Future Fund Management
Agency
Agency Resources and Planned
Performance
FUTURE FUND MANAGEMENT AGENCY
Section 1: Agency Overview and Resources ......................................................... 147
1.1
Strategic Direction Statement ....................................................................... 147
1.2
Agency Resource Statement ........................................................................ 148
1.3
Budget Measures .......................................................................................... 148
Section 2: Outcomes and Planned Performance ................................................... 149
2.1
Outcomes and Performance Information...................................................... 149
Section 3: Explanatory Tables and Budgeted Financial Statements................... 153
3.1
Explanatory Tables ....................................................................................... 153
3.2
Budgeted Financial Statements .................................................................... 154
145
FUTURE FUND MANAGEMENT AGENCY
Section 1: Agency Overview and Resources
1.1
STRATEGIC DIRECTION STATEMENT
The Future Fund Management Agency (FFMA) was established by the
Future Fund Act 2006 to support and advise the Future Fund Board of Guardians (the
Board) in its task of investing the assets of the Future Fund.
The scope of the FFMA and the Board was extended by the Nation-building Funds Act
2008 to include the management of investments to grow other Australian Government
Asset Funds as a means to provide financing sources for substantial future investments
in the Australian economy. As a result the FFMA now supports the Board in
managing investments of the Future Fund, Building Australia Fund (BAF), Education
Investment Fund (EIF) and Health and Hospitals Fund (HHF).
Since its establishment the FFMA has focused on supporting and advising the Board of
Guardians in developing and implementing appropriate investment strategies for the
funds. Particular focus has been placed on effectively managing the Future Fund
portfolio during the most significant period of market upheaval in recent decades.
The FFMA will continue to consolidate its capabilities to ensure adequate resources are
available to support the Board.
The long term asset allocation and associated investment approach for the Future Fund
was detailed in the 2010-11 Annual Report. Recognising the potential for continued
volatility in investment markets, an important emphasis for the FFMA and the Board is
maintaining a long term investment perspective and strategy that balances risk with
expected return as required under the Investment Mandate.
The FFMA provides support and advice to the Board in relation to the BAF, EIF and
HHF and is focused on developing and implementing investment strategies consistent
with the legislation and mandates. The investment strategies and approach for these
funds is detailed in the 2010-11 Annual Report.
147
FFMA Budget Statements
1.2
AGENCY RESOURCE STATEMENT
Table 1.1 shows the total resources from all sources. The table summarises how
resources will be applied by outcome and by administered and departmental
classification.
Table 1.1: Future Fund Management Agency Resource Statement — Budget
Estimates for 2012-13 as at Budget May 2012
Estimate
of prior
year amounts
available in
2012-13
$'000
Special Accounts
Opening balance
Non-appropriation receipts to
Special Accounts
Total Special Accounts
Total net resourcing for FFMA
Reader note: All figures are GST exclusive.
Total
estimate
Actual
available
appropriation
2012-13
$'000
2012-13
$'000
2011-12
$'000
-
-
-
-
-
421,262
421,262
421,262
421,262
380,864
380,864
-
421,262
421,262
380,864
+
Proposed
at Budget
=
Note:
Future Fund does not receive any Appropriations. Its outputs are funded as payments from the Future Fund
Special Account.
1.3
BUDGET MEASURES
There are no budget measures in 2012-2013 for FFMA.
148
FFMA Budget Statements
Section 2: Outcomes and Planned Performance
2.1
OUTCOMES AND PERFORMANCE INFORMATION
Government outcomes are the intended results, impacts or consequences of actions by
the Australian Government on the Australian community. Commonwealth programs
are the primary vehicle by which government agencies achieve the intended results of
their outcome statements. Agencies are required to identify the programs which
contribute to Government outcomes over the Budget and forward years.
Each outcome is described below together with its related programs, specifying the
performance indicators and targets used to assess and monitor the performance of
FFMA in achieving Government outcomes.
Outcome 1: Make provision for the Commonwealth’s unfunded
superannuation liabilities and payments for the creation and development of
infrastructure, by managing the operational activities of the Future Fund and
the Nation-Building Funds, in line with the Government’s investment
mandates.
Outcome 1 Strategy
The FFMA contributes to the achievement of the outcome through the provision of
advice and support to the Future Fund Board of Guardians and through the
implementation of investment decisions. This work is focused on ensuring that the
assets of the Future Fund and the Nation Building Funds are invested in line with the
relevant legislation and investment mandates to achieve their investment objectives.
This work includes portfolio modelling, risk management, the appointment of
investment managers and the application of appropriate corporate governance.
The specific investment strategies applied to the investment of assets, together with the
overarching investment beliefs and principles of the organisation, are detailed in the
Annual Report.
149
FFMA Budget Statements
Outcome Expense Statement
Table 2.1 provides an overview of the total expenses for the Outcome by program.
Table 2.1: Budgeted Expenses for Outcome 1
Outcom e 1: Make provision for the Com m onw ealth's unfunded
superannuation liabilities and paym ents for the creation and
developm ent of infrastructure, by m anaging the operational
activities of the Future Fund and the Nation-Building Funds,
in line w ith the Governm ent's investm ent m andates.
2011-12
Estimated
actual
expenses
$'000
2012-13
Estimated
expenses
Program 1.1: Managem ent of the Investm ent of the Future Fund
Special Accounts
34,212
40,789
34,212
40,789
720
720
720
720
Outcom e 1 Totals by appropriation type
Special Accounts
34,932
41,509
Total expenses for Outcom e 1
34,932
41,509
Total for Program 1.1
Program 1.2: Managem ent of the investm ent of the
Building Australia Fund, Education Investm ent Fund and
Health and Hospitals Fund
Special Accounts
Total for Program 1.2
$'000
2011-12
2012-13
Average Staffing Level (num ber)
86
95
Program splits and totals are indicative estimates and may change in the course of the budget year as
Australian Government priorities change.
150
FFMA Budget Statements
Contributions to Outcome 1
Program 1.1: Management of the Investment of the Future Fund
Program Objective
 The FFMA supports the Board of Guardians in investing to accumulate assets for
the purpose of offsetting the unfunded superannuation liabilities of the
Australian Government which will fall due on future generations.
Program 1.1: Management of the Investment of the Future Fund
Special Account Expenses:
Future Fund Special Account
Total program expenses
2011-12
Revised
budget
$'000
2012-13
Budget
34,212
34,212
40,789
40,789
$'000
2013-14 2014-15 2015-16
Forw ard Forw ard Forw ard
year 1
year 2
year 3
$'000
$'000
$'000
42,410
42,410
43,812
43,812
Program 1.1 Deliverables
 Ensure all decisions of the Board of Guardians are given effect as directed by the
Board within timeframes and quality levels agreed with the Board.
 Ensure all investments are made in accordance with relevant legislation,
Investment Mandate and ministerial directions.
 Provide administrative services to the Board.
 Provide information and recommendations to the Board.
 Advise the Board about the performance of the Board’s functions.
 Make resources and facilities available to the Board.
Program 1.1 Key Performance Indicators
 Provide assistance and advice to the Board in pursuit of achieving the Investment
Mandate target return of at least 4.5 to 5.5% above the Consumer Price Index
(CPI) over the long term (interpreted as rolling 10 year periods) with acceptable
but not excessive risk.
151
45,210
45,210
FFMA Budget Statements
Program 1.2: Management of the Investment of the Building Australia Fund,
Education Investment Fund and Health and Hospitals Fund
Program Objective
 The Nation-building Funds Act 2008 established the Education Investment Fund,
the Health and Hospitals Fund and the Building Australia Fund on 1 January
2009. The role of the FFMA was extended to include supporting the Board of
Guardians in the investment of the assets of these funds.
Program 1.2: Management of the Investment of the Building Australia Fund,
Education Investment Fund and Health and Hospitals Fund
Special Account Expenses:
Future Fund Special Account
Total program expenses
2011-12
Revised
budget
$'000
2012-13
Budget
720
720
720
720
$'000
2013-14 2014-15 2015-16
Forw ard Forw ard Forw ard
year 1
year 2
year 3
$'000
$'000
$'000
720
720
720
720
Program 1.2 Deliverables
 Ensure all decisions of the Board of Guardians are given effect as directed by the
Board within timeframes and quality levels agreed with the Board.
 Ensure all investments are made in accordance with relevant legislation,
Investment Mandate and ministerial directions.
 Provide administrative services to the Board.
 Provide information and recommendations to the Board.
 Advise the Board about the performance of the Board’s functions.
 Make resources and facilities available to the Board.
Program 1.2 Key Performance Indicators
 Provide assistance and advice to the Board in pursuit of achieving the Investment
Mandate target return for each fund of the Australian three month bank bill
swap rate plus 0.3% per annum, calculated on a rolling 12 month basis while
minimising the probability of capital loss over a 12 month horizon.
152
720
720
FFMA Budget Statements
Section 3: Explanatory Tables and Budgeted Financial
Statements
Section 3 presents explanatory tables and budgeted financial statements which provide
a comprehensive snapshot of agency finances for the 2012-13 budget year. It explains
how budget plans are incorporated into the financial statements and provides further
details of the reconciliation between appropriations and program expenses,
movements in administered funds, special accounts and Australian Government
Indigenous Expenditure.
3.1
EXPLANATORY TABLES
3.1.1 Movement of Administered Funds Between Years
Table 3.1.1 is not included as there is no movement of administered funds between
years.
3.1.2 Special Accounts
Special Accounts provide a means to set aside and record amounts used for specified
purposes. Special Accounts can be created by a Finance Minister’s Determination
under the FMA Act or under separate enabling legislation. Table 3.1.2 shows the
expected additions (receipts) and reductions (payments) for each account used by
FFMA.
Table 3.1.2: Estimates of Special Account Flows and Balances
Future Fund Special Account (A)(D)
Opening
balance
2012-13
2011-12
Outcome
$'000
1
-
Total Special Accounts
2012-13 Budget estim ate
Total Special Accounts
2011-12 estimate actual
(A) = Administered
(D) = Departmental
Receipts Payments Adjustments
2012-13
2012-13
2012-13
2011-12
2011-12
2011-12
$'000
$'000
$'000
421,262
421,262
-
-
380,864
380,864
-
-
-
421,262
421,262
-
-
-
380,864
380,864
-
-
3.1.3 Australian Government Indigenous Expenditure
Table 3.1.3 is not included as FFMA’s budget does not contain any specific Australian
Government Indigenous Expenditure.
153
Closing
balance
2012-13
2011-12
$'000
-
FFMA Budget Statements
3.2
BUDGETED FINANCIAL STATEMENTS
3.2.1 Differences in Agency Resourcing and Financial Statements
No material differences exist between agency resourcing and the financial statements.
3.2.2 Analysis of Budgeted Financial Statements
Departmental expenditure will increase over the 2012-13 estimate year as the FFMA
deepens its investment and operations resources to continue to support the Board in
managing the investments of the Future Fund and other Australian Government Asset
Funds.
Administered expenditure will increase over the 2012-13 estimate year as the portfolio
grows and develops in line with the Board’s investment strategy.
154
FFMA Budget Statements
3.2.3 Budgeted Financial Statements Tables
Table 3.2.1 Departmental Comprehensive Income Statement (Showing Net Cost
of Services)
(for the period ended 30 June)
Estimated
actual
2011-12
$'000
Budget
estimate
2012-13
$'000
Forw ard
estimate
2013-14
$'000
Forw ard
estimate
2014-15
$'000
Forw ard
estimate
2015-16
$'000
EXPENSES
Employee benefits
Suppliers
Depreciation and amortisation
Total expenses
25,168
8,837
927
34,932
29,249
11,039
1,221
41,509
30,356
11,466
1,308
43,130
31,541
11,863
1,128
44,532
32,777
12,273
880
45,930
LESS:
OWN-SOURCE INCOME
Ow n-source revenue
Other
Total ow n-source revenue
34,822
34,822
41,399
41,399
43,020
43,020
44,422
44,422
45,820
45,820
Gains
Other
Total gains
Total ow n-source incom e
110
110
34,932
110
110
41,509
110
110
43,130
110
110
44,532
110
110
45,930
Net cost of (contribution by)
services
-
-
-
-
-
Revenue from Government
-
*-
*-
*-
*-
-
-
-
-
-
Surplus (Deficit) attributable to
the Australian Governm ent
Prepared on Australian Accounting Standards basis.
155
FFMA Budget Statements
Table 3.2.2: Budgeted Departmental Balance Sheet
(as at 30 June)
Estimated
actual
2011-12
$'000
Budget
estimate
2012-13
$'000
Forw ard
estimate
2013-14
$'000
Forw ard
estimate
2014-15
$'000
Forw ard
estimate
2015-16
$'000
515
11,314
11,829
515
14,146
14,661
515
15,401
15,916
515
16,770
17,285
515
17,923
18,438
1,811
1,080
39
2,930
1,601
1,219
39
2,859
1,468
1,044
39
2,551
1,267
817
39
2,123
1,201
703
39
1,943
14,759
17,520
18,467
19,408
20,381
548
3,410
3,958
548
4,068
4,616
548
4,230
4,778
547
4,370
4,917
547
4,510
5,057
Provisions
Employee provisions
Other provisions
Total provisions
10,498
303
10,801
12,601
303
12,904
13,387
302
13,689
14,189
302
14,491
15,022
302
15,324
Total liabilities
14,759
17,520
18,467
19,408
20,381
-
-
-
-
-
ASSETS
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Non-financial assets
Property, plant and equipment
Intangibles
Other non-financial assets
Total non-financial assets
Total assets
LIABILITIES
Payables
Suppliers
GST Payable
Total payables
Net assets
Prepared on Australian Accounting Standards basis.
156
FFMA Budget Statements
Table 3.2.3: Budgeted Departmental Statement of Changes in Equity — Summary
of Movement (Budget Year 2012-13)
Table 3.2.3 is not included because FFMA does not have any changes in equity.
Table 3.2.4: Budgeted Departmental Statement of Cash Flows
(for the period ended 30 June)
Estimated
actual
2011-12
$'000
Budget
estimate
2012-13
$'000
Forw ard
estimate
2013-14
$'000
Forw ard
estimate
2014-15
$'000
Forw ard
estimate
2015-16
$'000
35,663
35,663
42,707
42,707
46,067
46,067
47,495
47,495
49,249
49,249
22,962
8,788
2,862
34,612
27,128
10,947
3,482
41,557
29,552
11,375
4,140
45,067
30,721
11,772
4,302
46,795
31,924
12,183
4,442
48,549
1,051
1,150
1,000
700
700
1,051
1,051
1,150
1,150
1,000
1,000
700
700
700
700
(1,051)
(1,150)
(1,000)
(700)
(700)
OPERATING ACTIVITIES
Cash received
Other
Total cash received
Cash used
Employees
Suppliers
Other
Total cash used
Net cash from (used by)
operating activities
INVESTING ACTIVITIES
Cash used
Purchase of property, plant
and equipment and intangibles
Total cash used
Net cash from (used by)
investing 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
Prepared on Australian Accounting Standards basis.
157
-
-
-
-
-
515
515
515
515
515
515
515
515
515
515
FFMA Budget Statements
Table 3.2.5: Departmental Capital Budget Statement
PURCHASE OF NON-FINANCIAL
ASSETS
Funded internally from
departmental resources
TOTAL
RECONCILIATION OF CASH
USED TO ACQUIRE ASSETS
TO ASSET MOVEMENT TABLE
Total purchases
Total cash used to
acquire assets
Estimated
actual
2011-12
$'000
Budget
estimate
2012-13
$'000
Forw ard
estimate
2013-14
$'000
Forw ard
estimate
2014-15
$'000
Forw ard
estimate
2015-16
$'000
1,051
1,051
1,150
1,150
1,000
1,000
700
700
700
700
1,051
1,150
1,000
700
700
1,051
1,150
1,000
700
700
Table 3.2.6: Statement of Asset Movements (2012-13)
Asset Category
Other property,
Computer
plant and softw are and
equipment
intangibles
$'000
$'000
As at 1 July 2012
Gross book value
Accumulated depreciation/amortisation
and impairment
Opening net book balance
Total
$'000
5,841
1,452
7,293
(4,030)
1,811
(372)
1,080
(4,402)
2,891
CAPITAL ASSET ADDITIONS
Estim ated expenditure on
new or replacem ent assets
By purchase - other
Total additions
700
700
450
450
1,150
1,150
Other m ovem ents
Depreciation/amortisation expense
Total other m ovem ents
(910)
(910)
(311)
(311)
(1,221)
(1,221)
As at 30 June 2013
Gross book value
Accumulated depreciation/amortisation
and impairment
Closing net book balance
Prepared on Australian Accounting Standards basis.
158
6,541
1,902
8,443
(4,940)
1,601
(683)
1,219
(5,623)
2,820
FFMA Budget Statements
Table 3.2.7: Schedule of Budgeted Income and Expenses Administered on
Behalf of Government (for the period ended 30 June)
EXPENSES ADMINISTERED ON
BEHALF OF GOVERNMENT
Employee benefits
Suppliers
Total expenses adm inistered
on behalf of Governm ent
Estimated
actual
2011-12
$'000
Budget
estimate
2012-13
$'000
Forw ard
estimate
2013-14
$'000
Forw ard
estimate
2014-15
$'000
Forw ard
estimate
2015-16
$'000
828
327,454
861
553,991
895
592,585
931
633,545
966
677,129
328,282
554,852
593,480
634,476
678,095
1,256,568
1,264,168
2,520,736
1,697,943
1,331,663
3,029,606
1,707,374
1,493,317
3,200,691
1,775,616
1,632,854
3,408,470
1,903,167
1,750,149
3,653,316
2,520,736
3,029,606
3,200,691
3,408,470
3,653,316
454,801
3,050,310
3,323,698
3,585,066
3,842,598
454,801
3,050,310
3,323,698
3,585,066
3,842,598
2,975,537
6,079,916
6,524,389
6,993,536
7,495,914
(5,525,064)
5,525,064
(5,930,909)
5,930,909
(6,359,060)
6,359,060
(6,817,819)
6,817,819
LESS:
OWN-SOURCE INCOME
Ow n-source revenue
Non-taxation revenue
Interest
Dividends
Total non-taxation revenue
Total ow n-source revenues
adm inistered on behalf of
Governm ent
Gains
Other gains
Total gains adm inistered
on behalf of Governm ent
Total ow n-source incom e
adm inistered on behalf of
Governm ent
Net Cost of (contribution by)
services
(2,647,255)
Surplus (Deficit)
2,647,255
Prepared on Australian Accounting Standards basis.
159
FFMA Budget Statements
Table 3.2.8: Schedule of Budgeted Assets and Liabilities Administered on Behalf
of Government (as at 30 June)
Estimated
actual
2011-12
$'000
Budget
estimate
2012-13
$'000
Forw ard
estimate
2013-14
$'000
Forw ard
estimate
2014-15
$'000
Forw ard
estimate
2015-16
$'000
ASSETS
Financial assets
Cash and cash equivalents
Other investments
Other financial assets
Total financial assets
1,144
78,256,592
3,410
78,261,146
1,144
83,918,656
4,068
83,923,868
1,144
89,970,448
4,230
89,975,822
1,144
96,432,750
4,370
96,438,264
1,144
103,360,786
4,510
103,366,440
Total assets adm inistered
on behalf of Governm ent
78,261,146
83,923,868
89,975,822
96,438,264
103,366,440
306,756
306,756
444,414
444,414
565,459
565,459
668,841
668,841
779,198
779,198
8
8
8
8
8
8
8
8
8
8
306,764
444,422
565,467
668,849
779,206
Net assets/(liabilities)
77,954,382
Prepared on Australian Accounting Standards basis.
83,479,446
89,410,355
95,769,415
102,587,234
LIABILITIES
Payables
Suppliers
Total payables
Provisions
Employee provisions
Total provisions
Total liabilities adm inistered
on behalf of Governm ent
160
FFMA Budget Statements
Table 3.2.9: Schedule of Budgeted Administered Cash Flows
(for the period ended 30 June)
OPERATING ACTIVITIES
Cash received
Interest
Dividends
Net GST received
Total cash received
Cash used
Suppliers
Employees
Other
Total cash used
Net cash from (used by)
operating activities
INVESTING ACTIVITIES
Cash received
Proceeds from sale of
property, plant and equipment
Proceeds from sales of
investments
Total cash received
Estimated
actual
2011-12
$'000
Budget
estimate
2012-13
$'000
Forw ard
estimate
2013-14
$'000
Forw ard
estimate
2014-15
$'000
Forw ard
estimate
2015-16
$'000
1,262,241
1,844,466
3,186
3,109,893
1,697,943
1,331,663
3,410
3,033,016
1,707,374
1,493,317
4,068
3,204,759
1,775,616
1,632,854
4,230
3,412,700
1,903,167
1,750,149
4,370
3,657,686
345,690
828
34,346
380,864
378,486
861
41,915
421,262
430,496
895
45,275
476,666
487,830
931
46,703
535,464
522,825
966
48,457
572,248
2,729,029
2,611,754
2,728,093
2,877,236
3,085,438
233,743
-
-
-
-
4,210,204
4,443,947
543,440
543,440
599,986
599,986
1,303,872
1,303,872
1,397,001
1,397,001
3,155,194
3,155,194
3,328,079
3,328,079
4,181,108
4,181,108
4,482,439
4,482,439
(2,611,754)
(2,728,093)
(2,877,236)
(3,085,438)
Cash used
Investments
7,172,976
Total cash used
7,172,976
Net cash from (used by)
investing activities
(2,729,029)
Net increase (decrease) in
cash held
Cash and cash equivalents at
beginning of reporting period
1,144
Cash and cash equivalents at end
of reporting period
1,144
Prepared on Australian Accounting Standards basis.
-
-
-
-
1,144
1,144
1,144
1,144
1,144
1,144
1,144
1,144
Table 3.2.10: Schedule of Administered Capital Budget
The FFMA has no budgeted administered capital administered on behalf of the
Australian Government.
Table 3.2.11: Schedule of Asset Movements — Administered
The FFMA has no budgeted non-financial assets administered on behalf of the
Australian Government.
161