposed to in 2013
Risk variable
Change in
risk variable
%
Effect on
Net cost of
services
$'000
Equity
$'000
Interest rate risk1
Deposit rate
+1.20%
9,945
-
Deposit rate
Discount rate
-1.20%
+1.20%
(9,945)
-
(2,617)
Discount rate
Discount rate
-1.20%
+1.20%
35,096
2,875
-
Discount rate
Discount rate
-1.20%
+1.20%
(32,600)
29,315
-
Discount rate
Discount rate
-1.20%
+1.20%
(26,816)
19,813
-
Discount rate
-1.20%
(17,936)
-
BAF
Exchange rate
Exchange rate
+15.7%
-15.7%
(372)
372
-
EIF
Exchange rate
Exchange rate
+15.7%
-15.7%
(142)
142
-
HHF
Exchange rate
Exchange rate
+15.7%
-15.7%
62
(62)
-
Overnight cash deposits with the RBA
Commonwealth authorities and companies
BAF
EIF
HHF
Currency risk2
1
Interest rate risk
Finance is exposed to interest rate risk in relation to overnight cash deposits with the Reserve Bank of Australia (RBA),
the NBF investments and administered investments. The impact of a change in interest rates is disclosed in the above
table. Finance has also issued a number of fixed interest loans that are not subject to any degree of interest rate risk.
2
Currency risk
The NBF undertakes certain transactions denominated in foreign currencies and hence is exposed to the effects of
exchange rate fluctuations. Exchange rate exposures are managed utilising forward foreign exchange contracts.
The above sensitivity analysis table demonstrates the impact on the operating result of a movement in the value of the
Australian dollar relative to the basket of actual net exposures as at year end, with all other variables held constant.
113
Notes to and forming part of the financial statements
Note 31J Market risk (continued)
The NBF’s exposure in Australian dollar equivalents to foreign currency risk at the reporting date was as follows for
2014:
USD
EURO
GBP
Other
Total
$'000
$'000
$'000
$'000
$'000
379,606
(367,062)
227,397
(216,054)
150,639
(150,967)
81
-
757,723
(734,083)
12,544
11,343
(328)
81
23,640
BAF
Total physical exposure
Total derivative exposure
Total net exposure
EIF
Total physical exposure
Total derivative exposure
Total net exposure
730,487
276,097
222,603
89
1,229,276
(713,987)
16,500
(264,089)
12,008
(224,578)
(1,975)
89
(1,202,654)
26,622
276,566
146,635
104,702
43
527,946
(263,891)
12,675
(135,569)
11,066
(104,737)
(35)
43
(504,197)
23,749
41,719
34,417
(2,338)
213
74,011
HHF
Total physical exposure
Total derivative exposure
Total net exposure
Total NBF exposure
The NBF’s exposure in Australian dollar equivalents to foreign currency risk at the reporting date was as follows for
2013:
USD
EURO
GBP
Other
Total
$'000
$'000
$'000
$'000
$'000
Total physical exposure
Total derivative exposure
Total net exposure
EIF
892,606
(891,291)
535,688
(536,678)
304,019
(307,342)
614
40
1,732,927
(1,735,271)
1,315
(990)
(3,323)
654
(2,344)
Total physical exposure
Total derivative exposure
Total net exposure
HHF
824,907
(822,685)
443,461
(444,418)
259,432
(262,180)
543
38
1,528,343
(1,529,245)
2,222
(957)
(2,748)
581
(902)
Total physical exposure
Total derivative exposure
Total net exposure
Total NBF exposure
436,970
(436,000)
279,637
(280,060)
156,230
(156,724)
322
19
873,159
(872,765)
970
4,507
(423)
(2,370)
(494)
(6,565)
341
1,576
394
(2,852)
BAF
114
Notes to and forming part of the financial statements
Note 31J Market risk (continued)
Investments under the NBF are exposed to risk of loss arising from movement in the prices of various assets flowing
through interest rate changes. The total exposure for each class of the NBF's financial investments is set out below:
Exposure of the NBF's financial investments by class in 2014
Floating
interest
rate
Fixed
interest
rate
Non-interest
bearing
Total
2014
$'000
2014
$'000
2014
$'000
2014
$'000
Cash and cash equivalents
1,208,175
-
-
1,208,175
Interest bearing securities
Other financial assets
Total BAF
1,020,310
-
1,437,012
-
60,917
2,457,322
60,917
2,228,485
(1,822,298)
1,437,012
(1,915,957)
60,917
-
3,726,414
(3,738,255)
Interest rate swaps (notional amount) - receive
1,915,957
1,822,298
-
3,738,255
EIF
Cash and cash equivalents
1,238,530
-
-
1,238,530
1,188,982
-
1,351,480
-
52,314
2,540,462
52,314
2,427,512
(1,992,757)
1,351,480
(2,132,927)
52,314
-
3,831,306
(4,125,684)
2,132,927
1,992,757
-
4,125,684
737,670
651,325
768,703
-
737,670
1,420,028
Other financial assets
Total HHF
1,388,995
768,703
27,439
27,439
27,439
2,185,137
Interest rate swaps (notional amount) - pay
Interest rate swaps (notional amount) - receive
(864,310)
919,852
(919,852)
864,310
Total NBF
Financial assets
BAF
Interest rate swaps (notional amount) - pay
Interest bearing securities
Other financial assets
Total EIF
Interest rate swaps (notional amount) - pay
Interest rate swaps (notional amount) - receive
HHF
Cash and cash equivalents
Interest bearing securities
(1,784,162)
1,784,162
6,044,992
3,557,195
140,670
9,742,857
Total NBF Interest rate swaps (notional amount) pay
(4,679,365)
(4,968,736)
-
(9,648,101)
Total NBF Interest rate swaps (notional amount) receive
4,968,736
4,679,365
-
9,648,101
115
Notes to and forming part of the financial statements
Note 31J Market risk (continued)
Exposure of the NBF's financial investments by class in 2013
Floating
interest rate
2013
Fixed
interest rate
2013
Non-interest
bearing
2013
Total
2013
$'000
$'000
$'000
$'000
Cash and cash equivalents
Interest bearing securities
1,510,921
1,606,621
1,748,567
-
1,510,921
3,355,188
Other financial assets
Total BAF
3,117,542
1,748,567
18,461
18,461
18,461
4,884,570
Interest rate swaps (notional amount) - pay
Interest rate swaps (notional amount) - receive
(535,530)
225,468
(225,468)
535,530
-
(760,998)
760,998
Financial assets
BAF
EIF
Cash and cash equivalents
1,458,610
-
-
1,458,610
Interest bearing securities
Other financial assets
Total EIF
1,294,487
-
1,263,065
-
16,993
2,557,552
16,993
2,753,097
(508,691)
191,135
1,263,065
(191,135)
508,691
16,993
-
4,033,155
(699,826)
699,826
881,647
866,340
1,030,919
-
881,647
1,897,259
1,747,987
1,030,919
8,918
8,918
8,918
2,787,824
(59,370)
99,135
(99,135)
59,370
-
(158,505)
158,505
7,618,626
4,042,551
44,372
11,705,549
(1,103,591)
(515,738)
-
(1,619,329)
515,738
1,103,591
-
1,619,329
Interest rate swaps (notional amount) - pay
Interest rate swaps (notional amount) - receive
HHF
Cash and cash equivalents
Interest bearing securities
Other financial assets
Total HHF
Interest rate swaps (notional amount) - pay
Interest rate swaps (notional amount) - receive
Total NBF
Total NBF Interest rate swaps (notional amount) pay
Total NBF Interest rate swaps (notional amount) receive
116
Notes to and forming part of the financial statements
Note 31J Market risk (continued)
Interest rate derivative contracts
The NBF had open positions in exchange traded interest rate futures contracts and interest rate swap agreements as
at 30 June 2014. The Nation-building Funds Act 2008 governs the use of financial derivatives. Interest rate derivatives
are used by the Fund's investment managers to manage the exposure to interest rates and to ensure it remains within
approved limits.
The notional value of the open contracts and their fair value are set out below.
BAF
EIF
HHF
Total
Notional value
2014
2013
$'000
$'000
(403,274)
(82,698)
(649,107)
(7,381)
(271,000)
(1,323,381)
(224,538)
(314,617)
Fair market value
2014
2013
$'000
$'000
(1,523)
(18,448)
510
(14,944)
145
(868)
(12,890)
(46,282)
Note 31K Assets pledged or held as collateral
There were no assets held or pledged as collateral in 2013-14 or 2012-13.
Note 31L Concessional loans
The following table provides information on the carrying value of concessional loans Finance holds with States and
Territories.
2014
2013
$'000
$'000
154,874
(55,085)
162,493
(59,206)
99,789
103,287
43,387
(13,236)
44,801
(14,108)
30,151
30,693
24,264
(7,215)
25,139
(7,724)
17,049
17,415
1,954
(652)
2,001
(693)
1,302
1,308
4,486
(1,214)
4,723
(1,325)
3,272
151,563
3,398
156,101
Australian Capital Territory housing loans
Nominal value
Unexpired discount
Carrying value
Returned service personnel - New South Wales
Nominal value
Unexpired discount
Carrying value
Returned service personnel - Queensland
Nominal value
Unexpired discount
Carrying value
Returned service personnel - South Australia
Nominal value
Unexpired discount
Carrying value
Returned service personnel - Western Australia
Nominal value
Unexpired discount
Carrying value
Total concessional loans
117
Notes to and forming part of the financial statements
Note 32
30 June
2014
$'000
30 June
2013
$'000
16,203,488
16,907,374
Administered financial assets reconciliation
Financial assets
Notes
Total financial assets as per statement of financial position
Less: Non-financial instrument components
Accrued employer superannuation contributions
Dividends receivable
25D
25B
45,671
-
46,238
300,000
Superannuation overpayment recovery
Superannuation additional lump sum contribution
25B
6,251
2,965
5,203
GST receivable from Australian Taxation Office
Lease incentives
Total non-financial instrument components
25B
1,392
353
2,340
-
53,667
356,746
Total financial assets as per financial instruments note
31A
16,149,821
16,550,628
118
Notes to and forming part of the financial statements
Note 33
Superannuation
Finance administers the following defined benefit superannuation schemes on behalf of the government:

C
ommonwealth Superannuation Scheme (CSS);

P
ublic Sector Superannuation Scheme (PSS);

P
arliamentary Contributory Superannuation Scheme (PCSS);

G
overnor-General Pension Scheme (G-GPS);

J
udges' Pensions Scheme (JPS); and

F
ederal Circuit Court Judges Death and Disability Scheme (FCCJDDS).
(a) Accounting policy
Finance complies with the requirements of the Australian Accounting Standard: AASB 119 Employee Benefits. Actuarial
gains or losses are recognised immediately in Other Comprehensive Income in the year in which they occur. Net interest
on the net defined benefit liability is recognised in profit and loss; the return on plan assets excluding the amount
included in interest income is recognised in Other Comprehensive Income as part of re-measurements. Sensitivity
analysis is provided on significant changes in assumptions that are reasonably possible.
(b) Scheme information
On behalf of the Government, Finance has recognised a liability in the Schedule of Administered Items in respect of its
defined benefit superannuation arrangements.
However, the liability incurred from the operation of any Commonwealth superannuation schemes is not a legal liability
for Finance. This liability instead rests with the Australian Government which has established the Future Fund for the
purpose of accumulating assets to help meet this liability.
Commonwealth Superannuation Scheme (CSS)
Scheme information and regulatory framework
The Commonwealth Superannuation Scheme (CSS) is a scheme for Commonwealth civilian employees and was
established under the Superannuation Act 1976. The CSS was open to new members from 1 July 1976 to 30 June
1990.
The CSS 1976 Scheme is a regulated public sector scheme and must comply with the Superannuation Industry
(Supervision) Act 1993 which governs the superannuation industry and provides the framework within which
superannuation plans operate.
Prior to 1976 the superannuation of Australian Government public servants was covered by the Superannuation Act
1922. There are no longer any members contributing under this Act. However, some pensioners remain entitled to
benefits under this Act and the liabilities in respect of these members are included in the CSS liability.
The 1922 scheme is an exempt public sector superannuation scheme for the purposes of the Superannuation Industry
(Supervision) Act 1993.
Benefits provided
The CSS 1976 Scheme is a partially unfunded defined benefit scheme that provides benefits on resignation, retirement,
involuntary retirement, invalidity and death (to eligible spouses / children). Retirement benefits include an unfunded
employer financed lifetime indexed pension based on the member’s age at retirement, years of contributory service and
119
Notes to and forming part of the financial statements
final superannuation salary. The member’s basic contributions, employer productivity contributions and interest can be
taken as a lump sum or an additional non-indexed lifetime pension.
Members of the scheme who resign before age 55 can claim a preserved resignation benefit on or after reaching that
age. This benefit is commonly known as the 54/11 benefit. In this case, the unfunded employer financed lifetime,
indexed pension is calculated by applying age-based factors to the amount of two and a half times the member’s
accumulated basic member contributions and interest.
120
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
Indexed pensions are indexed twice yearly (January and July) in line with changes in the Consumer Price Index.
The 1922 Scheme is an unfunded defined benefit scheme that still provides the payments of pensions, deferred benefit
entitlements and any reversionary pensions to surviving eligible spouses and/or children on the death of a member.
Funding arrangements
Funded contributions generally comprise basic member contributions and employer productivity (up to three per cent)
contributions. These are invested in the CSS Fund. Members can also choose to make no basic member contributions.
In most cases, when a member’s benefit becomes payable, monies held in the CSS Fund in respect of the member are
paid to Consolidated Revenue Fund with the member then having their benefit paid to them from Consolidated Revenue
Fund.
Governance
The Scheme’s Trustee, Commonwealth Superannuation Corporation (CSC), was established under the Governance of
Australian Government Superannuation Schemes Act 2011. CSC is responsible for:

a
dministration of the Scheme;

m
anagement and investment of the Scheme assets;

c
ompliance with superannuation and taxation laws and other applicable laws; and

c
ompliance with relevant legislation including the Governance of Australian Government Schemes Act 2011 and
the Commonwealth Authorities and Companies Act 1997.
ComSuper is the legislated provider of administration services for the Scheme under the ComSuper Act 2011.
ComSuper is subject to any reasonable direction from CSC and is required to comply, where possible with any policies,
guidelines and standards regarding administration services set by CSC.
The prudential regulator, the Australian Prudential Regulation Authority (APRA), licenses and supervises the regulated
CSS 1976 Scheme.
Public Sector Superannuation Scheme (PSS)
Scheme information and regulatory framework
The Public Sector Superannuation Scheme (PSS) is a scheme for Commonwealth civilian employees and was
established under the Superannuation Act 1990 and Trust Deed made under the Act. The PSS was open to new
members from 1 July 1990 to 30 June 2005.
The PSS is a regulated public sector scheme and must comply with the Superannuation Industry (Supervision) Act 1993
and regulations under that Act which govern the superannuation industry and provides the framework within which
superannuation plans operate.
Benefits provided
The PSS is a partially funded defined benefit scheme that provides benefits on resignation, retirement, involuntary
retirement, invalidity and death (to eligible spouse/children).
On retirement a lump sum benefit is payable. This lump sum is calculated based on the member’s length of contributory
membership, their rate of member contribution and Final Average Salary (average of a member’s superannuation salary
on their last three birthdays). Generally this lump sum comprises a funded component (as described above) and an
unfunded component.
121
Notes to and forming part of the financial statements
Where a member resigns before age 55, generally the member’s lump sum benefit at that time is crystallised with the
funded component of the benefit accumulating with interest and the unfunded component accumulating with changes in
the CPI, until the benefit becomes payable.
122
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
Members can convert 50 per cent or more of their lump sum to a lifetime indexed pension based on the member’s age.
Indexed pensions are indexed twice yearly (January and July) in line with changes in the Consumer Price Index.
Funding arrangements
In most cases, funded contributions comprise member contributions and employer productivity contributions. These are
invested in the PSS Fund and accumulate with interest. Members can choose to make no contributions.
When a member’s benefit becomes payable, monies held in the PSS Fund in respect of the member are paid to
Consolidated Revenue Fund with the member then having their benefit paid to them from Consolidated Revenue Fund.
Governance
The Scheme’s Trustee, Commonwealth Superannuation Corporation (CSC), was established under the Governance of
Australian Government Superannuation Schemes Act 2011. CSC is responsible for:

a
dministration of the Scheme;

m
anagement and investment of the Scheme assets;

c
ompliance with superannuation and taxation laws and other applicable laws; and

c
ompliance with relevant legislation including the Governance of Australian Government Schemes Act 2011 and
the Commonwealth Authorities and Companies Act 1997.
ComSuper is the legislated provider of administration services for the Scheme under the ComSuper Act 2011.
ComSuper is subject to any reasonable direction from CSC and is required to comply, where possible with any policies,
guidelines and standards regarding administration services set by CSC.
The prudential regulator, the Australian Prudential Regulation Authority (APRA), licenses and supervises the regulated
PSS 1990 Scheme.
Parliamentary Contributory Superannuation Scheme (PCSS)
Scheme information and regulatory framework
The Parliamentary Contributory Superannuation Scheme (PCSS) is a scheme for Federal parliamentarians and was
established under the Parliamentary Contributory Superannuation Act 1948 (the Act). The scheme was closed to new
and returning members on 9 October 2004.
The PCSS scheme is an exempt superannuation scheme for the purposes of the Superannuation Industry (Supervision)
Act 1993.
Benefits provided
The PCSS is an unfunded defined benefit scheme that is governed by the rules set out in the Act.
The main benefit provided by the PCSS is a lifetime pension, which is payable where a retiring member has sufficient
parliamentary service to meet the pension qualification period set out in the Act. A PCSS member who qualifies for a
pension can also elect to convert up to half of their benefit to a lump sum. Lump sum benefits are payable to PCSS
members who do not have sufficient parliamentary service to qualify for a lifetime pension.
Benefits are funded by the Commonwealth at the time they become payable. The amount of the benefit payable is
determined under the Act and is dependent on the member’s length of parliamentary service and the additional offices
they have held.
123
Notes to and forming part of the financial statements
Pension benefits are expressed as a percentage of the superannuation salary applicable for the PCSS and are indexed
by movements in that superannuation salary.
124
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
The Act also provides for the payment of reversionary pensions to surviving eligible spouses and/or children on the death
of a member.
Funding arrangements
Members of the scheme are required to contribute towards the cost of their benefit during their term of parliamentary
service. Contributions, which are a set percentage of the superannuation salary applicable for the purposes of the
PCSS, are paid into the Consolidated Revenue Fund.
In most cases, when a member’s benefit becomes payable, monies are paid to them from Consolidated Revenue Fund.
Governance
The Act establishes the Parliamentary Retiring Allowances Trust, which exercises certain statutory discretions in the Act
in relation to the PCSS. The Trust comprises five trustees, being two Senators, two members of the House of
Representatives and the Finance Minister. The Assistant Secretary, Funds and Superannuation, Governance and Public
Management, acts as adviser to the Trust.
The Finance Secretary also has certain powers under the Act in relation to Administration of the PCSS. Day-to-day
administration of the PCSS is undertaken by Finance.
Governor-General Pension Scheme (G-GPS)
Scheme information and regulatory framework
The Governor-General pension scheme was established under the Governor-General Act 1974 (the Act).
The scheme is an exempt public sector superannuation scheme for the purposes of the Superannuation Industry
(Supervision) Act 1993.
Benefits provided
The scheme is an unfunded defined benefit scheme that is governed by the rules set out in the Act. The scheme
remains open to new members.
The scheme provides a lifetime retirement allowance of 60% of the salary of the Chief Justice of the High Court of
Australia. There is no minimum qualification period for the payment of a retiring allowance and the allowance is not
dependent upon length of service.
The retirement allowance is funded by the Commonwealth at the time it becomes payable and is indexed by movements
in the salary of the Chief Justice of the High Court of Australia.
The Act also provides for the payment of a reversionary allowance to a surviving eligible spouse on the death of a
Governor-General or former Governor-General.
Funding arrangements
Governors-General are not required to contribute towards the cost of their benefit during their term of appointment.
Benefits are funded from Consolidated Revenue Fund.
Governance
The Finance Secretary has certain powers under the Act in relation to administration of the scheme. Day-to-day
administration of the scheme is undertaken by Finance.
125
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
Judges' Pensions Scheme (JPS)
Scheme information and regulatory framework
The Judges’ Pensions Scheme is a scheme for Federal Judges (excluding Federal Circuit Court Judges) and was
established under the Judges’ Pensions Act 1968 (the Act). The scheme remains open to new members.
The scheme is an exempt superannuation scheme for the purposes of the Superannuation Industry (Supervision) Act
1993.
Benefits provided
The Judges’ Pensions Scheme is an unfunded defined benefit scheme that is governed by the rules set out in the Act.
The scheme remains open to new members.
The main benefit provided by the Judges’ Pensions Scheme is a lifetime pension of 60% of judicial salary, which is
payable where a Judge has 10 or more years of service and is over age 60. The Act provides for a part pension (prorated based on length of service) where a Judge who has less than 10 years service, but not less than 6 years service,
must retire due to reaching the maximum retiring age in the Constitution (age 70).
A lump sum benefit, based on minimum Superannuation Guarantee, is payable to a Judge who does not have sufficient
judicial service to qualify for a lifetime pension.
Benefits under the Judges Pensions Scheme’ are funded by the Commonwealth at the time they become payable.
Pensions are indexed by movements in judicial salaries.
The Act also provides for the payment of reversionary pensions to surviving eligible spouses and/or children on the death
of a Judge or former Judge.
Funding arrangements
Judges are not required to contribute towards the cost of their benefit during their term of appointment. Benefits are
funded from Consolidated Revenue Fund.
Governance
The Finance Minister exercises certain discretions under the Act. The Finance Secretary also has certain powers under
the Act in relation to administration of the scheme. Day-to-day administration of the scheme is undertaken by Finance.
Federal Circuit Court Judges Death and Disability Scheme (FCCJDDS)
Scheme information and regulatory framework
The Federal Circuit Court of Australia Act 1999 (the Act) provides for employer funded superannuation contributions to a
superannuation fund of the Judge’s choice, as well as access to a statutory death and disability scheme (FCCJDDS).
Finance administers the FCCJDDS, which is an exempt public sector superannuation scheme for the purposes of the
Superannuation Industry (Supervision) Act 1993. Benefits under the FCCJDDS are paid from the Consolidated Revenue
Fund as they become payable.
Benefits provided
The scheme is unfunded and is governed by the rules set out in the Act. It is accessible to new Federal Circuit Court
Judges.
The disability benefit provides a retired disabled Federal Circuit Court Judge with a pension of 60% of the salary the
Judge would have received if they had not retired, and is payable until the earlier of the Judge attaining age 70, or his/her
death. In addition, the Judge continues to receive employer superannuation contributions in respect of this pension until
they reach age 65.
126
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
Funding arrangements
Judges are not required to contribute towards the cost of these benefits. Benefits are funded from Consolidated Revenue
Fund in the event they become payable.
Governance
The Finance Minister exercises certain discretions under the Act in respect of the death and disability scheme. Day-today administration of the scheme is undertaken by Finance.
127
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(c) Reconciliation of the present value of the defined benefit obligation - Financial year ended 30 June 2014
Present value of defined benefit obligations at beginning of
the year
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Total
$'000
72,737,546
67,777,214
1,059,819
19,382
1,102,200
1,715
142,697,876
264,247
2,385,108
11,550
3,627
41,100
676
2,706,308
3,045,127
75,021
2,887,545
574,923
44,611
-
844
-
47,400
-
82
-
6,025,609
649,944
25,528
210,066
-
-
-
-
235,594
-
-
-
-
3,559,616
Amounts recognised in income, expenses or equity:
Current service cost 1
Interest cost
Contributions by scheme participants
Productivity contributions
Actuarial (gains) / losses arising from changes in demographic
assumptions
-
3,559,616
Actuarial (gains) / losses arising from changes in financial
assumptions
1,704,434
3,135,100
31,949
432
31,500
9
4,903,424
Actuarial (gains) / losses arising from liability experience
1,314,927
964,887
(27,535)
(461)
(36,100)
(726)
2,214,992
Net amounts recognised in income, expenses or equity
6,429,284
13,717,245
60,575
4,442
83,900
41
20,295,487
Net benefits paid
Taxes, premiums and expenses paid
(3,841,290)
(3,958)
(1,250,016)
(31,538)
(44,740)
-
(1,306)
-
(42,700)
-
(273)
-
(5,180,325)
(35,496)
Present value of defined benefit obligations at end of the
year2
75,321,582
80,212,905
1,075,654
22,518
1,143,400
1,483
157,777,542
1
PCSS current service cost includes the cost of benefits accruing as a result of contributions deducted from members’ salaries that are paid into the Consolidated Revenue Fund.
2
The liabilities for employees of the ACT Government (ACT), the NT Government (NT) and the Australian National University (ANU) are excluded from the calculations of the
present value of defined benefit obligations.
128
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(c) Reconciliation of the present value of the defined benefit obligation - Financial year ended 30 June 2013
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Total
$'000
82,912,348
79,942,804
1,282,408
22,271
1,272,500
1,852
165,434,183
352,396
3,453,282
18,155
-
48,600
675
3,873,108
2,513,191
77,420
2,461,478
570,193
39,195
-
672
-
39,600
-
64
-
5,054,200
647,613
27,728
210,085
-
-
-
-
237,813
(11,422,201)
1,964,371
(19,073,055)
1,324,793
(224,516)
(19,724)
(2,286)
(62)
(209,700)
(7,900)
(76)
(564)
(30,931,834)
3,260,914
Net amounts recognised in income, expenses or equity
Net benefits paid
(6,487,095)
(3,683,337)
(11,053,224)
(1,080,608)
(186,890)
(35,699)
(1,676)
(1,213)
(129,400)
(40,900)
99
(236)
(17,858,186)
(4,841,993)
Taxes, premiums and expenses paid
Present value of defined benefit obligations at end of the year2
(4,370)
72,737,546
(31,758)
67,777,214
1,059,819
19,382
1,102,200
1,715
(36,128)
142,697,876
Present value of defined benefit obligations at beginning of the
year
Amounts recognised in income, expenses or equity:
Current service cost 1
Interest cost
Contributions by scheme participants
Productivity contributions
Actuarial (gains) / losses arising from changes in financial
assumptions
Actuarial (gains) / losses arising from liability experience
1
PCSS current service cost includes the cost of benefits accruing as a result of contributions deducted from members’ salaries that are paid into the Consolidated Revenue Fund.
2
The liabilities for employees of the ACT Government (ACT), the NT Government (NT) and the Australian National University (ANU) are excluded from the calculations of the
present value of defined benefit obligations.
129
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(d) Reconciliation of the fair value of scheme assets - Financial year ended 30 June 2014
CSS
PSS
$'000
$'000
Fair value of scheme assets at beginning of the year
Changes in fair value of scheme assets:
Interest income
Actual return on scheme assets less interest income
Contributions by employer - productivity contribution
Contributions by scheme participants
Net changes in fair value of scheme assets
Net appropriation from CRF
Net benefits paid
Taxes, premiums and expenses paid
Fair value of scheme assets at the end of the year1
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Total
$'000
3,894,657
13,855,717
-
-
-
-
17,750,374
156,387
229,791
594,273
971,893
-
-
-
-
750,660
1,201,684
25,528
75,021
210,066
574,923
-
-
-
-
235,594
649,944
486,727
3,229,177
2,351,155
425,720
44,740
1,306
42,700
273
2,837,882
3,743,916
(3,841,290)
(3,958)
(1,250,016)
(31,538)
(44,740)
-
(1,306)
-
(42,700)
-
(273)
-
(5,180,325)
(35,496)
3,765,313
15,351,038
-
-
-
-
19,116,351
(d) Reconciliation of the fair value of scheme assets - Financial year ended 30 June 2013
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Total
$'000
Fair value of scheme assets at beginning of the year
Changes in fair value of scheme assets:
3,911,019
12,106,610
-
-
-
-
16,017,629
Interest income
Actual return on scheme assets less interest income
114,811
283,686
377,848
1,207,217
-
-
-
-
492,659
1,490,903
Contributions by employer - productivity contribution
Contributions by scheme participants
27,728
77,420
210,085
570,193
-
-
-
-
237,813
647,613
503,645
3,167,700
2,365,343
496,130
35,699
1,213
40,900
236
2,868,988
3,741,878
(3,683,337)
(4,370)
(1,080,608)
(31,758)
(35,699)
-
(1,213)
-
(40,900)
-
(236)
-
(4,841,993)
(36,128)
3,894,657
13,855,717
-
-
-
-
17,750,374
Net changes in fair value of scheme assets
Net appropriation from CRF
Net benefits paid
Taxes, premiums and expenses paid
Fair value of scheme assets at the end of the year
1
1
The liabilities for employees of the ACT Government (ACT), the NT Government (NT) and the Australian National University (ANU) are excluded from the calculations of the fair
value of scheme assets.
130
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(e) Reconciliation of the Net Defined Benefit Liability - Financial year ended 30 June 2014
Net defined benefit liability at the beginning of the year
Current service cost 1
Net interest 2
Actual return on scheme assets less interest income
Actuarial (gains) / losses arising from changes in demographic
assumptions
Actuarial (gains) / losses arising from changes in financial
assumptions
Actuarial (gains) / losses arising from liability experience
Employer contributions - net appropriation from CRF
Net defined benefit liability at the end of the year3
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Total
$'000
68,842,889
264,247
2,888,740
(229,791)
53,921,497
2,385,108
2,293,272
(971,893)
1,059,819
11,550
44,611
-
19,382
3,627
844
-
1,102,200
41,100
47,400
-
1,715
676
82
-
124,947,502
2,706,308
5,274,949
(1,201,684)
-
3,559,616
-
-
-
-
3,559,616
1,704,434
1,314,927
(3,229,177)
71,556,269
3,135,100
964,887
(425,720)
64,861,867
31,949
(27,535)
(44,740)
1,075,654
432
(461)
(1,306)
22,518
31,500
(36,100)
(42,700)
1,143,400
9
(726)
(273)
1,483
4,903,424
2,214,992
(3,743,916)
138,661,191
PCSS current service cost includes the cost of benefits accruing as a result of contributions deducted from members’ salaries that are paid into the Consolidated Revenue Fund.
The Net interest on the net defined benefit liability can be viewed as comprising interest income on scheme assets, interest cost on the defined benefit obligation and interest on
the effect of the asset ceiling.
1
2
3
The liabilities for employees of the ACT Government (ACT), the NT Government (NT) and the Australian National University (ANU) are excluded from the calculations of the
present value of defined benefit obligations.
131
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(e) Reconciliation of the Net Defined Benefit Liability - Financial year ended 30 June 2013
CSS
Net defined benefit liability at the beginning of the year
Current service cost 1
Net interest 2
Actual return on scheme assets less Interest income
Actuarial (gains) / losses arising from changes in financial
assumptions
Actuarial (gains) / losses arising from liability experience
Employer contributions - net appropriation from CRF
Net defined benefit liability at the end of the year3
PSS
PCSS
G-GPS
JPS
FCCJDDS
Total
$'000
79,001,329
$'000
67,836,194
$'000
1,282,408
$'000
22,271
$'000
1,272,500
$'000
1,852
$'000
149,416,554
352,396
2,398,380
(283,686)
3,453,282
2,083,630
(1,207,217)
18,155
39,195
-
672
-
48,600
39,600
-
675
64
3,873,108
4,561,541
(1,490,903)
(11,422,201)
1,964,371
(3,167,700)
(19,073,055)
1,324,793
(496,130)
(224,516)
(19,724)
(35,699)
(2,286)
(62)
(1,213)
(209,700)
(7,900)
(40,900)
(76)
(564)
(236)
(30,931,834)
3,260,914
(3,741,878)
68,842,889
53,921,497
1,059,819
19,382
1,102,200
1,715
124,947,502
PCSS current service cost includes the cost of benefits accruing as a result of contributions deducted from members’ salaries that are paid into the Consolidated Revenue Fund.
The Net interest on the net defined benefit liability can be viewed as comprising interest income on scheme assets, interest cost on the defined benefit obligation and interest on
the effect of the asset ceiling.
3 The liabilities for employees of the ACT Government (ACT), the NT Government (NT) and the Australian National University (ANU) are excluded from the calculations of the
present value of defined benefit obligations.
1
2
132
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(f) The Net Defined Benefit Liabilities recognised on the statement of financial position - Financial year ended 30 June 2014
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Total
$'000
Defined benefit obligation
Less: fair value of scheme assets
75,321,582
(3,765,313)
80,212,905
(15,351,038)
1,075,654
-
22,518
-
1,143,400
-
1,483
157,777,542
(19,116,351)
Deficit / (surplus)
Net Defined benefit liability recognised in the statement
of financial position (Refer to Note 28B)
71,556,269
64,861,867
1,075,654
22,518
1,143,400
1,483
138,661,191
71,556,269
64,861,867
1,075,654
22,518
1,143,400
1,483
138,661,191
The Net Defined Benefit Liabilities recognised on the statement of financial position - Financial year ended 30 June 2013
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Total
$'000
Defined benefit obligation
Less: fair value of scheme assets
72,737,546
(3,894,657)
67,777,214
(13,855,717)
1,059,819
-
19,382
-
1,102,200
-
1,715
-
142,697,876
(17,750,374)
Deficit / (surplus)
Net Defined benefit liability recognised in the statement of
financial position (Refer to Note 28B)
68,842,889
53,921,497
1,059,819
19,382
1,102,200
1,715
124,947,502
68,842,889
53,921,497
1,059,819
19,382
1,102,200
1,715
124,947,502
133
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(g) Defined benefit cost recognised in the statement of comprehensive income - Financial year ended 30 June 2014
CSS
PSS
PCSS
$'000
$'000
$'000
264,247
2,385,108
11,550
Current service cost
2,888,740
2,293,272
44,611
Net interest
Defined benefit costs recognised in profit and loss
(Refer to Note 21B)
3,152,987
4,678,380
G-GPS
$'000
3,627
844
JPS
$'000
41,100
47,400
FCCJDDS
$'000
676
82
Total
$'000
2,706,308
5,274,949
56,161
4,471
88,500
758
7,981,257
Defined benefit cost recognised in the statement of comprehensive income - Financial year ended 30 June 2013
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Total
$'000
Current service cost
Net interest
352,396
2,398,380
3,453,282
2,083,630
18,154
39,195
672
48,600
39,600
675
64
3,873,107
4,561,541
Defined benefit cost recognised in the statement of
comprehensive income (Refer to Note 21B)
2,750,776
5,536,912
57,349
672
88,200
739
8,434,648
134
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
Scheme Assets
(h) The fair value of scheme assets is represented by:
Financial year ended 2014
Asset Category
Pooled Superannuation Trust
Total
Total
$'000
3,765,313
3,765,313
CSS
Level 1
$'000
-
Level 2
$'000
Level 3
$'000
Total
$'000
3,765,313
3,765,313
-
15,351,038
15,351,038
PSS
Level 1
$'000
-
Level 2
$'000
Level 3
$'000
15,351,038
15,351,038
-
Note: schemes that are not included in this table do not hold assets.
Assets invested in Pooled Superannuation Trust (PST) is related to CSS and PSS schemes, and only disclosed as Level 2 of PSTs for each scheme.
Level 1: net market value measurements are those derived from quoted prices in active markets.
Level 2: net market value measurements are those derived from inputs (other than quoted prices included within Level 1) that are observable such as prices or derived from prices.
Level 3: net market value measurements are those derived from valuation techniques that include inputs that are not based on observable market data.
135
Notes to and forming part of the financial statements
136
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(i) The percentage invested in each asset class at the reporting date is:
Financial year ended
CSS
30 June
PSS
30 June
30 June
2014
25.9%
Australian equity
29.5%
International equity
12.0%
Property
9.6%
Market neutral funds
5.2%
Objective based funds
6.6%
Credit
5.1%
Sovereign Bonds
6.1%
Cash
Note: schemes that are not included in this table do not hold assets.
30 June
2013
2014
2013
24.8%
34.3%
12.4%
8.8%
6.3%
6.8%
4.8%
1.8%
25.9%
29.5%
12.0%
9.6%
5.2%
6.6%
5.1%
6.1%
24.8%
34.3%
12.4%
8.8%
6.3%
6.8%
4.8%
1.8%
Fair value of scheme assets
The fair value of scheme assets does not include amounts relating to: any of Finance’s (and the Australian
Government’s) own financial instruments nor any property occupied by, nor other assets used by Finance (or the
Australian Government).
except:
Property holdings, including interest in various unit trusts, may include leases to Finance (or the Australian Government);
and Government bonds, amounting to CSS: $40.62 million (ARIA Investments Trust) as at 30 June 2014 ($25.0 million
as at 30 June 2013) and PSS: $177.94 million (ARIA Investments Trust) as at 30 June 2014 ($99.4 million as at 30 June
2013).
(j) Principal actuarial assumptions at balance sheet date
Assumptions for CSS/PSS
Financial year ended
30 June
2014
30 June
2013
30 June
2014
30 June
2013
Discount rate (active members)
Discount rate (pensioners)
4.1% pa
4.1% pa
4.3% pa
4.3% pa
4.1% pa
4.1% pa
4.3% pa
4.3% pa
N/A
7.0% pa
N/A
N/A
4.0% pa +
promotional
increases
4.0% pa +
promotional
increases
4.0% pa
4.0% pa
2.5% pa
2.5% pa
2.5% pa
4.0% pa
Expected rate of return on plan assets (active
members)
Expected salary increase rate
Expected pension increase rate
1
Assumptions for Other
Superannuation
Schemes1
PCSS, G-GPS, JPS and FCCJDDS.
137
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
Other material assumptions
CSS, PSS, and PCSS
Assumptions have been made regarding rates of retirement, death (for active, preserved and pension members),
mortality improvements, invalidity, resignation, retrenchment, retention and take up rates of pensions in the scheme.
Assumptions have also been made for the ages of spouses and rates of member contributions.
These assumptions are consistent to those used within the Long Term Cost Report (LTCR) of 30 June 2011, except for
two assumptions within the PSS scheme, which have been updated to reflect recent experiences. The two new
assumptions are:

P
SS members contribution rate increased by 0.6% of salary to 6.6% as at 30 June 2014, compared to 6.0% of salary
assumed within the 2011 LTCR; and

P
ension take-up rate has been updated from 70% to 80%
Certain estimates and approximations were required to determine the year end assets and liabilities in the Statement of
Administered Items in the timeframe required.
The fair value of scheme assets as at 30 June 2014 was estimated using the audited fair value of scheme assets at 30
June 2013 rolled forward to 30 June 2014 with cash flow items provided by the trustee, Commonwealth Superannuation
Corporation, other than benefits paid during the year, which were based on information provided by Finance. An
estimate of the actual rate of investment return earned by the scheme during the year to 30 June 2014 was used in
determining the fair value of scheme assets.
In relation to the defined benefit obligation, member data as at 30 June 2013 was projected forward allowing for
assumptions in accordance with the 2011 Long Term Cost Report. The data was then adjusted for the difference
between actual benefit payments and those based on the assumed decrements. Members’ account balances were
increased to be consistent with the estimated level of Earning Rates prevailing at 30 June 2014.
Other Schemes – G-GPS, JPS and FCCJDDS
The demographic assumptions used as at 30 June 2014 liability are those used for the last actuarial review of the
schemes as at 30 June 2011.
Benefits payable are paid from Consolidated Revenue on a pay as you go basis. Thus contributions made equal benefits
paid.
138
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(k) Sensitivity analysis for significant actuarial assumptions
The defined benefit obligation as at 30 June 2014 under several scenarios is presented below.
The defined benefit obligation has been recalculated by changing the assumptions as outlined below, whilst retaining all other assumptions.
Rate
Discount rate
Defined benefit obligation
- Base Case
- Scenario A
- Scenario B
Salary increase rate
Defined benefit obligation
- Base Case
- Scenario A
- Scenario B
Pension increase rate (by CPI rate)
Defined benefit obligation
- Base Case
4.1% pa
4.1% pa - 0.6%
pa
4.1% pa + 0.6%
pa
4.0% pa
4.0% pa - 1.0%
pa
4.0% pa + 1.0%
pa
CSS 1922
$'000
CSS 1976
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
833,880
74,487,702
80,212,905
1,075,654
22,518
1,143,400
1,483
870,606
80,024,863
90,860,096
1,181,178
23,921
1,246,600
1,512
800,093
69,586,049
71,287,527
984,108
21,245
1,052,800
1,456
74,487,702
80,212,905
1,075,654
22,518
1,143,400
1,483
74,250,344
75,385,608
933,535
20,424
1,024,800
1,444
74,748,901
85,795,166
1,251,730
24,803
1,284,900
1,524
NA
2.5% pa
833,880 74,487,702 80,212,905
2.5% pa - 0.5%
- Scenario A
pa
795,927 71,048,613 75,662,692
2.5% pa + 0.5%
- Scenario B
pa
878,379 78,562,030 85,772,173
Note: A more extensive sensitivity analysis is prepared in the Long Term Cost Report which is publicly available
139
N/A
N/A
N/A
N/A
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(l) Expected contributions
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDDS
$'000
Expected contributions - financial year ended 30 June 20151
22,855
207,699
41,029
1,500
44,000
263
Actual contributions - financial year ended 30 June 20141
25,528
210,066
44,740
1,306
42,814
273
1
This represents the employer productivity contributions which are paid into the CSS/PSS fund. For other schemes, employer contributions comprise appropriations from the
Consolidated Revenue Fund to pay benefits.
(m) Maturity profile of defined benefit obligation
Expected benefit payments for the financial year ending on
30-Jun-15
30-Jun-16
30-Jun-17
30-Jun-18
30-Jun-19
Following 5 years
Weighted average duration of the defined benefit obligation in years.
140
CSS 1922
CSS 1976
PSS
PCSS
G-GPS
JPS
FCCJDDS
$'000
101,612
93,940
86,696
79,883
73,492
285,792
7.3 years
$'000
4,053,027
4,107,218
4,156,743
4,176,491
4,215,179
21,322,948
12.1 years
$'000
1,130,865
1,281,036
1,444,947
1,628,885
1,836,907
13,076,310
21 years
$'000
41,029
41,806
46,073
47,134
48,040
270,554
16 years
$'000
1,000
2,000
2,000
2,000
2,000
10,000
10.1 years
$'000
43,670
46,448
49,336
51,827
54,780
316,986
14.3 years
$'000
2,000
3.3 years
Notes to and forming part of the financial statements
Note 33 Defined benefit superannuation scheme (continued)
(n) Asset-Liability matching strategies
There is no asset and liability matching strategies adopted by CSS/PSS and other schemes.
Finance has recognised a liability in the Schedule of Administered Items in respect of its defined benefit
superannuation arrangements administered on behalf of the Government.
All these schemes do not impose a legal liability on Finance to cover any deficit that exists in the scheme. The liability
instead rests with the Australian Government. The Government has established the Future Fund for the purpose of
accumulating assets to help meet this liability.
(o) Description of risks
The more significant risks relating to the defined benefits are outlined below.
• Investment risk – The risk that investment returns will be lower / higher than expected from the funded assets and
increase the unfunded liabilities of the Australian Government.
• Salary growth risk – The risk that wages or salaries (on which future benefit amounts will be based) will increase
more than expected, which increases the unfunded liabilities of the Australian Government.
• Longevity risk – The risk that pensioners live longer than expected which increases future pensions.
• Pension indexation risk – The risk that pensions will be indexed at a rate greater than expected, increasing future
pensions.
• Legislative risk – The risk that legislative changes could increase the cost of providing the defined benefits.
(p) Description of significant events
There were no plan amendments affecting the defined benefits payable, curtailments or settlements during the year.
141
Notes to and forming part of the financial statements
Note 34
Appropriations
Note 34A Annual appropriations ('recoverable GST exclusive')
2013-2014 Appropriations
Appropriation Act
FMA Act
Annual
Appropriation
$'000
Appropriations
reduced1
$'000
Section 30
$'000
Section 31
$'000
Section 32
$'000
Total
appropriation
$'000
Appropriation
applied2
$'000
Variance
$'000
DEPARTMENTAL
Ordinary annual services
Other services
271,370
-
-
31,599
-
302,969
(274,595)
28,374
Equity3
Total departmental
318,393
589,763
-
-
31,599
-
318,393
621,362
(259,879)
(534,474)
58,514
86,888
ADMINISTERED
Ordinary annual services
Outcome 1
Outcome 2
Outcome 3
Other services
Administered assets and liabilities4
11,373
712
291,683
(690)
(66)
(3,577)
613
-
-
10,683
646
288,719
(10,683)
(646)
(282,236)
6,483
8,967
8,967
(1,881)
7,086
Total administered
312,735
(4,333)
613
309,015
(295,446)
13,569
1 Appropriations reduced under Appropriation Acts (No. 1, 3 & 5) 2013-14: sections 10, 11, 12 and 15 and under Appropriation Acts (No. 2, 4 & 6) 2013-14: sections 12, 13, 14 and 17.
Departmental appropriations do not lapse at financial year-end. However, the responsible Minister may decide that part or all of a departmental appropriation is not required and
request the Finance Minister to reduce that appropriation. The reduction in the appropriation is effected by the Finance Minister's determination and is disallowable by Parliament. In
2014, there was no reduction in departmental appropriations.
As with departmental appropriations, the responsible Minister may decide that part or all of an administered appropriation is not required and request that the Finance Minister reduce
that appropriation. For administered appropriations reduced under section 11 of Appropriation Acts (No. 1, 3 & 5) 2013-14 and section 12 of Appropriation Acts (No. 2, 4 & 6) 2013-14,
the appropriation is taken to be reduced to the required amount specified in Table F of this note once the annual report is tabled in Parliament. All administered appropriations may be
adjusted by a Finance Minister’s determination, which is disallowable by Parliament.
2 Appropriation applied’ includes cash payments made from current and prior year appropriations compared to ‘Annual Appropriation’ which includes only current year appropriations.
3 The variance is due primarily to the delay in major project construction timeframes, with the appropriated funds now to be drawn in later years.
4 $4.2 million of the 2013-14 appropriated amount relates to 2012-13 expenditure already incurred with the remainder to be drawn in later years.
ComSuper, the Department of Parliamentary Services and the Department of Defence spent money from the Consolidated Revenue Fund (CRF) on behalf of Finance. The money
spent has been included in the table above.
142
Notes to and forming part of the financial statements
Note 34A Annual appropriations ('recoverable GST exclusive') (continued)
2012-2013 Appropriations
FMA Act
Appropriation Act
DEPARTMENTAL
Ordinary annual services
Other services
Equity
Total departmental
ADMINISTERED
Ordinary annual services
Outcome 1
Outcome 2
Outcome 3
Other services
Administered assets and liabilities
Total administered
Annual
Appropriation
$'000
Appropriations
reduced1
$'000
Section 30
$'000
Section 31
$'000
Section 32
$'000
Total
appropriation
$'000
Appropriation
applied2
$'000
Variance
$'000
283,821
-
1
54,686
-
338,508
(317,982)
20,526
190,464
(36,009)
-
-
-
154,455
(177,906)
(23,451)
474,285
(36,009)
1
54,686
-
492,963
(495,888)
(2,925)
11,434
697
267,524
(412)
(17)
(17,400)
7
484
-
-
11,029
680
250,608
(11,979)
(680)
(247,444)
(950)
3,164
11,822
-
-
-
-
11,822
(5,826)
5,996
291,477
(17,829)
491
-
-
274,139
(265,929)
8,210
1 Appropriations
reduced under Appropriation Acts (No. 1, 3 & 5) 2012-13: sections 10, 11, 12 and 15 and under Appropriation Acts (No. 2, 4 & 6) 2012-13: sections 12, 13, 14 and 17.
Departmental appropriations do not lapse at financial year-end. However, the responsible Minister may decide that part or all of a departmental appropriation is not required and
request the Finance Minister to reduce that appropriation. The reduction in the appropriation is affected by the Finance Minister's determination and is disallowable by Parliament. On
13 August 2013, the Finance Minister issued a determination to reduce departmental appropriations following a request by the Parliamentary Secretary to the Prime Minister. The
amount of the reduction under Appropriation Act (No.2) 2012-13 was $36.0 million. In addition, there was a reduction under Appropriation Act (No.1) 2012-13 for $0.5 million.
As with departmental appropriations, the responsible Minister may decide that part or all of an administered appropriation is not required and request that the Finance Minister reduce
that appropriation. For administered appropriations reduced under section 11 of Appropriation Acts (No. 1, 3 & 5) 2012-13 and section 12 of Appropriation Acts (No. 2, 4 & 6) 2012-13,
the appropriation is taken to be reduced to the required amount specified in Table F of this note once the annual report is tabled in Parliament. All administered appropriations may be
adjusted by a Finance Minister’s determination, which is disallowable by Parliament. On 13 August 2013, the Finance Minister issued a determination to reduce administered
appropriations following a request by the Parliamentary Secretary to the Prime Minister. The amount of the reduction against Appropriation Act (No.2) 2012-13 was $0.3 million.
2 ‘Appropriation applied’ includes cash payments made from current and prior year appropriations compared to ‘Annual Appropriation’ which includes only current year appropriations.
ComSuper and the Department of Defence spent money from the Consolidated Revenue Fund (CRF) on behalf of Finance. The money spent has been included in the table above.
143
Notes to and forming part of the financial statements
Note 34B Departmental and administered capital budgets ('recoverable GST exclusive')
Capital Budget Appropriations applied in
2013-14 (current and prior years)
2013-14 Capital Budget Appropriations
Appropriation Act
FMA Act
Annual
Capital
Budget
$'000
Section 32
$'000
Total Capital
Budget
Appropriations
$'000
Payments for
non-financial
assets3
$'000
Payments for
other
purposes
$'000
Appropriations
reduced2
$'000
Total
payments
$'000
Variance
$'000
10,921
-
-
10,921
7,909
-
7,909
3,012
7,890
-
-
7,890
4,142
-
4,142
3,748
DEPARTMENTAL
Ordinary annual services
Capital Budget1
ADMINISTERED
Ordinary annual services
Capital Budget1
1 Departmental
and Administered Capital Budgets are appropriated through Appropriation Acts (No. 1, 3, 5). They form part of ordinary annual services, and are not separately
identified in the Appropriation Acts. For more information on ordinary annual services appropriations, please see Note 34A: Annual Appropriations.
2 Appropriations reduced under Appropriations Acts (No. 1, 3, 5) 2013-14: sections 10, 11, 12 and 15, under Appropriation Acts (No.2, 4, 6) 2013-14: sections 12, 13, 14 and 17 or
via a determination by the Finance Minister.
3 Payments made on non-financial assets include purchases of assets, expenditure on assets which has been capitalised, costs incurred to make good an asset to its original
condition, and the capital repayment component of finance leases.
144
Notes to and forming part of the financial statements
Note 34B Departmental and administered capital budgets ('recoverable GST exclusive') (continued)
Capital Budget Appropriations applied in
2012-13 (current and prior years)
2012-13 Capital Budget Appropriations
Appropriation Act
FMA Act
Annual
Capital
Budget
$'000
Appropriations
reduced2
$'000
Section 32
$'000
Total Capital
Budget
Appropriations
$'000
Payments for
non-financial
assets3
$'000
Payments for
other
purposes
$'000
Total
payments
$'000
Variance
$'000
8,290
-
-
8,290
5,603
-
5,603
2,687
3,197
-
-
3,197
1,009
-
1,009
2,188
DEPARTMENTAL
Ordinary annual services
Capital Budget1
ADMINISTERED
Ordinary annual services
Capital Budget1
1 Departmental
and Administered Capital Budgets are appropriated through Appropriation Acts (No. 1, 3, 5). They form part of ordinary annual services, and are not separately
identified in the Appropriation Acts. For more information on ordinary annual services appropriations, please see Note 34A: Annual Appropriations.
2 Appropriations reduced under Appropriations Acts (No. 1, 3, 5) 2012-13: sections 10, 11, 12 and 15, under Appropriation Acts (No.2, 4, 6) 2012-13: sections 12, 13, 14 and 17 or
via a determination by the Finance Minister.
3 Payments made on non-financial assets include purchases of assets, expenditure on assets which has been capitalised, costs incurred to make good an asset to its original
condition, and the capital repayment component of finance leases.
145
Notes to and forming part of the financial statements
146
Notes to and forming part of the financial statements
Note 34C Unspent annual appropriations ('recoverable GST exclusive')
2014
2013
$'000
$'000
15,590
37,885
137,353
2,655
90,937
4,345
7,405
296,170
762
8,907
58,256
74,463
na
81,430
na
na
4,393
na
228,211
-
407
32
494
273
1,451
Appropriation Act (No. 2) 2012 - 2013
Appropriation Act (No. 2) 2013 - 2014
1,425
8,287
1,732
na
Appropriation Act (No. 4) 2008 - 2009
Appropriation Act (No. 4) 2012 - 2013
-
1,406
5,000
Appropriation Act (No. 1) 2011 - 20121
5
5
Appropriation Act (No. 1) 2012 - 2013
Appropriation Act (No. 1) 2013 - 2014
28,770
20,800
na
Appropriation Act (No. 1) 2012 - 2013 - Capital
Appropriation Act (No. 1) 2013 - 2014 - Capital
Total unspent administered annual appropriations
3,748
42,729
2,188
na
33,294
Authority
DEPARTMENTAL
Appropriation Act (No. 2) 2008 - 2009
Appropriation Act (No. 2) 2009 - 2010
Appropriation Act (No. 2) 2011 - 20121
Appropriation Act (No. 2) 2012 - 2013
Appropriation Act (No. 2) 2013 - 2014
Appropriation Act (No. 1) 2011 - 20121,2
Appropriation Act (No. 1) 2012 - 2013
Appropriation Act (No. 1) 2013 - 2014
Appropriation Act (No. 3) 2013 - 2014
Appropriation Act (No. 1) 2012 - 2013 – Capital
Appropriation Act (No. 1) 2013 - 2014 – Capital
Total unspent departmental annual appropriations
ADMINISTERED
Appropriation Act (No. 2) 2004 - 2005
Appropriation Act (No. 2) 2009 - 2010
Appropriation Act (No. 2) 2010 - 20111
Appropriation Act (No. 2) 2011 - 20121
1
Under the Omnibus Repeal Day (Autumn 2014) Bill 2014 these Acts will be repealed, as disclosed in Note 2.
2 The
financial framework provides flexibility in how departmental appropriations are drawn down. Prior year balances
have been reallocated to more accurately reflect the appropriation source for multi-year projects. $2.65m has been
reallocated to 2011-12 to be repealed under Omnibus Repeal Day (Autumn 2014) Bill 2014. The 2012-13 Annual
Report showed a balance of nil for 2013; retrospectively this should have shown $2.65m.
147
Notes to and forming part of the financial statements
Note 34D Special Appropriations ('recoverable GST exclusive')
Authority
Type
Purpose
Medibank Private Sale Act 2006
S. 8(1)
Departmental
Unlimited
amount
An Act about the sale of the
Commonwealth's equity in
Medibank Private Limited, and
for other purposes.
Superannuation Act 1922
s.119T(2)(b), s.119ZC(5),
s.134(1)
Administered
Unlimited
amount
Superannuation Act 19761
s.54L(2), s.54ZA, s.110TG(2),
s.112(2), s.112(5), s.112(9),
s.124(1)(b), s.124(1)(c)(i),
s.128(7A), s.140(3), s.145(5),
s.145(9)(b), s.160A(2), s.166(4),
s.180(4), s.241(2)
Administered
Unlimited
amount
An Act to provide
superannuation benefits for
persons employed by the
Commonwealth and by certain
Commonwealth authorities and
to make provision for the families
of those persons.
An Act to make provision for and
in relation to an occupational
superannuation scheme, known
as the Commonwealth
Superannuation Scheme, for
people employed by the
Commonwealth and for certain
other people.
Superannuation Act 19901
s.18, s.33E(2), s.37(1), s.37(3),
s.37A(2), s.38(2)
Administered
Unlimited
amount
Superannuation Act 2005
Appropriation provision
removed from 1 July 2011
Administered
Unlimited
amount
Governance of Australian
Government Superannuation
Schemes Act 2011
s.35(3)(a), s.35(4)
Administered
Unlimited
amount
Parliamentary Contributory
Superannuation Act 1948
s.15C(11), s.22DH(4), s.26D,
s.27
Administered
Unlimited
amount
1
An Act to make provision for and
in relation to an occupational
superannuation scheme for
persons employed by the
Commonwealth, and for certain
other persons.
An Act about the Public Sector
Superannuation Accumulation
Plan (PSSAP), and for related
purposes.
An Act to provide for the
administration of certain
Australian Government
superannuation schemes by a
single body and for related
purposes.
An Act to make provision for
contributory superannuation for
persons who have served as
Members of the Parliament.
Appropriation applied
2014
2013
$'000
$'000
(1,656)
-
(108,654)
(117,754)
(4,113,741)
(3,967,312)
(1,340,886)
(1,216,035)
-
-
(582)
(243)
(44,645)
(35,701)
Payments include amounts that are not an additional cost to the Australian Government and are funded through a
special capital appropriation from a return of superannuation benefit funded component associated with retirements of
scheme members and reimbursements from the emerging cost entities.
148
Notes to and forming part of the financial statements
Note 34D Special Appropriations ('recoverable GST exclusive') (continued)
Authority
Type
Purpose
Parliamentary Superannuation
Act 2004
s.18
Administered
Unlimited
amount
Members of Parliament (Life
Gold Pass) Act 2002
s.31
Administered
Parliamentary Entitlements Act
1990
s.11
Administered
Governor-General Act 1974
s.4AC(7), s.5
Administered
Unlimited
amount
An Act to provide for the making
of superannuation contributions
in respect of Members of
Parliament and for related
purposes.
An Act to set out the entitlements
of holders of a life gold pass.
Appropriation applied
2014
2013
$'000
$'000
(5,302)
(4,462)
(2,338)
(2,643)
(170,413)
(160,793)
Unlimited
amount
An Act relating to the provision of
benefits to Members of each
House of the Parliament.
Unlimited
amount
An Act to make provision in
relation to the salary of the
Governor-General, and the
payment of allowances to
persons, and to the spouses of
persons, who have held the
office of Governor-General, to
establish the office of Official
Secretary to the GovernorGeneral, to provide for the
employment of staff of the
Governor-General and for
related purposes.
(1,306)
(1,213)
Judges' Pensions Act 1968
s.12A(5), 14(b), s.17AB(7),
s.20(4)
Administered
Federal Circuit Court of
Australia Act 1999
s. 9G
Administered
Unlimited
amount
An Act to make provision for
pensions for Judges and their
families.
(42,814)
(40,742)
Unlimited
amount
An Act relating to the Federal
Circuit Court of Australia, and for
other purposes.
(273)
(236)
Financial Management and
Accountability Act 1997
s.28
Administered
Refund
An Act to provide for the proper
use and management of public
money, public property and other
Commonwealth resources, and
for related purposes.
(137)
(3,422)
Same-Sex Relationships (Equal
Treatment in Commonwealth
Laws – Superannuation) Act
2008, s.4(7)
Administered
Unlimited
amount
An Act to address discrimination
against same-sex couples and
their children in Commonwealth
laws and for other purposes.
(57)
(56)
149
Notes to and forming part of the financial statements
Note 34D Special Appropriations ('recoverable GST exclusive') (continued)
Appropriation applied
2014
2013
$'000
$'000
(4,834)
(4,763)
Authority
Type
Purpose
Commonwealth of Australia
Constitution Act s.66 (Ministers
of State Act 1952 s.5)
Limited to $5,000,000 annually
Balance lapsed
Administered
Limited
amount
An Act to determine the number
of the Ministers of State and to
make provision for their salaries
and allowances.
Airports (Transitional) Act 1996,
s.39, s.44, s.70, s.78 and
s.86(1)
Administered
Lands Acquisitions Act 1989,
s.124(5)
Administered
Unlimited
amount
An Act relating to the leasing of
airports, and for related
purposes.
-
-
Unlimited
amount
An Act relating to the acquisition
of land by the Commonwealth
and certain authorities and
dealings with land so acquired,
and for other purposes.
-
-
Parliamentary Retiring
Allowances (Increases) Act
1967, s.5(c)
Administered
Unlimited
amount
An Act to provide for increases in
certain parliamentary retiring
allowances.
-
-
Parliamentary Retiring
Allowances (Increases) Act
1971, s.10(2)
Administered
Public Accounts and Audit
Committee Act 1951, s.22(3)
Administered
Unlimited
amount
An Act to provide for increases in
certain parliamentary retiring
allowances.
-
-
Unlimited
amount
An Act to provide for a joint
Parliamentary Committee of
Public Accounts and Audit.
-
-
Public Works Committee Act
1969,
threshold limit of $15,000,000
and allowances limited to
$30,000
Administered
Superannuation (Pension
Increases) Act 1967, s.6.
Administered
Limited
amount
An Act relating to the
Parliamentary Standing
Committee on Public Works.
-
-
Unlimited
amount
An Act to provide for increases in
certain superannuation pensions.
-
-
Superannuation (Pension
Increases) Act 1971, s.11.
Administered
Unlimited
amount
An Act to provide for increases in
certain superannuation pensions.
-
-
Superannuation (Pension
Increases) Act 1961, s.6.
Administered
Transferred Officers'
Allowances Act 1948, s.8
Administered
Unlimited
amount
An Act to provide for increases in
certain superannuation pensions.
-
-
Unlimited
amount
An Act to provide for the
payment of allowances to certain
transferred officers.
-
-
150
Notes to and forming part of the financial statements
Note 34D Special Appropriations ('recoverable GST exclusive') (continued)
Authority
Type
Purpose
Aerospace Technologies of
Australia Limited Sale Act 1994
Administered
Unlimited
amount
An Act relating to the sale of
AeroSpace Technologies of
Australia Limited, and for related
purposes.
AIDC Sale Act 1997
Administered
Unlimited
amount
Superannuation Legislation
(Consequential Amendments
and Transitional Provisions) Act
2011
Administered
Unlimited
amount
Albury-Wodonga Development
Act 1973
Administered
Unlimited
amount
An Act to amend the Australian
Industry Development
Corporation Act 1970, and for
other purposes
An Act to deal with consequential
and transitional matters arising
from the enactment of the
Governance of Australian
Government Superannuation
Schemes Act 2011 and the
Comsuper Act 2011, and for
other purposes.
An Act relating to the
Development of the AlburyWodonga Area.
Total
Appropriation applied
2014
2013
$'000
$'000
-
-
-
-
-
-
-
(5,837,638)
(5,555,375)
Comsuper drew from the special appropriation authorised by the Superannuation Act 1922, the Superannuation Act
1976, the Superannuation Act 1990, the Governance of Australian Government Superannuation Schemes Act 2011 and
the Same-Sex Relationships (Equal Treatment in Commonwealth Laws – Superannuation) Act 2008. The money spent
has been included in the table above.
The Department of the House of Representatives and the Department of the Senate drew from the special appropriation
authorised by the Parliamentary Superannuation Act 2004 and Commonwealth of Australia Constitution Act s66
[Ministers of State Act 1952] salaries. The money spent has been included in the table above.
The Attorney-General’s Department, Department of Defence, Department of the Prime Minister and Cabinet, the
Department of Parliamentary Services, the Department of Foreign Affairs and Trade, the Department of the House of
Representatives and the Department of the Senate drew from the special appropriation authorised by the Parliamentary
Entitlements Act 1990. The money spent has been included in the table above.
Fair Work Commission drew from the special appropriation authorised by the Judges Pension Act 1968. The money
spent has been included in the table above.
151
Notes to and forming part of the financial statements
Note 34E Disclosure by agent in relation to annual and special appropriations ('recoverable GST exclusive')
2014
Total receipts
Total payments
2013
Total receipts
Total payments
Department
of Defence
$'000
Department
of Foreign
Affairs and
Trade
$'000
AttorneyGeneral's
Department1
$'000
Australian
Secret
Intelligence
Organisation2
$'000
Department
of Prime
Minister and
Cabinet3
$'000
Department
of the
Treasury3
$'000
-
-
414
(414)
17,639
(17,639)
1,862
(1,862)
1,133
(1,133)
Australian
Secret
Intelligence
Organisation
$'000
Department
of Prime
Minister and
Cabinet
$'000
Department
of the
Treasury
$'000
59,631
(59,631)
212
(212)
-
Department
of Defence
$'000
AusAID
$'000
AttorneyGeneral's
Department
$'000
77
(77)
59
(59)
370
(370)
Relationship between Finance and agency:
1 Solicitors-General pension payments.
2 Commonwealth New Building Project undertaken on behalf of ASIO.
3 COMCAR services provided for G20.
152
Notes to and forming part of the financial statements
Note 34F Reduction in Administered Items ('recoverable GST exclusive')
As per Appropriation Act (Act 1 s.11; Act 2 s.12)
Amount required - by Appropriation Act
2014
Ordinary Annual Services
Outcome 1
Outcome 2
Outcome 3
Administered capital budget
Total
Total amount
required
Total amount
appropriated in 2014
Total reduction2
Act (No.1)
Act (No.3)
10,683,019.86
646,090.18
0.00
0.00
10,683,019.86
646,090.18
11,373,000.00
712,000.00
689,980.14
65,909.82
283,793,000.00
4,313,209.66
0.00
0.00
283,793,000.00
4,313,209.66
283,793,000.00
7,890,000.00
0.00
3,576,790.34
299,435,319.70
0.00
299,435,319.70
303,768,000.00
4,332,680.30
Notes:
1. Numbers in this table are disclosed to the cent.
2. Administered items for 2013-14 will be reduced by these amounts when the financial statements are tabled in Parliament as part of Finance’s 2013-14 annual report.
This reduction is effective in 2014-15, but the amounts are reflected in the 2013-14 financial statements in Table A of this note, in column ‘Appropriations reduced’ as they are
adjustments to the 2013-14 appropriations.
As per Appropriation Act (Act 1 s.11; Act 2 s.12)
Amount required - by Appropriation Act
2013
Ordinary Annual Services
Outcome 1
Outcome 2
Outcome 3
Administered capital budget
Total
Total amount required
Total amount
appropriated in 2013
Total reduction2
Act (No.1)
Act (No.3)
11,021,740.73
679,994.00
0.00
0.00
11,021,740.73
679,994.00
11,434,000.00
697,000.00
412,259.27
17,006.00
219,340,000.00
3,197,000.00
27,587,000.00
0.00
246,927,000.00
3,197,000.00
264,327,000.00
3,197,000.00
17,400,000.00
0.00
234,238,734.73
27,587,000.00
261,825,734.73
279,655,000.00
17,829,265.27
Notes:
1. Numbers in this table are disclosed to the cent.
2. Administered items for 2012-13 were reduced by these amounts when the financial statements were tabled in Parliament as part of Finance’s 2012-13 annual report.
This reduction was effective in 2013-14, but the amounts were reflected in the 2012-13 financial statements in Table A of this note, in column ‘Appropriations reduced’ as they were
adjustments to the 2012-13 appropriations.
153
Notes to and forming part of the financial statements
Note 35
Special accounts
Note 35A Special accounts ('recoverable GST exclusive')
Departmental Special Accounts
Coordinated
Comcover
Property
1
Business Services
2
Procurement
3
Total Departmental
Contracting 4
2014
Balance brought forward
2013
2014
2013
2014
2013
2014
2013
2014
2013
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
288,826
256,631
221,568
226,837
896
901
36,044
42,084
547,334
526,453
10,055
13,092
170,716
116,755
-
-
951
4,813
181,722
134,660
Increases
Appropriation credited
Rendering of services
Insurance premiums
Reinsurance and other recoveries
-
68
73,203
53,193
-
-
125,602
73,868
198,805
127,129
87,658
83,960
-
-
-
-
-
-
87,658
83,960
6,106
62,859
6,106
-
-
-
-
-
-
62,859
Proceeds from sale of assets
-
-
-
260
-
-
-
-
-
260
Other
-
-
274
5,906
12
7,970
6,217
8,256
12,123
Total increases
160,572
103,226
244,193
176,114
12
-
134,523
84,898
539,300
364,238
Available for payments
449,398
359,857
465,761
402,951
908
901
170,567
126,982
1,086,634
890,691
Employees
(3,285)
(2,824)
(10,696)
(8,031)
-
-
(9,477)
(8,279)
(23,458)
(19,134)
Suppliers
(8,099)
(8,469)
(43,738)
(46,483)
(221)
(5)
(112,632)
(76,212)
(164,690)
(131,169)
Decreases
(72,341)
(54,738)
-
-
-
-
-
-
(72,341)
(54,738)
Property, plant and equipment
-
-
(87,377)
(84,553)
-
-
-
-
(87,377)
(84,553)
Intangibles
-
-
-
-
-
-
(80)
(247)
(80)
(247)
(40,421)
Insurance claims paid
-
-
(34,895)
(34,221)
-
-
-
(6,200)
(34,895)
(5,000)
(5,000)
(8,669)
(8,095)
-
-
-
-
(13,669)
(13,095)
Total decreases
(88,725)
(71,031)
(185,375)
(181,383)
(221)
(5)
(122,189)
(90,938)
(396,510)
(343,357)
Total balance carried forward
360,673
288,826
280,386
221,568
687
896
48,378
36,044
690,124
547,334
Capital repayments
Competitive neutrality
Represented by
1,526
244
6,048
695
-
-
198
662
7,772
1,601
Appropriation receivable
359,147
288,582
274,338
220,873
687
896
48,180
35,382
682,352
545,733
Total cash
360,673
288,826
280,386
221,568
687
896
48,378
36,044
690,124
547,334
Cash and bank
154
Notes to and forming part of the financial statements
Note 35B Special accounts ('recoverable GST exclusive') (continued)
Administered Special Accounts
Balance brought forward
Building Australia
Education Investment
Fund 5
Fund 6
Services for Other
Health and Hospital Fund
Entities and Trust
7
Moneys 8
Total Administered
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
-
-
-
-
-
-
-
257
-
257
41,469
34,038
38,764
30,381
25,594
21,937
-
-
105,827
86,356
180,835
87,054
117,502
54,190
87,594
48,662
-
-
385,931
189,906
Increases: Receipts
Interest
Net realised gain
Net exchange gains/(losses)
(117,511)
32,229
(91,223)
26,600
(61,966)
25,192
-
-
(270,700)
84,021
Investments realised
6,437,512
14,312,404
3,944,605
10,775,202
3,796,547
8,137,495
-
-
14,178,664
33,225,101
-
-
-
-
-
-
4
6
4
6
Total increases
6,542,305
14,465,725
4,009,648
10,886,373
3,847,769
8,233,286
4
6
14,399,726
33,585,390
Available for payments
6,542,305
14,465,725
4,009,648
10,886,373
3,847,769
8,233,286
4
263
14,399,726
33,585,647
Other
Decreases: Payments
(4,679)
(6,268)
(4,580)
(5,208)
(2,853)
(3,851)
(4)
(6)
(12,116)
(15,333)
Purchase of investments
(5,338,636)
(13,111,402)
(3,763,511)
(10,332,061)
(3,219,901)
(7,500,161)
-
-
(12,322,048)
(30,943,624)
Distributions
(1,198,990)
(1,348,055)
(241,557)
(549,104)
(625,015)
(729,274)
-
-
(2,065,562)
(2,626,433)
-
-
-
-
-
-
-
(257)
-
(257)
(6,542,305)
(14,465,725)
(4,009,648)
(10,886,373)
(3,847,769)
(8,233,286)
(4)
(263)
(14,399,726)
(33,585,647)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Suppliers
Transfer to OPA
Total decreases
Total balance carried forward
Represented by
Appropriation receivable
Total cash
155
Notes to and forming part of the financial statements
Note 35
1
Special accounts (continued)
Comcover Special Account
Legal Authority: Financial Management and Accountability Act 1997, s20. Purpose: For receipts and expenditure relating
to the promotion of risk management to General Government Sector entities; to administer the Commonwealth’s general
insurance fund; and to make payments in respect of any uninsured superannuation liability claims against an insured
Commonwealth entity. This account is non-interest bearing.
2
Property Special Account
Legal Authority: Financial Management and Accountability Act 1997, s20. Purpose: Facilitates the management of the
Commonwealth's non-Defence domestic property portfolio. This account is non-interest bearing.
3
Business Services Special Account
Legal Authority: Financial Management and Accountability Act 1997, s20. Purpose: For expenditure relating to
sentencing and disposing of records associated with the former Department of Administration Services (DAS), managing
and settling any personal injury and other legal claims arising from activities associated with the former DAS, and to
conclude any other activity arising from the former DAS. This account is non-interest bearing.
4
Coordinated Procurement Contracting Special Account
Legal Authority: Financial Management and Accountability Act 1997, s20. Purpose: For expenditure relating to the Whole
of Government contract for providing fleet management and leasing services, the centralised Government advertising
activities, and other co-coordinated procurement contracts for the benefit of Government entities. The account is noninterest bearing.
5
Building Australia Fund Special Account
Legal Authority: Financial Management and Accountability Act 1997, s21. Purpose: For making payments in relation to
transport infrastructure, communications infrastructure (including the National Broadband Network), energy infrastructure
and water infrastructure. The balance of the special account is invested by the Future Fund Board of Guardians. The
Future Fund Board of Guardians invests amounts standing to the credit of the special account, although the special
account itself is non-interest bearing.
6
Education Investment Fund Special Account
Legal Authority: Financial Management and Accountability Act 1997, s21. Purpose: For making payments in relation to
higher education infrastructure, research infrastructure, vocational education and training infrastructure, and any other
eligible education infrastructure. The balance of the special account is invested by the Future Fund Board of Guardians.
The Future Fund Board of Guardians invests amounts standing to the credit of the special account, although the special
account itself is non-interest bearing.
7
Health and Hospitals Fund Special Account
Legal Authority: Financial Management and Accountability Act 1997, s21. Purpose: For making payments in relation to
health infrastructure. The balance of the special account is invested by the Future Fund Board of Guardians. The Future
Fund Board of Guardians invests amounts standing to the credit of the special account, although the special account
itself is non-interest bearing.
156
Notes to and forming part of the financial statements
Note 35
8
Special accounts (continued)
Services for Other Entities and Trust Moneys Special Account – Department of Finance
Legal Authority: Financial Management and Accountability Act 1997, s20. Purpose: For the receipt of moneys
temporarily held in trust for other persons other than the Commonwealth and for the payment to a person other than the
Commonwealth, on behalf of the Government that are not FMA Act agencies, or as permitted by an Act. The account is
non-interest bearing. This account was established on 26 June 2012 for the purpose of combining the Other Trust
Moneys and the Services for Other Governments and Non-agency Bodies special accounts.
The following Special Account has not been used during the current and comparative years:
Lands Acquisition Account (Lands Acquisition Act 1989) [Special Public Money]
Legal Authority: Financial Management and Accountability Act 1997, s21. Purpose: For the holding of amounts of
compensation due to be paid to a person in respect of compulsory acquisition of interests in land where the amount of
compensation payable to the person has been determined but where the person has not, because of some default or
delay on the part of the person, received payment for the compensation within a 3 month period after the date of the
determination. To date there have not been any transactions through this account.
157
Notes to and forming part of the financial statements
Note 35C Investments made under Nation-building Funds Act 2008
Movements in Nation-building Funds
investments established under the
Nation-building Funds Act 2008
Building Australia
Fund
2014
Education Investment
2013
Fund
2014
2013
Health and Hospital
Fund
2014
2013
Total
Administered
2014
2013
$'000
4,720,849
$'000
5,895,496
$'000
3,893,179
$'000
4,320,412
$'000
2,703,870
$'000
3,326,755
$'000
11,317,898
$'000
13,542,663
6,530,790
130,550
13,785,544
202,203
3,966,063
108,212
10,541,297
147,478
3,804,371
75,980
7,854,135
118,002
14,301,224
314,742
32,180,976
467,683
Foreign currency realised
Distributions - operating
(117,511)
(1,198,989)
32,229
(981,610)
(91,223)
(225,862)
26,600
(407,181)
(61,966)
(625,015)
25,193
(729,274)
(270,700)
(2,049,866)
84,022
(2,118,065)
Distributions - capital
Investments made
(6,426,265)
(366,445)
(13,840,292)
(15,695)
(3,911,660)
(141,923)
(10,588,295)
(3,761,755)
(7,887,093)
(15,695)
(14,099,680)
(508,368)
(32,315,680)
(4,654)
3,634,770
(6,276)
4,720,849
(4,577)
3,718,437
(5,209)
3,893,179
(2,839)
2,132,646
(3,848)
2,703,870
(12,070)
9,485,853
(15,333)
11,317,898
Opening balance
Investments realised
Interest earned
Amounts transferred to operations1
Closing fund balance
Investment Mandates for each of the Nation-building Funds were issued by the responsible Ministers on 14 July 2009 and set a target benchmark return of the Australian three
month bank bill swap rate + 0.3% per annum calculated on a rolling 12 month basis (net of fees). The Future Fund Board of Guardians is required to invest in such a way as to
minimise the probability of capital losses over a 12 month horizon.
1 The
158
operations of the Nation-building Funds are funded from revenues generated by the funds.
Notes to and forming part of the financial statements
Note 36
Compliance with statutory conditions for payments from the Consolidated Revenue Fund
Section 83 of the Constitution provides that no amount may be paid out of the Consolidated Revenue Fund except under
an appropriation made by law. The Department of Finance (Finance) in its central agency role provided information to all
agencies in 2011 regarding the need for specific risk assessments in relation to section 83. It is impossible to fully
remove the potential for section 83 breaches for all payments. In the vast majority of cases Finance relies on information
provided by its clients to pay appropriate entitlements. The information provided by customers is not always accurate
resulting in potential breaches of section 83.
During 2012-13, additional legal advice was received that indicated there could be breaches of section 83 under certain
circumstances with payments for long service leave, goods and services tax and payments under determinations of the
Remuneration Tribunal. During 2013-14, Finance has reviewed its processes and controls over payments for these items
to minimise the possibility for future breaches as a result of these payments. Risk assessments have been undertaken
to determine the level of risk of non-compliance for the circumstances mentioned in the legal advice applying to Finance.
Finance has identified risks in relation to Ministerial and Parliamentary Services special appropriations where breaches
are occurring and there are plans underway to make legislative changes.
The current status of the reviews, identified breaches and remedial action is set out in the table on the following page.
159
Notes to and forming part of the financial statements
Note 36
Compliance with statutory conditions for payments from the Consolidated Revenue Fund (continued)
Appropriations identified as subject to
conditions
Expenditure
in 2013-14
$'000
Review
complete?
(Yes/No) 1
Breaches identified to date 2
Were any
breaches
identified?
Special appropriation - Ministerial
and Parliamentary payments
Parliamentary Entitlements Act 1990
Members of Parliament (Life Gold
Pass) Act 2002
Commonwealth of Australia
Constitution Act 1901 s.66 (limit set
under Ministers of State Act 1952 s.5)
Other appropriation
Long Service Leave (Commonwealth
employees) Act 19764
Remedial
action taken
or
proposed3
Number
Total
Amounts
recovered
Amounts
waived
Amounts yet
to be
recovered
$000
$000
$000
$000
170,413
Yes
Yes
33
69
69
-
-
LP
2,338
Yes
No
N/A
N/A
N/A
N/A
N/A
LP
4,834
Yes
No
N/A
N/A
N/A
N/A
N/A
LP
12,202
Yes
No
N/A
N/A
N/A
N/A
N/A
N/A
1
Review : Finance has undertaken an assessment of the inherent level of risk of a breach. Legislation marked as completed has undergone internal assessment by the business area.
2
Breaches: The work conducted to date has identified that a number of breaches exist. Amounts reported have been derived by analysing data on recovery of overpayments and other identified risk areas
for 2013-14. Business processes exist to ensure that identified overpayments are recovered. The numbers and amounts represent the overpayments made during 2013-14 under relevant programmes.
3
Remedial action taken or proposed (L= legislative change; S= systems change; P= planned change; M= change made)
160
Notes to and forming part of the financial statements
Note 37
Compensation and debt relief
Departmental
2014
$
2013
$
No ‘Act of Grace’ payments were expended during the reporting period (2013: no
expenses).
-
-
No waivers of amounts owing to the Australian Government were made pursuant
to subsection 34(1) of the Financial Management and Accountability Act 1997
(2013: no waivers).
-
-
No payments were provided under the Compensation for Detriment caused by
Defective Administration (CDDA) Scheme during the reporting period (2013: no
payments).
-
-
No ex-gratia payments were provided for during the reporting period
(2013: no payments).
-
-
No payments were provided in special circumstances relating to APS
employment pursuant to section 73 of the Public Service Act 1999 (PS Act)
during the reporting period (2013: no payments).
-
-
1,218,525
1,255,373
7,709
4,809
No payments were provided under the Compensation for Detriment caused by
Defective Administration (CDDA) Scheme during the reporting period (2013: no
payments).
-
-
No ex-gratia payments were provided for during the reporting period (2013: no
payments).
-
-
No payments were provided in special circumstances relating to APS
employment pursuant to section 73 of the Public Service Act 1999 during the
reporting period (2013: no payments).
-
-
Administered
57 ‘Act of Grace’ payments were expensed during the reporting period (2013: 61
expenses).
57 of the above payments amounting to $1,218,525 were paid on a periodic basis
(2013: 61 payments amounting to $1,255,373). These are expected to continue
in future years. The estimated amount outstanding in relation to payments being
made on a periodic basis as at 30 June 2014 was $11,792,000 ($13,539,000 at
30 June 2013).
1 waivers of amounts owing to the Australian Government were made pursuant to
subsection 34(1) of the Financial Management and Accountability Act 1997
(2013: 2 waivers).
161
Notes to and forming part of the financial statements
Note 38
Reporting of outcomes
Note 38A Net cost of outcome delivery
Outcome 1
2014
2013
$'000
$'000
Outcome 2
2014
2013
$'000
$'000
Outcome 3
2014
2013
$'000
$'000
Not attributed
2014
2013
$'000
$'000
Total
2014
$'000
2013
$'000
Departmental
Expenses (incl tax expense)
Own-source income
252,449
133,004
227,596
100,483
362,176
154,395
242,011
192,753
43,803
12,278
43,676
8,225
-
-
658,428
299,677
513,283
301,461
Net cost/(contribution) of outcome
delivery
119,445
127,113
207,781
49,258
31,525
35,451
-
-
358,751
211,822
10,493,305
10,636,957
644
680
519,293
421,599
-
-
11,013,242
11,059,236
2,258,134
2,600,777
170,341
469,850
11,167
27,004
20,542
26,054
2,460,184
3,123,685
8,235,171
8,036,180
(169,697)
(469,170)
508,126
394,595
(20,542)
(26,054)
8,553,058
7,935,551
Administered
Expenses
Own-source income
Net cost/(contribution) of outcome
delivery
Finance uses an activity based costing system to determine the attribution of its shared items. The basis of attribution in the above table is consistent with the basis used for the 201314 Budget.
Outcomes 1, 2 and 3 are described in Note 1.1. Net costs shown include intra-Government costs that are eliminated in calculating the actual budget outcome.
162
Notes to and forming part of the financial statements
Note 38B Major classes of departmental expenses, income, assets and liabilities by outcome
Outcome 1
2014
2013
$'000
$'000
Outcome 2
2014
2013
$'000
$'000
Outcome 3
2014
2013
$'000
$'000
Not attributed
2014
2013
$'000
$'000
Total
2014
$'000
2013
$'000
Departmental expenses
Employee benefits
Suppliers
Depreciation and amortisation
Finance costs
Write-down and impairment of assets
Losses from asset sales
Insurance claims
Other expenses (incl tax expense)
Total expenses
97,924
142,779
7,007
15
4,724
252,449
109,210
110,828
7,277
26
229
26
227,596
42,996
66,686
16,073
8
114,155
108,394
13,864
362,176
43,299
74,673
15,149
14
821
1,772
92,849
13,434
242,011
27,159
12,827
3,767
7
43
43,803
29,227
10,956
3,393
11
82
7
43,676
-
-
168,079
222,292
26,847
30
118,922
108,394
13,864
658,428
181,736
196,457
25,819
51
1,132
1,805
92,849
13,434
513,283
Departmental income
Revenue from Government
Rendering of services
Rental income
Insurance premiums
Reinsurance and other recoveries
Other revenue
Other gains
Interest
Total income
102,755
123,419
9,346
239
235,759
118,237
93,122
7,636
(275)
218,720
124,133
7,406
48,180
86,258
6,589
259
5,703
278,528
118,219
10,360
47,666
82,705
5,154
41,398
5,470
310,972
34,800
12,197
57
24
47,078
37,992
8,077
148
46,217
-
-
261,688
143,022
48,180
86,258
6,589
9,662
5,966
561,365
274,448
111,559
47,666
82,705
5,154
7,636
41,271
5,470
575,909
163
Notes to and forming part of the financial statements
Note 38B Major classes of departmental expenses, income, assets and liabilities by outcome (continued)
Outcome 1
2014
2013
$'000
$'000
Departmental assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Land and buildings
Plant and equipment
Investment properties
Intangibles
Other non-financial assets
Total assets
Departmental liabilities
Suppliers
Return of equity
Unearned revenue
Outstanding insurance claims
Other payables
Employee provisions
Other provisions
Total liabilities
1
Outcome 3
2014
2013
$'000
$'000
Not attributed1
2014
2013
$'000
$'000
Total
2014
$'000
2013
$'000
198
155,283
3,493
5,290
43,174
5,308
662
82,994
4,393
6,832
41,464
3,010
7,574
645,123
4,648
1,014,609
3
649,096
1,895
1,209
939
642,909
4,484
925,259
793
608,303
9,162
327
43,711
307
977
559
5,193
75
43,825
347
1,384
325
6,685
54
1,528
28,761
4,483
6,505
12,758
4,299
1,683
19,415
6,838
8,610
12,113
1,888
9,300
872,878
8,448
1,020,069
12,357
649,096
63,020
10,891
3,284
789,143
9,224
933,481
16,560
608,303
69,424
5,279
212,746
139,355
2,324,157
2,192,176
50,822
52,620
58,334
50,547
2,646,059
2,434,698
12,999
49,961
1,850
22,050
86,860
10,920
2,402
1,475
24,087
38,884
62,370
10,359
19,152
329,423
3,282
10,519
5,911
441,016
17,050
34,112
10,636
295,170
2,033
10,796
5,610
375,407
1,001
629
215
6,193
52
8,090
531
2,285
575
5,710
50
9,151
5,884
510
16,305
1,625
24,324
3,536
2,554
16,245
750
23,085
82,254
10,359
69,742
329,423
5,857
55,067
7,588
560,290
32,037
34,112
15,323
295,170
6,637
56,838
6,410
446,527
Assets and liabilities that cannot be reliably attributed to outcomes.
164
Outcome 2
2014
2013
$'000
$'000
Notes to and forming part of the financial statements
Note 38C Major classes of administered expenses, income, assets and liabilities by outcomes
Outcome 1
2014
Outcome 2
2014
2013
$'000
$'000
2013
$'000
$'000
5,302
4,462
644
-
7,981,257
7,959,092
2,049,866
Outcome 3
2014
2013
Not attributed1
2014
2013
Total
2014
2013
$'000
$'000
$'000
$'000
$'000
$'000
680
-
302,148
232,448
-
-
644
307,450
680
236,910
-
-
-
-
-
-
7,981,257
7,959,092
2,118,065
-
-
-
-
-
-
2,049,866
2,118,065
22,351
-
25,291
-
-
-
192,950
21,504
173,092
15,570
-
-
215,301
21,504
198,383
15,570
-
-
-
-
2,530
161
75
129
-
-
2,530
161
75
129
666
492
-
-
-
285
-
-
-
666
285
492
270,701
163,162
394,851
134,704
-
-
-
-
-
-
270,701
163,162
394,851
134,704
10,493,305
10,636,957
644
680
519,293
421,599
-
-
11,013,242
11,059,236
Administered expenses
Grants
Employee benefits
Superannuation
Nation-building Funds
distribution
Suppliers
Depreciation and amortisation
Write-down and impairments
Finance costs
Losses from asset sales
Other expenses
Foreign exchange losses
Losses on financial investments
Total expenses
Administered income
Rendering of services
Interest
Dividends
Superannuation contributions
Other revenue
Foreign exchange gains
Gains on financial investments
Other gains
Total income
-
-
12,909
-
3,548
3,989
-
-
16,457
3,989
122,362
-
107,006
-
157,312
467,852
-
-
20,542
-
26,054
-
142,904
157,312
133,060
467,852
1,457,615
232
1,499,161
9,259
120
1,998
7,067
6,923
-
-
1,457,615
7,419
1,499,161
18,180
290,867
385,931
84,022
900,478
-
-
-
-
-
-
290,867
385,931
84,022
900,478
1,127
2,258,134
851
2,600,777
170,341
469,850
552
11,167
16,092
27,004
20,542
26,054
1,679
2,460,184
16,943
3,123,685
¹ Expenses and income that cannot be reliably attributed to outcomes.
165
Notes to and forming part of the financial statements
Note 38C Major classes of administered expenses, income, assets and liabilities by outcomes (continued)
Outcome 1
2014
$'000
Outcome 2
2013
$'000
2014
$'000
Outcome 3
2013
$'000
2014
$'000
Not attributed1
Total
2013
$'000
2014
$'000
2013
$'000
2014
$'000
2013
$'000
Administered assets
Cash and cash equivalents
Trade and other receivables
Investments
Other financial assets
Land and buildings
Infrastructure, plant and
equipment
4,920
8,283
-
-
-
3,866
1,704,153
455,076
1,709,073
467,225
124,794
9,722,783
143,857
11,692,175
1,238
4,532,827
299,999
4,206,884
57,092
-
42,471
-
-
-
183,124
14,255,610
486,327
15,899,059
53,390
-
54,756
-
-
-
618
26,706
7
41,341
1,673
-
-
55,681
26,706
54,763
41,341
-
-
-
-
72,812
62,809
-
-
72,812
62,809
-
-
-
-
2,491
3,615
3,161
3,458
-
-
2,491
3,615
3,161
3,458
9,905,887
11,899,071
4,534,065
4,506,883
163,334
157,113
1,705,826
455,076
16,309,112
17,018,143
85,155
-
318,597
-
227
123
11,307
15,673
15,477
15,754
1,483,460
1,497,857
96,462
1,499,360
334,074
1,513,734
Employee provisions
Superannuation
138,661,191
124,947,502
-
-
234,396
-
186,501
-
-
-
234,396
138,661,191
186,501
124,947,502
Other provisions
Total liabilities
13,040
138,759,386
14,856
125,280,955
227
123
5,200
266,576
5,509
223,241
1,483,460
1,497,857
18,240
140,509,649
20,365
127,002,176
Intangibles
Other non financial assets
Total assets
Administered liabilities
Suppliers
Other payables
¹ Assets and liabilities that cannot be reliably attributed to outcomes.
166
Notes to and forming part of the financial statements
Note 39
Competitive neutrality and cost recovery
Note 39A Competitive neutrality - expenses and dividend declared
Competitive neutrality - rates and other taxes
Commonwealth tax equivalent expense1
Total expenses and dividend declared
30 June
2014
$'000
30 June
2013
$'000
2,813
5,856
2,343
5,542
8,669
7,885
1
The amount of Commonwealth tax equivalent payable on the taxable profit for the period was $5.9 million (2012-13:
$5.5 million), therefore there were no adjustments for timing differences in accordance with AASB 112 Income Taxes.
Note 39B Receipts subject to cost recovery policy
Finance received no departmental receipts subject to the cost recovery policy for the period (2013: $nil).
Note 39C Competitive neutrality - administered expenses and dividend declared
Finance made no administered competitive neutrality payments during the period (2013: $nil).
Note 39D Administered receipts subject to cost recovery policy
There were no receipts subject to cost recovery policy (2013: $nil).
Note 40
Net cash appropriation arrangements
Total comprehensive income/(loss) less depreciation/amortisation
expenses previously funded through revenue appropriations 2
Add: depreciation/amortisation expenses previously funded through revenue
appropriation3
Total comprehensive income/(loss) - as per Statement of Comprehensive
Income
2
(100,417)
52,532
14,660
14,682
(85,757)
67,214
From 2010-11, the Government introduced net cash appropriation arrangements, where revenue appropriations for
depreciation/amortisation expenses ceased. Entities now receive a separate capital budget provided through equity
appropriations. Capital budgets are to be appropriated in the period when the cash payments for capital expenditure are
required.
3 Excludes depreciation and amortisation of $14.7 million (2012-13: $14.7 million) for Special Accounts, which are
appropriated through their own determination.
167