Department of Finance and Deregulation
FINANCIAL STATEMENTS
for the period ended 30 June 2013
Department of Finance and Deregulation
STATEMENT BY THE SECRETARY AND CHIEF FINANCIAL OFFICER
In our opinion, the attached financial statements for the year ended 30 June 2013 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.
…….................................
…………................................
David Tune
Secretary
Department of Finance and Deregulation
Andrew Harvey
Chief Financial Officer
Department of Finance and Deregulation
26 August 2013
26 August 2013
1
Department of Finance and Deregulation
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 June 2013
30 June
2013
$'000
30 June
2012
$'000
3A
3B
3C
3D
3E
3F
3G
3H
181,736
196,457
25,819
51
1,092
2,394
92,849
7,343
507,741
184,354
202,327
18,969
57
62,998
831
37,272
15,241
522,049
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
111,559
82,705
5,154
47,666
5,470
6,251
114,429
99,698
2,216
88,806
6,051
9,734
258,805
320,934
Gains
Other gains
Total gains
4G
42,656
42,656
16,872
16,872
Total own-source income
301,461
337,806
Net cost of (contribution by) services
206,280
184,243
274,448
235,495
68,168
51,252
5,542
9,028
62,626
42,224
62,626
42,224
4,588
(58,524)
4,588
(58,524)
67,214
(16,300)
Notes
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
LESS:
OWN-SOURCE INCOME
Revenue from Government
Surplus (deficit) before income tax on continuing
operations
4H
Income tax expense
Surplus (deficit) after income tax on continuing
operations
5
Surplus (deficit) after income tax
OTHER COMPREHENSIVE INCOME
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 and Deregulation
BALANCE SHEET
as at 30 June 2013
Notes
30 June
2013
$'000
30 June
2012
$'000
8A
8B
8C
3,284
789,143
9,224
4,989
785,660
9,414
801,651
800,063
933,481
16,560
608,303
69,424
5,279
815,243
11,186
582,857
63,272
3,584
1,633,047
1,476,142
2,434,698
2,276,205
32,037
15,323
34,112
6,637
21,650
59,454
42,296
11,440
88,109
134,840
56,838
295,170
6,410
358,418
58,380
257,059
6,784
322,223
446,527
457,063
Net assets
1,988,171
1,819,142
EQUITY
Contributed equity
Asset revaluation reserves
Retained surplus
1,584,105
124,378
279,688
1,482,290
119,790
217,062
Total equity
1,988,171
1,819,142
ASSETS
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total financial assets
Non-financial assets
Land and buildings
Infrastructure, plant and equipment
Investment properties
Intangibles
Other non-financial assets
Total non-financial assets
9A, 9C
9B, 9C
9D
9E, 9F
9G
Total assets
LIABILITIES
Payables
Suppliers
Unearned revenue
Return of equity
Other payables
Total payables
Provisions
Employee
Outstanding insurance claims
Other provisions
Total provisions
10A
10B
10C
10D
11A
11B, 15
11C
Total liabilities
3
The above statement should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2013
Asset revaluation
reserves
Retained earnings
Opening balance
Balance carried forward from previous period
Adjusted opening balance
Comprehensive income
Other comprehensive income
Surplus (Deficit) for the period
Total comprehensive income
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 12)
Sub-total transactions with owners
Transfers between equity components
Closing balance as at 30 June 2013
Contributed
equity/capital
Total equity
2013
$'000
2012
$'000
2013
$'000
2012
$'000
2013
$'000
2012
$'000
2013
$'000
2012
$'000
217,062
217,062
176,536
176,536
119,790
119,790
176,616
176,616
1,482,290
1,482,290
1,293,503
1,293,503
1,819,142
1,819,142
1,646,655
1,646,655
62,626
62,626
42,224
42,224
4,588
4,588
(58,524)
(58,524)
-
-
4,588
62,626
67,214
(58,524)
42,224
(16,300)
-
-
-
-
(33,816)
(33,175)
(33,816)
(33,175)
-
-
-
-
8,290
154,455
(27,114)
101,815
8,290
154,455
(27,114)
101,815
16,631
208,000
(2,669)
188,787
279,688
(1,698)
217,062
124,378
1,698
119,790
1,584,105
16,631
208,000
(2,669)
188,787
-
1,988,171
1,819,142
1,482,290
4
The above statement should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
CASH FLOW STATEMENT
for the period ended 30 June 2013
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
13
INVESTING ACTIVITIES
Cash received
Proceeds from sales of property, plant and equipment
Total cash received
Cash used
Purchase of land and buildings
Purchase of infrastructure, 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
8A
30 June
2013
$'000
30 June
2012
$'000
153,050
260,006
82,705
6,106
3,698
8,006
201,524
226,635
99,698
10,060
6,287
513,571
544,204
183,119
214,126
54,738
47,837
-
173,041
219,380
71,058
28,879
5,418
499,820
13,751
497,776
46,428
260
260
204
204
112,597
7,555
12,157
24,916
157,225
77,945
7,310
40,618
126,569
252,442
(156,965)
(252,238)
183,509
249,689
183,509
249,689
42,000
42,000
40,521
40,521
141,509
209,168
(1,705)
4,989
3,358
1,631
3,284
4,989
5
The above statement should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
SCHEDULE OF COMMITMENTS
as at 30 June 2013
BY TYPE
Commitments receivable
Property leases1
Net GST recoverable on commitments
Total commitments receivable
30 June
2013
$'000
30 June
2012
$'000
206,433
49,786
256,219
229,809
27,772
257,581
94,027
173,772
94,027
173,772
22,093
12,848
435,030
18,757
475,880
129,177
20,881
162,906
Commitments payable
Capital commitments
Land and buildings2
Total capital commitments
Operating leases and other commitments
Operating leases3
Other commitments:
Goods and services contracts
Net GST Payable
Total operating leases and other commitments
Total commitments payable
569,907
336,678
(313,688)
(79,097)
51,417
119,442
85,360
256,219
51,154
110,461
95,966
257,581
50,808
43,219
94,027
120,490
53,282
173,772
7,289
12,464
2,340
6,040
6,808
-
22,093
12,848
Other commitments
One year or less
From one to five years
Over five years
Total other commitments
146,694
299,354
7,739
453,787
95,115
46,222
8,721
150,058
Total commitments payable
569,907
336,678
(313,688)
(79,097)
Net commitments receivable (payable) by type
BY MATURITY
Commitments receivable
One year or less
From one to five years
Over five years
Total commitments receivable
Commitments payable
Capital commitments
One year or less
From one to five years
Total capital commitments
Operating lease commitments
One year or less
From one to five years
Over five years
Total operating lease commitments
Net commitments receivable (payable) by maturity
Commitments are GST inclusive where relevant.
6
The above statement should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
SCHEDULE OF COMMITMENTS
as at 30 June 2013
1 Property
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:
Nature of leases
Leases for office
accommodation
General description of leasing arrangement
Leases are for office accommodation for the Department of
Finance and Deregulation’s (Finance’s) business operations.
Lease terms and conditions are dependent on market conditions in
each location.
Leases for motor vehicles
-
Leases are for Commonwealth cars and motor vehicles for
Finance’s employees. No contingent rentals exist. There are no
purchase options available to Finance.
Leases for computer
equipment
-
Computer equipment for Finance is supplied through an
outsourcing arrangement. Computer equipment is either
purchased or leased from suppliers. For leased equipment, various
schedules exist commencing from March 2005 and expiring in
May 2015.
7
The above statement should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
SCHEDULE OF CONTINGENCIES
as at 30 June 2013
30 June
2013
$'000
30 June
2012
$'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 is disclosed in Note 14 Contingent assets and liabilities, along with
information on significant remote contingencies and contingencies that cannot be quantified.
In 2012-13, there were no guarantees provided to other entities (2011-12: no guarantees).
8
The above statement should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
ADMINISTERED SCHEDULE OF COMPREHENSIVE INCOME
for the period ended 30 June 2013
Notes
30 June
2013
30 June
2012
$'000
$'000
EXPENSES
Employee benefits
Superannuation
20A
20B
236,910
7,959,092
244,387
6,449,642
Suppliers
Grants
20C
20D
198,383
680
191,816
649
Depreciation and amortisation
Write-down and impairment of assets
20E
20F
15,570
9
19,786
3
Finance costs
Other expenses
20G
20H
129
2,118,557
82
4,617,073
Losses on financial investments
Losses from asset sales
20I
20J
134,704
351
555,995
278
Unrealised foreign exchange losses
Total expenses administered on behalf of Government
20K
394,851
11,059,236
2,561
12,082,272
LESS:
OWN-SOURCE INCOME
Own-source revenue
Non-taxation revenue
Rendering of services
21A
3,989
4,137
Interest
Dividends
21B
21C
133,060
467,852
115,715
103,660
Superannuation contributions
Other revenue
Total non-taxation revenue
21D
21E
1,499,161
14,280
1,330,498
7,968
2,118,342
1,561,978
Gains
Realised foreign exchange gains
21F
84,022
258,666
Gains on financial investments
Other gains
Total gains
Total own-source income administered on behalf of
Government
21G
21H
900,478
20,843
1,090,647
4,094
1,005,343
1,353,407
3,123,685
2,915,385
7,935,551
9,166,887
(7,935,551)
(9,166,887)
319,440
28,686,266
(516,291)
(51,737,891)
29,005,706
(52,254,182)
21,070,155
(61,421,069)
Net cost of (contribution by) services
Surplus (deficit) after income tax
OTHER COMPREHENSIVE INCOME
Changes in administered reserves
Movement in carrying amount of superannuation
Total other comprehensive income
22A
Total comprehensive income (loss)
9
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
ADMINISTERED SCHEDULE OF ASSETS AND LIABILITIES
as at 30 June 2013
Notes
30 June
2013
30 June
2012
$'000
$'000
ASSETS
Financial assets
Cash and cash equivalents
23A
467,225
744,278
Trade and other receivables
Investments
23B
23C
486,327
15,899,059
218,630
17,483,610
Other financial assets
Total financial assets
23D
54,763
16,907,374
41,486
18,488,004
Non-financial assets
Buildings
Infrastructure, plant and equipment
24A, 24C
24B, 24C
41,341
62,809
19,205
60,169
Intangibles
Other non-financial assets
Total non-financial assets
24D, 24E
24F
3,161
3,458
1,310
2,507
110,769
83,191
17,018,143
18,571,195
334,074
1,513,734
137,986
1,697,643
1,847,808
1,835,629
Total assets administered on behalf of Government
LIABILITIES
Payables
Suppliers
Other payables
Total payables
25A
25B
Provisions
Employee provisions
26A
186,501
199,347
Superannuation provisions
Other provisions
Total provisions
26B
26C
124,947,502
20,365
149,416,553
20,497
125,154,368
149,636,397
127,002,176
151,472,026
(109,984,033)
(132,900,831)
Total liabilities administered on behalf of Government
Net administered assets (liabilities)
10
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
ADMINISTERED RECONCILIATION SCHEDULE
for the period ended 30 June 2013
Opening administered assets less administered liabilities
as at 1 July
30 June
2013
30 June
2012
$'000
$'000
(132,900,831)
(73,626,968)
3,123,685
(11,059,236)
2,915,385
(12,082,272)
Surplus (deficit) items:
Plus: Administered income
Less: Administered expenses (non-CAC)
Other comprehensive income:
Assets and make good valuation
Movement in carrying amount of superannuation
Administered revaluations taken to/from reserves
15,579
4,236
28,686,266
303,861
(51,737,891)
(520,527)
241,455
23,987
240,330
5,623
5,472,451
(3,257,795)
5,167,721
(2,570,623)
(511,328)
565,702,910
(461,815)
553,150,559
(565,825,037)
(553,384,589)
(109,984,033)
(132,900,831)
Administered transfers to/from Australian Government:
Appropriation transfers from Official Public Account:
Annual appropriations
Administered assets and liabilities appropriations
Special appropriations
Transfers to Official Public Account
Equity distribution
Transfers from other entities (Whole-of-Government)
Transfers to other entities (Whole-of-Government)
Closing administered assets less administered liabilities as at
30 June
11
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
ADMINISTERED CASH FLOW STATEMENT
for the period ended 30 June 2013
30 June
2013
30 June
2012
$'000
$'000
Rendering of services
Superannuation contributions - employers
6,185
1,495,565
3,963
1,341,078
Superannuation funds contributions
Net gains from sale of financial instruments
1,563,828
189,905
1,354,716
50,823
Net realised exchange gains
Interest
84,022
124,596
258,666
108,404
Dividends
Other
Total cash received
167,851
10,704
114,660
8,395
3,642,656
3,240,705
Notes
OPERATING ACTIVITIES
Cash received
Cash used
233,388
212,216
Suppliers
Grants - Nation-building Funds distributions
188,220
2,118,065
187,622
4,324,072
Grants - other
Superannuation
1,172
5,305,705
1,349
5,011,306
Settlements
Total cash used
7,846,550
286,800
10,023,365
(4,203,894)
(6,782,660)
137
32,171,019
87
31,309,861
10,602
3,385
10,428
5,400
32,185,143
31,325,776
Employees
Net cash from (used by) operating activities
27
INVESTING ACTIVITIES
Cash received
Proceeds from sales of property, plant and equipment
Proceeds from sale of investments
Repayments of advances and loans
Matured government securities
Total cash received
Cash used
Purchase of property, plant and equipment
Purchase of buildings
Purchase of intangibles
Purchase of investments
Total cash used
Net cash from (used by) investing activities
5,600
4,308
18,385
-
10,552
1,335
29,894,214
29,918,199
26,872,318
26,888,513
2,266,944
4,437,263
12
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
ADMINISTERED CASH FLOW STATEMENT
for the period ended 30 June 2013
Notes
30 June
2013
30 June
2012
$'000
$'000
1,587,815
1,354,716
1,587,815
1,354,716
FINANCING ACTIVITIES
Cash received
Appropriations - contributed equity
Total cash received
Cash used
Equity distribution
Total cash used
Net cash from (used by) financing activities
508,369
461,815
508,369
1,079,446
461,815
892,901
Net increase (decrease) in cash held
(857,504)
(1,452,496)
744,278
1,084,235
565,513,205
553,008,793
(565,825,037)
(553,384,589)
(311,832)
(375,796)
Cash and cash equivalents at the beginning of the
reporting period
Official Public Account (Whole-of-Government)
Transfers from other entities
Transfers to other entities
Net cash received from (transferred to) other entities
Finance administered
Cash from Official Public Account - for appropriations
Cash to Official Public Account - for appropriations
Net cash received from Official Public Account
Cash and cash equivalents at the end of the reporting
period
23A
4,150,078
4,058,958
(3,257,795)
892,283
(2,570,623)
1,488,335
467,225
744,278
13
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
SCHEDULE OF ADMINISTERED COMMITMENTS
as at 30 June 2013
30 June
2013
30 June
2012
$'000
$'000
15,793
15,793
15,024
15,024
3,260
-
3,260
-
Operating leases1
160,121
159,969
Goods and services contracts
Total other commitments
15,147
175,268
6,663
166,632
178,528
(162,735)
166,632
(151,608)
4,420
3,373
6,445
4,928
7,027
4,624
15,793
15,024
3,260
3,260
-
39,618
66,297
32,932
76,173
54,206
160,121
50,864
159,969
7,921
7,226
5,545
1,118
15,147
178,528
6,663
166,632
(162,735)
(151,608)
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 receivable (payable) by type
BY MATURITY
Commitments receivable
One year or less
From one to five years
Over five years
Total commitments receivable
Commitments payable
Capital commitments
One year or less
Total capital commitments
Operating lease commitments
One year or less
From one to five years
Over five years
Total operating lease commitments
Goods and services contracts
One year or less
From one to five years
Total goods and services contracts
Total commitments payable
Net commitments receivable (payable) by maturity
Commitments are GST inclusive where relevant.
14
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
SCHEDULE OF ADMINISTERED COMMITMENTS (CONTINUED)
as at 30 June 2013
1Operating
leases comprise:
Nature of leases
General description of leasing arrangement
Leases for office
accommodation
- 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 for motor vehicles
- Leases of motor vehicles 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.
15
The above schedule should be read in conjunction with the accompanying notes.
Department of Finance and Deregulation
SCHEDULE OF ADMINISTERED CONTINGENCIES
as at 30 June 2013
30 June
2013
30 June
2012
$'000
$'000
16,724
16,724
10,973
10,973
(16,724)
(10,973)
Administered contingent liabilities
Other
Total administered contingent liabilities
Net administered contingent assets (liabilities)
Administered contingencies are GST inclusive where relevant.
Details of each class of contingent liabilities in the above table are disclosed in Note 28, along with information on
significant remote contingencies that cannot be quantified.
In 2012-13, there were no guarantees provided to other entities (2011-12: no guarantees).
Statement of activities administered on behalf of Government
The major administered activities of Finance are directed towards achieving the three outcomes described in
Note 1 to the financial statements. The major financial activities include investments, entitlements and services
provided to Members of Parliament and Senators, grants and superannuation benefits payable, fees and interest
and loans. Details of planned activities for the year can be found in the Agency Portfolio Budget and Portfolio
Additional Estimates Statements for 2012-13 that have been tabled in the Parliament.
16
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 ......................................................................................................... 18
Note 2
Events after the reporting period ..................................................................................................... 32
Note 3
Expenses ......................................................................................................................................... 33
Note 4
Income ............................................................................................................................................. 35
Note 5
Income tax expense ......................................................................................................................... 36
Note 6
Other comprehensive income .......................................................................................................... 36
Note 7
Departmental operations ................................................................................................................. 37
Note 8
Financial assets ............................................................................................................................... 39
Note 9
Non-financial assets ........................................................................................................................ 41
Note 10 Payables .......................................................................................................................................... 47
Note 11 Provisions ........................................................................................................................................ 48
Note 12 Restructuring ................................................................................................................................... 50
Note 13 Cash flow reconciliation ................................................................................................................... 52
Note 14 Contingent assets and liabilities ...................................................................................................... 53
Note 15 General insurance activities............................................................................................................. 54
Note 16 Senior executive remuneration ........................................................................................................ 63
Note 17 Remuneration of auditors ................................................................................................................ 68
Note 18 Financial instruments ....................................................................................................................... 68
Note 19 Financial assets reconciliation ......................................................................................................... 72
Note 20 Administered expenses ................................................................................................................... 73
Note 21 Administered income ....................................................................................................................... 75
Note 22 Administered other comprehensive income .................................................................................... 77
Note 23 Administered financial assets .......................................................................................................... 77
Note 24 Administered non-financial assets ................................................................................................... 82
Note 25 Administered payables .................................................................................................................... 86
Note 26 Administered provisions ................................................................................................................... 87
Note 27 Administered cash flow reconciliation .............................................................................................. 89
Note 28 Administered contingent assets and liabilities ................................................................................. 90
Note 29 Financial instruments ....................................................................................................................... 91
Note 30 Administered financial assets reconciliation .................................................................................. 104
Note 31 Superannuation ............................................................................................................................. 105
Note 32 Appropriations ................................................................................................................................ 119
Note 33 Special accounts ............................................................................................................................ 131
Note 34 Compliance with Statutory Conditions for Payments from the Consolidated Revenue Fund ....... 136
Note 35 Compensation and debt relief ........................................................................................................ 138
Note 36 Reporting of outcomes................................................................................................................... 139
Note 37 Competitive neutrality and cost recovery....................................................................................... 144
Note 38 Net cash appropriation arrangements ........................................................................................... 144
17
Notes to and forming part of the financial statements
Note 1
Significant accounting policies
1.1 Objectives of the Department of Finance and Deregulation
The Department of Finance and Deregulation (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.
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 1.24.
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 (2012) 288 ALR 410, 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 Balance Sheet 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 14).
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.
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
18
Notes to and forming part of the financial statements
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 1.18.

Finance recognises a liability for outstanding Comcover insurance claims. These liabilities are based on an
actuarial assessment as at 30 June 2013. Further details on the valuation methodology are
provided at Note 1.22.

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 1.24.

Finance recognises administered liabilities for the Australian Government’s unfunded civilian superannuation
schemes. These liabilities are based on an actuarial assessment as at 30 June 2013. Further details on the
valuation methodology are provided at Note 1.25.

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
an actuarial assessment which is conducted on a 3 yearly cycle or in the event of a significant demographic
change.

Finance has made judgements in relation to the valuation of the Intra-government Communications Network
(ICON). The valuation is based on replacement cost for comparable networks using publically available data for
similar infrastructure assets.
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
All new accounting standards, revised standards or amending standards that were issued prior to the signing of
the statements by the Secretary and Chief Financial Officer (sign-off date) and are applicable to the current
reporting period did not have a financial impact, and are not expected to have a future financial impact on the
entity.
Future Australian Accounting Standard requirements
The following new standard issued by the AASB prior to sign-off date is expected to have a financial impact on
the entity for future reporting periods:
AASB 119
Employee Benefits
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 the entity.
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 2012-13 financial year, by agreement, Finance returned
$33.8 million to the OPA (2011-12: $33.2 million). This represents sale proceeds, returns of excess funds and
returns of unused appropriations.
19
Notes to and forming part of the financial statements
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 1.22 and 1.25, respectively. Details of revenue amounts are given in Note 4 (Departmental) and Note 21
(Administered).
Sales of goods and services
Revenue from the sale of goods is recognised when the risks and rewards of ownership have been transferred to
the buyer, the entity 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 the entity.
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.
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 1.5).
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 1.25.
20
Notes to and forming part of the financial statements
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 due 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.
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 the work of an actuary as at
30 June 2013. 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 PSS 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 1.25) and are settled by the Australian Government in due course or as they
become payable.
Finance makes employer contributions to the employees’ superannuation scheme 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
21
Notes to and forming part of the financial statements
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.
Lease incentives
Lease incentives received in the form of 'free' leasehold improvements and rent holidays 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 at the date of the
transaction.
1.12
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.
1.13
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;
22
Notes to and forming part of the financial statements


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.
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.
1.14
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
23
Notes to and forming part of the financial statements
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.
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).
1.15
Contingent liabilities and contingent assets
Contingent liabilities and contingent assets are not recognised in the balance sheet 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.
1.16
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.
1.17
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 at 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.
1.18
Infrastructure, plant and equipment
Asset recognition threshold
Purchases of infrastructure, plant and equipment are recognised initially at cost in the balance sheet, 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)
Investment properties
Leasehold improvements
Infrastructure, plant and equipment
Fair value measured at:
Market selling price
Market selling price or discounted cash flows
Market selling price or discounted cash flows
Depreciated replacement cost
Market selling price or depreciated replacement cost
24
Notes to and forming part of the financial statements
Following initial recognition at cost, 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 or has been classified as an investment property.
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 or asset.
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:
2013
Buildings on freehold land
3 to 100 years
2012
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 20E (Administered).
Gain or loss on disposal
The gain or loss on disposal of land, buildings 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 were assessed for impairment at 30 June 2013. 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.
25
Notes to and forming part of the financial statements
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.
1.19
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. 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.
1.20
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 (2011-12: 3 to 7 years).
All software assets were assessed for indication of impairment as at 30 June 2013.
1.21
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.
1.22
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.
26
Notes to and forming part of the financial statements
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 15.
1.23
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.
1.24
Reporting of Administered activities
Administered assets, liabilities, revenue, 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.
27
Notes to and forming part of the financial statements
Administered cash transfers to and from the Official Public Account
Revenue collected by Finance for use by the Government rather than by Finance is administered
revenue. Collections 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 on a time proportional basis taking into account the interest rates
applicable to the financial assets.
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 moneys 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 as at
30 June 2013. 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 23C.
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 29H 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.
28
Notes to and forming part of the financial statements
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 21G Gains on financial
investments and are not included again in Note 21B Interest.
Guarantees
The amounts guaranteed by the Australian Government have been disclosed in the Schedule of
Administered Contingencies and in Note 28. 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 28. 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.
1.25
Superannuation schemes
Finance recognises an administered liability for the present value of the Australian Government's
expected future payments arising from the Parliamentary Contributory Superannuation Scheme, Judges'
Pensions Scheme, Governor-General Pension Scheme, death and invalidity 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 longest
dated Australian government bonds is used. Additional superannuation information can be found at Note
31.
1.26
Nation-building Funds
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.
29
Notes to and forming part of the financial statements
The following methods are adopted by the Nation-building Funds 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).
Foreign currency
(i) Functional and presentation currency
Items included in the financial statements of the Nation-building Funds 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 Nation-building Fund’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 Nation-building Funds have entered into forward foreign exchange contracts to manage exposure to
foreign exchange risk. The Nation-building Funds 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 Nation-building
Funds is governed by the Nation-building Funds Act 2008.
The Nation-building Funds 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 Nation-building Funds have not designated any derivatives as cash flow or fair value hedges. All
derivatives are accounted for at fair value through profit and loss.
30
Notes to and forming part of the financial statements
1.27
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.
1.28
Comparative figures
Unless otherwise stated, comparative figures are provided and, where necessary, have been adjusted in
accordance with the Finance Minister's Orders.
1.29
Prior year adjustments
The comparative year financial statements have been changed as follows:
Statement of Comprehensive Income:
The following minor changes were made to the departmental figures reported for 2011-12:




$1.2 million fleet monitoring revenue has been reclassified from Note 4F Other revenue to Note 4A
Rendering of services revenue.
$0.9 million unearned revenue has been reclassified from ‘related entities’ to ‘external entities’ in
Note 10B Unearned revenue.
$17.2 million rendering of services income has been reclassified from ‘related entities: Centralised
procurement and contracting’ to ‘external entities: Centralised procurement and contracting’ in Note 4A
Rendering of services revenue.
$6.5 million rental income has been reclassified from ‘Operating lease – other properties’ to ‘Operating
lease – investment properties’ in Note 4D Rental income.
31
Notes to and forming part of the financial statements
Note 2
Events after the reporting period
Departmental
On 1 July 2013, Royal Assent was received for the Statute Stocktake (Appropriations) Act 2013 repealing all
annual Appropriation Acts from 1 July 1999 through 30 June 2010. The following departmental appropriations
were repealed effective 1 July 2013:


Appropriation Act (No.2) 2008-2009 - $762,022.02
Appropriation Act (No.2) 2009-2010 - $8,906,990.68
The Statute Stocktake Act became effective after the end of the reporting period, and as such, no adjustment is required
to the amounts reported in the financial statements. If an adjustment had been required, this would have impacted
Note 8B Appropriations Receivable and Note 32C Unspent Annual Appropriations. Further information is disclosed in
Note 32C.
Additionally, on 13 August 2013, the Finance Minister approved the following routine departmental appropriation
reductions:

Appropriation Act (No.1) 2012-2013 - $500,000.00

Appropriation Act (No.2) 2012-2013 - $36,009,000.00
The reductions became effective after the end of the reporting period, and as such, no adjustment is required to the
amounts reported in the financial statements. If an adjustment had been required, this would have impacted Note 8B
Appropriations Receivable and Note 32A Annual Appropriations. Further information is disclosed in Note 32A.
The Department of Immigration and Citizenship (DIAC) facilities on Nauru were extensively damaged on
Friday 19 July 2013. Due to the remote location of the facilities and the extent of the damage it has not been possible to
quantify the financial impact. Comcover is working with DIAC to quantify the damage and is awaiting a loss assessor’s
report. The extent of Comcover’s obligations concerning the Nauru facility have not yet been fully resolved.
Administered
On 1 July 2013, Royal Assent was received for the Statute Stocktake (Appropriations) Act 2013 repealing
all annual Appropriation Acts from 1 July 1999 through 30 June 2010. The following administered
appropriations were repealed effective 1 July 2013:



Appropriation Act (No.2) 2004-2005 - $406,996.35
Appropriation Act (No.4) 2008-2009 - $1,405,956.54
Appropriation Act (No.2) 2009-2010 - $32,000.00
The Statute Stocktake Act became effective after the end of the reporting period, and as such, no adjustment is
required to the amounts reported in the financial statements. If an adjustment had been required, this would have
impacted Note 32C Unspent Annual Appropriations. Further information is disclosed in Note 32C.
Additionally, on 13 August 2013, the Finance Minister approved the following routine administered appropriation
reduction:

Appropriation Act (No.2) 2012-2013 - $336,000.00
The reduction became effective after the end of the reporting period, and as such, no adjustment is required to
the amounts reported in the financial statements. If an adjustment had been required, this would have impacted
Note 32A Annual Appropriations. Further information is disclosed in Note 32A.
32
Notes to and forming part of the financial statements
30 June
2013
$'000
Note 3
30 June
2012
$'000
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
Outsourcing costs
Consultants and contractors
Insurance expenses
Other goods and services
Property operating expenses
Total goods and services
Goods and services are made up of:
Provision of goods – external parties
Rendering of services – related entities
Rendering of services - external parties
Total goods and services
Other supplier expenses
Operating lease rentals – external parties:
Minimum lease payments
Workers compensation expenses
Total other supplier expenses
Total suppliers
Note 3C Depreciation and amortisation
Depreciation:
Buildings
Leasehold improvements
Infrastructure, plant and equipment
Total depreciation
Amortisation:
Intangibles
Total amortisation
Total depreciation and amortisation
130,112
132,562
9,567
18,072
4,315
18,364
1,306
181,736
8,785
16,842
509
24,500
1,156
184,354
78,200
27,387
5,452
47,725
34,707
193,471
84,069
33,961
27,141
33,123
22,269
200,563
1,171
1,385
190,915
1,343
1,385
197,835
193,471
200,563
908
2,078
1,049
715
2,986
196,457
1,764
202,327
11,134
2,796
4,000
6,697
2,767
2,464
17,930
11,928
7,889
7,889
7,041
7,041
25,819
18,969
33
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
Note 3D Finance costs
Notional interest1
51
57
Total finance costs
51
57
1 Relates
to notional interest in the provision for make good costs reported in current year as a result of passage
of time.
Note 3E Write-down and impairment of assets
Financial assets:
Impairment on financial assets
Non-financial assets:
Revaluation decrement - land and buildings
Write-off of intangible assets
Write-down of investment properties
Total write-down and impairment of assets
Note 3F Losses from asset sales
Investments:
Proceeds from sale
Carrying value of assets sold
Selling expense
Land and buildings:
Proceeds from sale
Infrastructure, plant and equipment:
Carrying value of assets sold
Intangibles:
Carrying value of assets sold
Total losses from asset sales
Note 3G Insurance claims
Current claims incurred
Changes in outstanding claims liability
Net recovery adjustment
Effect of change in discount rate
Claims management costs
Total insurance claims
Note 3H Other expenses
Reinsurance equivalent payment
Competitive neutrality:
Competitive neutrality - regulatory
Competitive neutrality - rates and other
Total other expenses
taxes2
717
18,048
375
-
36,485
8,465
1,092
62,998
(260)
2,065
549
815
-
(204)
38
146
2
2,394
74
831
76,274
16,859
(2,505)
2,221
76,056
(54,192)
7,771
5,607
2,030
92,849
37,272
5,000
5,000
-
104
2,343
7,343
10,137
15,241
2 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.
34
Notes to and forming part of the financial statements
30 June
2013
$'000
Note 4
30 June
2012
$'000
Income
OWN-SOURCE REVENUE
Note 4A Rendering of services
Rendering of services - related entities:
Centralised procurement and contracting
Property services
Recovery of costs from other entities
Other services
Rendering of services - external parties:
Centralised procurement and contracting
Total rendering of services
Note 4B Insurance premiums
Comcover Special Account - insurance premiums
Total insurance premiums
Note 4C Reinsurance and other recoveries
Current claims incurred
Net recovery adjustment
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 entities
External parties
Operating lease - other properties:
Related entities
External parties
Total rental income1
65,089
6,451
18,182
2,045
61,124
12,398
22,438
1,261
19,792
111,559
17,208
114,429
82,705
99,698
82,705
99,698
786
4,424
(56)
5,154
2,214
7,771
(8,110)
341
2,216
15,407
177
52,331
190
32,043
39
36,285
-
47,666
88,806
1
As a result of a Government decision in 2011-12, the Commonwealth Law Courts were reclassified from
investment properties to land and buildings. This has resulted in lower rental income in 2012-13 and a
corresponding increase in appropriation, see note 4H.
Note 4E Interest
2
Notional interest2
5,470
6,051
Total interest
5,470
6,051
Reversal of notional interest expense reported in prior years as a result of passage of time.
Note 4F Other revenue
Commission
Total other revenue
6,251
6,251
9,734
9,734
35
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
GAINS
Note 4G Other gains
Change in fair value of investment properties
Change in fair value of buildings1
Assets first found
Resources received free of charge
Other
4,260
36,485
525
1,385
1
11,050
4,414
1,385
23
Total other gains
42,656
16,872
1
Relates to a revaluation increment for the Commonwealth Law Courts ($36.5 million) which reverses the 2012
revaluation decrement in Note 3E.
REVENUE FROM GOVERNMENT
Note 4H Revenue from Government
Appropriations:
Departmental appropriations
274,448
235,495
Total revenue from Government2
274,448
235,495
2
As a result of a Government decision in 2011-12, the Commonwealth Law Courts were reclassified from
investment properties to land and buildings. This has resulted in lower rental income in 2012-13 (see note 4D)
and a corresponding increase in appropriation.
Note 5
Income tax expense
Income tax expense
Competitive neutrality - Commonwealth tax equivalent expense3
5,542
9,028
Total income tax expense
5,542
9,028
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.
3 The
Note 6
Other comprehensive income
Changes in asset revaluation reserves
Non-financial assets revaluation reserve adjustment:
Land
Buildings
Infrastructure, plant and equipment
Make good provision
Total other comprehensive income
4
(2,718)
6,040
841
425
(15,281)
(43,243)
-
4,588
(58,524)
4
As a result of a Government decision, the Commonwealth Law Courts were reclassified from investment properties to
land and buildings in the prior year. This contributed to a total revaluation decrement of $95.0 million in the prior year, of
which $58.5 million was recorded against the asset revaluation reserve. A further $36.5 million was recorded as writedown expense.
36
Notes to and forming part of the financial statements
Note 7
Departmental operations
Departmental Special Account Operations
Budget Funded
Insurance and Risk
Operations1
Management
Property and
30 June
30 June
30 June
Procurement
Construction3
(Comcover)2
30 June
30 June
Total
Coordinated
Contracting4
30 June
30 June
30 June
Business
Departmental
Services5
Operations
30 June
30 June
30 June
30 June
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
239,364
243,716
109,419
94,245
70,077
99,632
88,877
84,423
4
33
507,741
522,049
14,373
16,914
94,584
109,701
101,372
123,120
91,132
88,066
-
5
301,461
337,806
224,991
226,802
14,835
(15,456)
(31,295)
(23,488)
(2,255)
(3,643)
4
28
206,280
184,243
Statement of Comprehensive
Income:
Expenses
Own-source income
Net cost (contribution) of services
Revenue from government
209,184
215,185
13,092
15,022
47,359
335
4,813
4,953
-
-
274,448
235,495
Surplus (deficit) before tax
(15,807)
(11,617)
(1,743)
30,478
78,654
23,823
7,068
8,596
(4)
(28)
68,168
51,252
-
-
-
-
5,542
9,028
-
-
-
-
5,542
9,028
(15,807)
(11,617)
(1,743)
30,478
73,112
14,795
7,068
8,596
(4)
(28)
62,626
42,224
14,682
12,267
-
-
-
-
-
-
-
-
14,682
12,267
(410)
4,277
-
-
-
-
-
-
-
-
(410)
4,277
378
64
-
-
-
-
-
-
-
-
378
64
Income tax
Surplus (deficit) after tax
Add back unfunded expenses:
Depreciation
Bond rate impact - employee provision
Write-down and impairment of assets
Losses from asset sales
Funded surplus (deficit)
40
220
-
-
-
-
-
-
-
-
40
220
(1,117)
5,211
(1,743)
30,478
73,112
14,795
7,068
8,596
(4)
(28)
77,316
59,052
37
Notes to and forming part of the financial statements
Note 7: Departmental operations (continued)
Departmental Special Account Operations
Budget Funded
Insurance and Risk
Operations1
Management
Property and
Construction3
(Comcover)2
Total
Coordinated
Procurement
Contracting4
Business
Departmental
Services5
Operations
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
30 June
Balance Sheet:
Assets:
98,776
84,208
425,286
388,626
234,878
239,234
41,815
87,095
896
900
801,651
800,063
Non-financial assets
152,000
86,208
-
-
1,480,797
1,389,929
250
5
-
-
1,633,047
1,476,142
Total assets
250,776
170,416
425,286
388,626
1,715,675
1,629,163
42,065
87,100
896
900
2,434,698
2,276,205
Payables
22,573
15,609
3,018
2,898
57,084
63,849
5,434
52,484
-
-
88,109
134,840
Provisions
49,402
53,968
296,288
258,003
9,892
8,565
2,836
1,687
-
-
358,418
322,223
Total liabilities
71,975
69,577
299,306
260,901
66,976
72,414
8,270
54,171
-
-
446,527
457,063
Net Assets
178,801
100,839
125,980
127,725
1,648,699
1,556,749
33,795
32,929
896
900
1,988,171
1,819,142
Equity
178,801
100,839
125,980
127,725
1,648,699
1,556,749
33,795
32,929
896
900
1,988,171
1,819,142
Financial assets
Liabilities:
Budget Funded Operations – Finance contributes to shaping and delivering the Government’s agenda by providing high quality advice and services, particularly in relation to expenditure and financial
management, deregulation reform and government operations. Budget Funded Operations are funded from annual appropriations.
2
Comcover – Finance provides General Government Sector agencies insurance and risk management services through the Comcover self-managed insurance fund. Comcover is responsible for promoting
best practice risk management in agencies so as to improve policy formulation and delivery of Government programs and services.
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 developing and maintaining the Australian Government’s procurement policy framework, including 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
38
Notes to and forming part of the financial statements
Note 8
Financial assets
30 June
2013
$'000
30 June
2012
$'000
1,671
12
244
695
662
3,284
3,828
11
233
55
862
4,989
13,673
134
13,807
49,204
2,800
52,004
220,873
288,582
35,382
896
91,518
637,251
226,782
256,398
41,222
901
70,433
595,736
17,666
118,550
2,583
18,618
131,065
6,281
138,799
789,857
155,964
803,704
(714)
(714)
(59)
(17,985)
(18,044)
Total trade and other receivables (net)
789,143
785,660
Receivables are expected to be recovered in:
No more than 12 months
More than 12 months
147,168
641,975
70,820
714,840
Total trade and other receivables (net)
789,143
785,660
Note 8A 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
Total cash and cash equivalents
Note 8B Trade and other receivables
Goods and services:
Goods and services - related entities
Goods and services - external parties
Total receivables for goods and services
Appropriations receivable:
Property Special Account
Comcover Special Account
Coordinated Procurement Contracting Special Account
Business Services Special Account
Other departmental undrawn
Total appropriations receivable
Other receivables:
Reinsurance and other recoveries
Insurance debtor 1
GST receivable from the Australian Taxation Office
Total other receivables
Total trade and other receivables (gross)
Less impairment allowance account:
Goods and services
Other receivables
Total impairment allowance account
Amounts recoverable from Finance’s insurers arising from claim settlements following the Commonwealth’s
suspension of Pan Pharmaceuticals Ltd’s manufacturing license. Finance’s insurers have denied liability.
Finance’s legal advice is that the insurance claims are valid and recoverable.
1
Credit terms for goods and services were within 30 days (2011-12: 30 days).
39
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
787,713
793,883
560
12
31
1,541
7,233
893
79
1,616
789,857
803,704
The impairment allowance account is aged as follows:
Not overdue
More than 90 days
(714)
(17,985)
(59)
Total impairment allowance account
(714)
(18,044)
Other
receivables
$'000
17,985
(17,985)
Goods and
services
$'000
59
717
(62)
Total
$'000
18,044
717
(18,047)
-
714
714
Other
receivables
$'000
17,985
17,985
Goods and
services
$'000
63
(4)
59
Total
$'000
18,048
(4)
18,044
Note 8C Other financial assets
Accrued revenue - goods and services
Lease incentives
4,803
4,421
4,590
4,824
Total other financial assets
9,224
9,414
Other financial assets expected to be recovered in:
No more than 12 months
More than 12 months
5,163
4,061
4,993
4,421
Total other financial assets
9,224
9,414
Note 8B Trade and other receivables (continued)
Receivables (gross) are aged as follows:
Not overdue
Overdue by:
0 to 30 days
31 to 60 days
61 to 90 days
More than 90 days
Total receivables (gross)
Reconciliation of the impairment allowance account:
Movements in relation to 2013
Opening balance
Increase/decrease recognised in net surplus
Amounts written off
Closing balance
Movements in relation to 2012
Opening balance
Increase/decrease recognised in net surplus
Amounts recovered and reversed
Closing balance
40
Notes to and forming part of the financial statements
Note 9
Non-financial assets
Note 9A Land and buildings
Land:
Land - at fair value
Total land
Buildings on freehold land:
Work in progress - at cost
Fair value
Total buildings on freehold land
Leasehold improvements:
Work in progress - at cost
Fair value
Accumulated depreciation
Total leasehold improvements
Total land and buildings
Note 9B Infrastructure, plant and equipment
Work in progress - at cost
Fair value
Accumulated depreciation
Total infrastructure, plant and equipment
30 June
2013
$'000
30 June
2012
$'000
321,471
323,630
321,471
323,630
138,362
465,426
50,460
432,954
603,788
483,414
351
7,871
-
1,683
12,014
(5,498)
8,222
933,481
8,199
815,243
9,207
7,353
16,560
7,409
8,309
(4,532)
11,186
Above assets have been valued on a fair value basis in accordance with the revaluation policy set out in
Note 1.18. All revaluations were conducted by independent valuers as at 30 June 2013. No land and buildings or
infrastructure, plant and equipment are under finance lease.
No indicators of impairment were found for land and buildings or infrastructure, plant and equipment. There is no
accumulated impairment from previous years.
No land and buildings or infrastructure, plant and equipment are expected to be disposed of within the next
12 months.
Revaluation of non-financial assets
A revaluation decrement for land of $2.7 million (2011-12: decrement of $15.3 million), an increment for buildings
on freehold land of $3.3 million (2011-12: decrement of $43.2 million), an increment for leasehold improvements
of $2.8 million (2011-12: no adjustment) and an increment for infrastructure, plant and equipment of $0.9 million
(2011-12: no adjustment) were credited to the asset revaluation reserve by asset class and included in the equity
section of the balance sheet.
A revaluation increment for buildings on freehold land of $36.5 million was recognised in the operating result
(2011-12: decrement of $36.5 million).
41
Notes to and forming part of the financial statements
Note 9C Reconciliation of the opening and closing balances of property, infrastructure, plant and equipment (2012-13)
As at 1 July 2012
Gross book value
Accumulated depreciation and impairment
Net book value 1 July 2012
Total land
&
buildings
$’000
Infrast.,
plant &
equipment
$’000
Total
$’000
Land
$’000
Buildings
$’000
Leasehold
improvements
$’000
323,630
-
483,414
-
13,697
(5,498)
820,741
(5,498)
15,718
(4,532)
836,459
(10,030)
323,630
483,414
8,199
815,243
11,186
826,429
74
485
(2,718)
-
117,234
3,283
36,485
(21,603)
(3,891)
(11,134)
68
40
2,757
(46)
(2,796)
117,376
525
3,322
36,485
(21,649)
(3,891)
(13,930)
8,104
841
21,649
(21,182)
(4,000)
125,480
525
4,163
36,485
(25,073)
(17,930)
Additions:
By purchase
Assets first found
Revaluations and impairments recognised in other comprehensive income
Revaluations and impairments recognised in the operating results
Reclassification
Restructuring - gross value
Depreciation/amortisation expense
Disposals:
Other disposals
Net book value 30 June 2013
-
-
-
-
(38)
(38)
321,471
603,788
8,222
933,481
16,560
950,041
Net book value as of 30 June 2013 represented by:
Gross book value
Accumulated depreciation and impairment
321,471
-
603,788
-
8,222
-
933,481
-
16,560
-
950,041
-
Net book value at 30 June 2013
321,471
603,788
8,222
933,481
16,560
950,041
42
Notes to and forming part of the financial statements
Note 9C Reconciliation of the opening and closing balances of property, infrastructure, plant and equipment (2011-12)
As at 1 July 2011
Gross book value
Accumulated depreciation and impairment
Net book value 1 July 2011
Additions:
By purchase
Assets first found
Transfer from investment properties - net value1
Revaluations and impairments recognised in other comprehensive income
Revaluations and impairments recognised in the operating results
Restructuring - gross value
Depreciation/amortisation expense
Disposals:
Other disposals - cash considerations
Net book value 30 June 2012
1
Total land
& buildings
$’000
Infrast.,
plant &
equipment
$’000
Total
$’000
Land
$’000
Buildings
$’000
Leasehold
improvements
$’000
157,194
-
205,481
-
11,181
(2,730)
373,856
(2,730)
8,790
(2,304)
382,646
(5,034)
157,194
205,481
8,451
371,126
6,486
377,612
35,403
4,414
141,900
(15,281)
-
39,555
327,000
(43,243)
(36,485)
(2,197)
(6,697)
2,515
(2,767)
77,473
4,414
468,900
(58,524)
(36,485)
(2,197)
(9,464)
7,310
(2,464)
84,783
4,414
468,900
(58,524)
(36,485)
(2,197)
(11,928)
-
-
-
-
(146)
(146)
323,630
483,414
8,199
815,243
11,186
826,429
Net book value as of 30 June 2012 represented by:
Gross book value
Accumulated depreciation and impairment
323,630
-
483,414
-
13,697
(5,498)
820,741
(5,498)
15,718
(4,532)
836,459
(10,030)
Net book value at 30 June 2012
323,630
483,414
8,199
815,243
11,186
826,429
As a result of a Government decision, the Commonwealth Law Courts were reclassified from investment properties to land and buildings.
43
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
Note 9D Investment properties
Land and buildings
Land at fair value
Buildings at fair value
94,970
513,333
94,907
487,950
Total investment properties1
608,303
582,857
Reconciliation of the opening and closing balances of investment properties
As at 1 July 2012
582,857
920,961
23,251
(2,065)
128,211
(468,900)
-
4,260
608,303
(8,465)
11,050
582,857
Additions:
By assets under construction
Transfer to land and buildings1
Disposals
Movements recognised in operating results:
Impairments
Revaluation increment/(decrement)
Net book value at 30 June 2013
1
As a result of a Government decision, the Commonwealth Law Courts were reclassified in 2011-12 from
investment properties to land and buildings, effective 17 April 2012.
Rental income from investment properties was $15.6 million in 2012-13 (2011-12: $52.5 million). Operating
expenses in relation to these properties were $6.5 million in 2012-13 (2011-12: $27.5 million).
All formal revaluations are independent and are conducted in accordance with the revaluation policy stated in
Note 1.18. In 2012-13, the formal revaluations were conducted by Savills.
The net revaluation increment of $4.3 million (2011-12: increment of $11.1 million) was recorded through the
Statement of Comprehensive Income.
Impairment losses of $nil (2011-12: $8.5 million) were recorded through the Statement of Comprehensive Income.
Note 9E Intangibles
Computer software:
Internally developed – in progress
Internally developed – in use
Purchased
Accumulated amortisation
Accumulated impairment losses
Total intangibles
43,964
54,281
25,242
(51,273)
(2,790)
69,424
44,578
41,447
23,958
(43,921)
(2,790)
63,272
No indicators of impairment were found for intangible assets. Impairment losses of $nil (2011-12: $nil) were
recorded through the Statement of Comprehensive Income.
No intangibles are expected to be sold or disposed of within the next 12 months.
44
Notes to and forming part of the financial statements
Note 9F Reconciliation of the opening and closing balances of intangibles (2012-13)
As at 1 July 2012
Gross book value
Accumulated amortisation and impairment
Net book value 1 July 2012
Additions:
By purchase
Internally developed
Amortisation
Restructuring:
Restructuring
Disposals:
Other disposals
Net book value 30 June 2013
Net book value as of 30 June 2013 represented by:
Gross book value
Accumulated amortisation and impairment
Net book value at 30 June 2013
Computer
software
internally
developed
$’000
Computer
software
purchased
$’000
Total
$’000
86,025
(29,569)
56,456
23,958
(17,142)
6,816
109,983
(46,711)
63,272
14,841
(5,573)
1,618
(2,316)
1,618
14,841
(7,889)
(2,041)
-
(2,041)
(377)
63,306
6,118
(377)
69,424
98,245
(34,939)
25,242
(19,124)
123,487
(54,063)
63,306
6,118
69,424
45
Notes to and forming part of the financial statements
Note 9F Reconciliation of the opening and closing balances of intangibles (2011-12)
As at 1 July 2011
Gross book value
Accumulated amortisation and impairment
Net book value 1 July 2011
Additions:
By purchase
Internally developed
Reclassifications
Amortisation
Disposals:
Other disposals
Net book value 30 June 2012
Net book value as of 30 June 2012 represented by:
Gross book value
Accumulated amortisation and impairment
Net book value at 30 June 2012
Computer
software
internally
developed
$’000
Computer
software
purchased
$’000
Total
$’000
50,046
(28,768)
21,278
23,921
(15,430)
8,491
73,967
(44,198)
29,769
3,454
36,436
(295)
(4,349)
728
295
(2,692)
4,182
36,436
(7,041)
(68)
56,456
(6)
6,816
(74)
63,272
86,025
(29,569)
23,958
(17,142)
109,983
(46,711)
56,456
6,816
63,272
46
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
Note 9G Other non-financial assets
Prepayments
5,279
3,584
Total other non-financial assets
5,279
3,584
Other non-financial assets expected to be recovered in:
No more than 12 months
More than 12 months
4,316
963
3,366
218
Total other non-financial assets
5,279
3,584
Note 10A Suppliers
Trade creditors and accruals
32,037
21,650
Total suppliers
32,037
21,650
Supplier payables expected to be settled within 12 months:
Related entities
External parties
2,148
29,889
943
20,707
Total suppliers
32,037
21,650
Note 10B Unearned revenue
Related entities
External parties
Total unearned revenue
13,933
1,390
15,323
54,242
5,212
59,454
Unearned revenue expected to be settled in:
No more than 12 months
More than 12 months
Total unearned revenue
14,976
347
15,323
58,972
482
59,454
Note 10C Return of equity
Property special account - cash returns
Total return of equity
34,112
34,112
42,296
42,296
34,112
42,296
34,112
42,296
No indicators of impairment were found for other non-financial assets.
Note 10
Payables
Settlement is usually made within 30 days.
Return of equity expected to be settled in:
No more than 12 months
Total return of equity
47
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
Note 10D Other payables
Salaries and wages
Separations and redundancies
Competitive neutrality tax payable
Client advances
Lease incentives
Other
3,406
596
196
2,439
3,581
260
210
4,934
230
2,225
Total other payables
6,637
11,440
Total other payables expected to be settled in:
No more than 12 months
More than 12 months
6,510
127
11,431
9
Total other payables
6,637
11,440
Note 11A Employee
Long service leave
Other leave
31,505
25,333
32,225
26,155
Total employee
56,838
58,380
Employee provisions expected to be settled in:
No more than 12 months
More than 12 months
48,158
8,680
49,567
8,813
Total employee
56,838
58,380
314,497
(19,327)
295,170
264,482
(7,423)
257,059
106,499
188,671
162,164
94,895
295,170
257,059
Note 11
Provisions
Note 11B 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 in:
No more than 12 months
More than 12 months
Total outstanding insurance claims
48
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
Note 11C Other provisions
Provision for remediation costs:
Make good costs1
Property remediation costs
800
5,610
1,174
5,610
Total other provisions
6,410
6,784
Other provisions expected to be settled in:
No more than 12 months
More than 12 months
5,250
1,160
3,489
3,295
Total other provisions
6,410
6,784
Property
remediation
costs
$’000
5,610
5,610
Total
$’000
6,784
(425)
51
6,410
Reconciliation of other provisions:
Carrying amount 1 July 2012
Amounts transferred to revaluation reserve
Unwinding of discount or change in discount rate
Closing balance 30 June 2013
Make good
costs
$’000
1,174
(425)
51
800
1Finance
currently has four 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.
49
Notes to and forming part of the financial statements
Note 12
Restructuring
Note 12A Departmental restructuring
Function
2013
2013
2013
2013
2012
2012
Cocos
COMCAR
National
Villawood
Villawood
Electorate
(Keeling)
Reservation
Portrait
Immigration
Immigration
Office
Gallery
Islands
and
Detention
Detention
Information
Runway
Allocation
Facility
Facility
Technology
Refurbishment
IT System
Project
Project
Project
Entity
FUNCTIONS
RELIQUISHED
Assets relinquished
Financial assets
Non-financial assets
Total assets
relinquished
Net assets
(liabilities)
relinquished7
DRALGAS1
Finance2
DRALGAS3
DIAC4
DIAC5
DPS6
$'000
$'000
$'000
$'000
$'000
$'000
21,182
2,041
2,748
1,143
2,197
472
-
21,182
2,041
2,748
1,143
2,197
472
21,182
2,041
2,748
1,143
2,197
472
There were no functions assumed by Finance during the reporting period.
1
The transfer of the Cocos (Keeling) Islands runway refurbishment to the Department of Regional Australia,
Local Government, Arts and Sport (DRALGAS) effective 30 April 2013.
2
The reclassification of the refurbished COMCAR reservation and allocation IT system and call centre from a
Departmental to an Administered asset effective 30 June 2013.
3
Stage 2 of 3 stage transfer of the construction of the National Portrait Gallery project to DRALGAS effective
30 April 2013.
4
The transfer of the Heritage Precinct and Fence costs for the Villawood Immigration Detention Facility
Redevelopment Project to the Department of Immigration And Citizenship (DIAC) effective 31 March 2013.
5
Project management for the redevelopment of the Villawood Immigration Detention Facility was given to
Finance as part of the 2009-10 Budget. This project has been substantially completed and transferred back to
DIAC for ongoing management.
6
The Electorate Office Information Technology was relinquished to the Department of Parliamentary Services
(DPS) on 1 September 2011 following a Government decision made on 22 August 2011.
7
The net assets relinquished to all entities were $27.1 million (2011-12: $2.7 million). In respect of functions
relinquished, the net book values of assets and liabilities were transferred to the entity for no consideration.
50
Notes to and forming part of the financial statements
Note 12B Administered restructuring
2013
2013
Moorebank
Intermodal
Company
COMCAR
Reservation
and
Allocation IT
System
DoIT1
$'000
Finance2
$'000
-
2,041
-
2,041
-
2,041
FUNCTION RELINQUISED
Assets relinquished
Financial assets
Total assets relinquished
5,000
5,000
-
Net assets (liabilities) relinquished3
5,000
-
Function
Entity
FUNCTION ASSUMED
Assets recognised
Non-Financial assets
Total assets assumed
Net assets (liabilities) assumed3
1
The transfer of the Moorebank Intermodal Company to the Department of Infrastructure and Transport (DoIT).
reclassification of the refurbished COMCAR reservation and allocation IT system and call centre from a
Departmental to an Administered asset.
3 The net assets assumed were $2.0 million (2011-12: nil) and relinquished were $5.0 million (2011-12: nil). In respect of
functions assumed and relinquished, the net book values of assets and liabilities were transferred for no consideration.
2 The
There were no functions assumed or relinquished in 2011-12.
51
Notes to and forming part of the financial statements
30 June
2013
$'000
Note 13
30 June
2012
$'000
Cash flow reconciliation
Reconciliation of cash and cash equivalents as per Balance Sheet to Cash Flow Statement
Cash and cash equivalents as per:
Statement of cash flows
Balance sheet
Difference
3,284
3,284
-
4,989
4,989
-
(206,280)
274,448
(5,542)
(184,243)
235,495
(9,028)
Adjustments for non-cash items
Net losses from sale of assets
Revaluation increment - investment properties
Revaluation increment - buildings
Assets first found
Depreciation and amortisation
Revaluation decrement - land and buildings
Non-financial assets write-down
2,394
(4,260)
(36,485)
(525)
25,819
375
831
(11,050)
(4,414)
18,969
36,485
8,465
Changes in assets / liabilities
(Increase) decrease in trade and other receivables
(Increase) decrease in other financial assets
(Increase) decrease in other non-financial assets
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
(24,247)
190
(1,695)
(1,542)
51
38,111
(44,131)
(4,803)
1,873
(1,670)
(642)
(1,118)
10,903
365
(41,557)
(18,600)
7,275
(38)
13,751
46,428
Reconciliation of net cost of services to net cash from operating activities:
Net contribution (cost) of services
Add revenue from Government
Less income tax expense
Net cash from (used by) operating activities
52
Notes to and forming part of the financial statements
Note 14
Contingent assets and liabilities
Claims for damages or
costs
Total
2013
$'000
2012
$'000
2013
$'000
2012
$'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 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 11C, 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 2013.
Comcover insurance claims
Finance provides general insurance services to Australian Government entities through use of the Comcover
Special Account. In the normal course of business, Finance is exposed to contingent liabilities arising from claims
that are subject to litigation. At the date of this report, the outcome 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.
Cultana Expansion Area (SA) – Federal Court appeal
On 17 April 2013, the Special Minister Of State (SMOS) agreed to lodge a protective appeal against the decision of
Besanko J in French v SMOS [2013] FCA 263. The contingency relates to the Commonwealth’s costs of the appeal and
payment of costs if the Commonwealth is unsuccessful in any appeal.
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.
53
Notes to and forming part of the financial statements
Note 14
Contingent assets and liabilities (continued)
Magistrates Pension Recovery of Costs
The Federal Magistrates 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. The amount to be recovered cannot be
reliably quantified at this stage.
Significant remote contingencies
Finance does not have any significant remote contingencies.
Note 15
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:



(i)
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 allowance is also added to the future cash flows.
(ii) 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.
54
Notes to and forming part of the financial statements
Note 15
General insurance activities (continued)
(iii) 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.
55
Notes to and forming part of the financial statements
Note 15
(c)
General insurance activities (continued)
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)
2013
2012
1.9%
2.4% to 5.2%
3.2%
2.1% to 4.5%
2.41 to 2.56
1.09 to 1.79
0.38 to 1.62
0.36 to 0.72
2.21
1.08
4.0% to 4.3%
4.3% to 4.5%
3.0%
3.0%
$115,420,118
$89,309,489
30% to 55%
75% to 85%
15% to 40%
77% to 90%
30% to 55%
75% to 85%
15% to 40%
90% to 92%
$14,025
$10,089
Figures are in current values at the time of estimation, i.e. assumptions as at 30 June 2013 are in 30 June 2013
values, whilst those as at 30 June 2012 are in 30 June 2012 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). The assumptions underlying the general allowance
have been strengthened, after a review of industry benchmarks and actual experience in respect of very large
claims cost development resulting in an increase in the net outstanding claims provision of approximately
$25.0 million.
(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.
56
Notes to and forming part of the financial statements
Note 15
General insurance activities (continued)
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.
57
Notes to and forming part of the financial statements
Note 15
(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
2013
$'000
(2,876)
2,876
5,813
(6,090)
(4,377)
4,252
30 June
2012
$'000
(2,521)
2,521
2,457
(2,525)
(1,589)
1,563
All Classes
All Classes
+10%
-10%
(8,464)
8,464
(6,872)
6,872
Public liability
Public liability
+10%
-10%
(3,763)
3,763
(3,577)
3,577
Professional indemnity
Professional indemnity
+10%
-10%
(4,490)
4,490
(1,571)
1,571
Average claim size (capped component)
Public liability
Public liability
+10%
-10%
(1,048)
1,048
(721)
721
Bornhuetter-Ferguson loss ratios (capped)
Professional indemnity
Professional indemnity
Property
Property
+10%
-10%
+10%
-10%
(132)
132
(787)
787
(111)
111
(810)
810
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 1.9% to 2.9%) 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.
58
Notes to and forming part of the financial statements
Note 15
(f)
General insurance activities (continued)
Net claims incurred table
2012-13
Direct business expenses
Gross claims incurred and related expenses - undiscounted
Reinsurance and other recoveries - undiscounted
Net claims incurred - undiscounted
Discount and discount movement - gross claims incurred
Discount and discount movement - reinsurance and other recoveries
Net discount movement
Net claims incurred
Other underwriting expenses
Other underwriting expenses
Claims background
Claims paid 2012-13 policy year
Claims paid prior policy years
Claims not settled
Estimated claims incurred but not reported
2011-12
Current
year
$'000
Prior year
$'000
Total
$'000
Current
year
$'000
Prior year
$'000
Total
$'000
82,724
(791)
81,933
19,745
(4,280)
15,465
102,469
(5,071)
97,398
78,646
(2,222)
76,424
(56,206)
9,417
(46,789)
22,440
7,195
29,635
(6,450)
4
(5,390)
(88)
(11,840)
(84)
(2,590)
8
7,621
(1,648)
5,031
(1,640)
(6,446)
75,487
(5,478)
9,987
(11,924)
85,474
(2,582)
73,842
5,973
(40,816)
3,391
33,026
6,087
-
6,087
28,431
-
28,431
$'000
7,400
45,117
103,867
191,303
59
Notes to and forming part of the financial statements
Note 15
(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
2013
$'000
2012
$'000
244,166
51,004
295,170
215,321
41,738
257,059
20.9%
75.0%
19.4%
75.0%
106,499
188,671
295,170
162,164
94,895
257,059
12,952
4,714
12,494
6,124
17,666
18,618
277,504
238,441
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
3.0% to 4.3%
2.4% to 2.7%
Inflation rate
Discount rate
3.0% to 4.3%
2.4% to 5.2%
Reconciliation of changes in net discounted liability
Gross
$'000
Reinsurance
and other
recoveries
$'000
Balance as at 1 July 2012
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
257,059
76,274
16,859
(7,400)
(45,117)
(2,505)
(18,618)
(786)
(4,424)
395
5,711
56
Net
$'000
238,441
75,488
12,435
(7,005)
(39,406)
(2,449)
Balance as at 30 June 2013
295,170
(17,666)
277,504
60
Notes to and forming part of the financial statements
Note 15
(h)
General insurance activities (continued)
Claims development table
Prior
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
At end of accident year
69,428
44,375
58,575
69,131
60,543
55,992
61,744
140,720
75,473
80,736
One year later
50,990
27,556
74,992
72,995
56,296
50,162
55,743
120,360
82,113
Two years later
38,378
32,291
73,810
64,753
52,022
53,726
52,540
109,972
Three years later
25,527
31,994
64,399
59,706
55,135
48,509
80,620
Four years later
25,163
45,030
64,386
60,625
51,773
49,955
Five years later
34,096
38,133
61,741
61,793
51,729
Six years later
40,157
38,756
53,449
60,866
Seven years later
39,889
26,349
53,005
Eight years later
39,524
26,110
Nine years later
39,549
Current estimate of ultimate claims cost
39,549
26,110
53,005
60,866
51,729
49,955
80,620
109,972
82,113
80,736
Cumulative payments to date
31,759
25,737
51,488
48,136
39,802
36,490
30,122
49,105
23,178
7,400
7,790
373
1,517
12,730
11,927
13,465
50,498
60,867
58,935
73,336
Estimate of gross ultimate claims
costs
Gross outstanding claims liability undiscounted
Claim handling expense
Discounting impact
18,264
309,702
219
13
11
21
108
142
145
570
734
753
2,078
4,794
(180)
(158)
(10)
(43)
(404)
(411)
(609)
(2,681)
(3,636)
(4,653)
(6,541)
(19,326)
18,303
7,645
374
1,495
12,434
11,658
13,001
48,387
57,965
55,035
68,873
295,170
Total gross outstanding claims
liability - discounted
61
Notes to and forming part of the financial statements
Note 15
General insurance activities (continued)
Prior
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
At end of accident year
61,120
39,738
56,126
64,329
58,590
54,512
61,063
139,980
73,251
79,945
One year later
43,458
25,205
72,476
68,745
55,193
49,437
55,036
119,463
80,737
Two years later
31,490
22,071
68,035
58,046
50,998
53,002
51,670
108,989
Three years later
23,555
22,291
62,476
55,802
53,913
47,664
79,640
Four years later
23,225
19,325
61,263
56,381
49,633
49,045
Five years later
31,825
19,748
58,654
56,869
49,580
Six years later
30,858
20,271
49,954
54,699
Seven years later
30,532
18,384
46,442
Eight years later
30,102
18,094
Nine years later
29,448
Current estimate of ultimate claims cost
29,448
18,094
46,442
54,699
49,580
49,045
79,640
108,989
80,737
79,945
Cumulative payments to date
28,985
17,721
44,924
45,597
37,852
35,582
29,142
48,199
21,847
7,005
463
373
1,518
9,102
11,728
13,463
50,498
60,790
58,890
72,940
Estimate of net ultimate claims costs
Net outstanding claims liability undiscounted
Claim handling expense
Discounting impact
11,905
291,670
219
13
11
21
108
142
145
570
734
753
2,078
4,794
(144)
(12)
(10)
(43)
(233)
(404)
(609)
(2,681)
(3,636)
(4,652)
(6,536)
(18,960)
11,980
464
374
1,496
8,977
11,466
12,999
48,387
57,888
54,991
68,482
277,504
Total net outstanding claims liability
- discounted
62
Notes to and forming part of the financial statements
30 June
2013
$
30 June
2012
$
17,073,679
1,645,591
1,832,866
560,032
17,070,067
1,587,676
1,838,882
602,855
21,112,168
21,099,480
3,472,578
3,472,578
3,323,324
3,323,324
Other long-term benefits:
Long service leave
Total other long-term benefits
945,297
787,562
945,297
787,562
Termination benefits:
Separation and redundancies
Total termination benefits
538,387
367,054
538,387
367,054
26,068,430
25,577,420
Note 16
Senior executive remuneration
Note 16A Senior executive remuneration expenses for the reporting period
Short-term employee benefits:
Salary (including annual leave taken)
Annual leave accrued
Executive vehicle scheme
Other benefits
Total short-term employee benefits
Post-employment benefits:
Superannuation
Total post-employment benefits
Total senior executive remuneration expenses
1. Note 16A is prepared on an accrual basis.
2. Note 16A excludes acting arrangements and part-year service where total remuneration expensed as a
senior executive was less than $180,000.
63
Notes to and forming part of the financial statements
Note 16B Average annual reportable remuneration paid to substantive senior executives during the reporting period
Average annual reportable remuneration paid to substantive senior executives in 2013
Substantive
senior
Average annual reportable remuneration1
executives
No.
Total reportable remuneration (including part-time arrangements):
Less than $180,000
$180,000 to $209,999
$210,000 to $239,999
$240,000 to $269,999
$270,000 to $299,999
$300,000 to $329,999
$330,000 to $359,999
$360,000 to $389,999
$390,000 to $419,999
$660,000 to $689,999
Total number of substantive senior executives
20
20
33
15
12
3
1
3
2
1
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Total
reportable
remuneration
$
72,082
170,996
190,831
215,195
238,382
262,399
299,786
314,039
330,631
582,762
12,507
28,399
33,621
38,725
44,688
55,921
54,412
59,113
61,628
104,242
1,147
-
84,589
199,395
224,452
253,920
284,217
318,320
354,198
373,152
392,259
687,004
110
64
Notes to and forming part of the financial statements
Note 16B Average annual reportable remuneration paid to substantive senior executives during the reporting period (continued)
Average annual reportable remuneration paid to substantive senior executives in 2012
Average annual reportable remuneration1
Total reportable remuneration (including part-time arrangements):
Less than $180,000
$180,000 to $209,999
$210,000 to $239,999
$240,000 to $269,999
$270,000 to $299,999
$300,000 to $329,999
$330,000 to $359,999
$360,000 to $389,999
$390,000 to $419,999
$570,000 to $599,999
Total number of substantive senior executives
Substantive
senior
executives
No.
31
24
32
14
4
4
1
5
1
1
117
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Total reportable
remuneration
$
90,049
171,424
190,030
215,635
239,134
257,964
289,219
312,315
321,877
479,477
13,821
25,187
32,006
38,363
49,462
48,326
44,664
57,038
69,386
96,155
472
-
103,870
196,611
222,036
254,470
288,596
306,290
333,883
369,353
391,263
575,632
1
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.
2 'Reportable salary' includes the following:
a) gross payments;
b) reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits);
c) exempt foreign employment income; and
d) salary sacrificed benefits.
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.
65
Notes to and forming part of the financial statements
Note 16C 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
2013
Average annual reportable remuneration1
Total reportable remuneration (including part-time arrangements):
$180,000 to $209,999
$210,000 to $239,999
$240,000 to $269,999
$270,000 to $299,999
Total number of other highly paid staff
Other highly
paid staff
No.
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Total
reportable
remuneration
$
14
3
4
1
22
152,646
195,901
217,698
241,627
35,430
24,921
27,205
31,969
831
5,259
1,475
-
188,907
226,081
246,378
273,596
66
Notes to and forming part of the financial statements
Note 16C Average annual reportable remuneration paid to other highly paid staff during the reporting period (continued)
Average annual reportable remuneration paid to other highly paid staff in 2012
Average annual reportable
remuneration1
Other highly
paid staff
No.
Reportable
salary2
$
Contributed
superannuation3
$
Reportable
allowances4
$
Total reportable
remuneration
$
10
4
5
1
20
162,814
193,607
228,707
251,448
28,856
26,638
23,495
24,642
1,057
3,435
-
192,727
223,680
252,202
276,090
Total reportable remuneration (including part-time arrangements):
$180,000 to $209,999
$210,000 to $239,999
$240,000 to $269,999
$270,000 to $299,999
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 $180,000 or more for the reporting period; and
c) were not required to be disclosed in Table B.
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 (2012-13: 9, 2011-12: 8) or were deployed overseas and received foreign employment income (2012-13: 10,
2011-12: 10).
2
'Reportable salary' includes the following:
a) gross payments;
b) reportable fringe benefits (at the net amount prior to 'grossing up' to account for tax benefits);
c) exempt foreign employment income; and
d) salary sacrificed benefits.
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.
67
Notes to and forming part of the financial statements
Note 17
30 June
2013
$'000
30 June
2012
$'000
668
710
-
668
710
7
1,378
1,385
3,272
13,807
4,751
4,978
52,004
9,414
21,830
66,396
21,830
66,396
32,037
1,808
21,650
7,048
33,845
28,698
33,845
28,698
(717)
(63)
(717)
(63)
(717)
(63)
Remuneration of auditors
Financial statement audit services were provided free of charge to Finance
by the Australian National Audit Office (ANAO).
Fair value of the services provided
Finance's financial statements audit services
Whole-of-Government financial statements audit services
Advance to the Finance Minister
Total of fair value of services provided
No other services were provided by the auditors of the financial statements.
Note 18
Financial instruments
Note 18A Categories of financial instruments
Financial assets
Loans and receivables:
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total
Carrying amount of financial assets
Financial liabilities
At amortised cost:
Suppliers
Other payables
Total
Carrying amount of financial liabilities
Note 18B Net income and expense from financial assets
Loans and receivables
Impairment
Net gain/(loss) from loans and receivables
Net gain/(loss) from financial assets
The net expense from financial assets not at fair value from profit and loss for 2012-13 is $0.7 million (2011-12:
$0.1 million).
Note 18C Net income and expense from financial liabilities
There was no net income or expense from financial liabilities not at fair value through profit and loss for the
current and comparative years.
68
Notes to and forming part of the financial statements
Note 18D Fair value of financial instruments
The carrying values of Finance's financial assets and liabilities are a reasonable approximation of their fair
values.
Fair value changes due to credit risk
There are no changes in the fair value of loans and receivables designated at fair value through profit and loss
that arise due to credit risk for the current and comparative years.
Fair value measurements recognised by fair value hierarchy
As the carrying value is a reasonable approximation of fair value, Finance’s financial assets and liabilities have
not been measured at fair value through comprehensive income.
Note 18E Financial liabilities designated at fair value through profit and loss
Finance has no financial liabilities designated at fair value through profit and loss.
Note 18F Financial assets reclassified
No financial assets were reclassified in the current and prior years.
69
Notes to and forming part of the financial statements
Note 18G 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 (2013: $18.6
million and 2012: $61.4 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 balance sheet.
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.
30 June
30 June
2013
2012
$'000
$'000
Financial assets
13,807
Trade and other receivables
52,004
4,751
Other financial assets
9,414
Total
18,558
61,418
Financial liabilities
Suppliers
Other payables
Total
(32,037)
(1,808)
(33,845)
(21,650)
(7,048)
(28,698)
Credit quality of financial instruments not past due or individually determined as impaired
Not past
due nor
impaired
2013
$'000
Not past due
nor impaired
2012
$'000
Past due or
impaired
2013
$'000
Past due or
impaired
2012
$'000
3,272
11,663
4,751
4,978
42,183
9,414
2,144
-
9,821
-
19,686
56,575
2,144
9,821
Ageing of financial assets that were past due but not impaired for 2013
0 to 30
31 to 60
61 to 90
days
days
days
$'000
$'000
$'000
560
12
31
Trade and other receivables
90+
days
$'000
1,541
Total
$'000
2,144
Total
31
1,541
2,144
Ageing of financial assets that were past due but not impaired for 2012
0 to 30
31 to 60
61 to 90
days
days
days
$'000
$'000
$'000
Trade and other receivables
7,233
893
79
90+
days
$'000
1,616
Total
$'000
9,821
Total
1,616
9,821
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total
560
7,233
12
893
79
There are no financial assets that have been assessed as impaired.
70
Notes to and forming part of the financial statements
Note 18H 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 2013
On
Within 1
demand
year
$'000
$'000
Suppliers
Other payables
Total
16,908
231
17,139
15,129
1,450
16,579
1 to 2
years
$'000
2 to 5
years
$'000
>5
years
$'000
Total
$'000
48
48
79
79
-
32,037
1,808
33,845
Maturities for non-derivative financial liabilities 2012
Suppliers
Other payables
Total
On
demand
$'000
Within 1
year
$'000
1 to 2
years
$'000
2 to 5
years
$'000
>5
years
$'000
Total
$'000
9,152
6,027
12,498
1,012
3
3
3
21,650
7,048
15,179
13,510
3
3
3
28,698
Finance has no derivative financial liabilities in either the current or prior year.
Note 18I 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 balance sheet are loans, leases and other interest bearing liabilities.
Loans and leases bear interest at a fixed rate and will not fluctuate due to changes in the market interest rate.
Note 18J Assets pledged/or held as collateral
Finance has not pledged any assets as collateral, nor does it hold any assets as collateral.
Note 18K Concessional loans
Finance has no concessional loans.
71
Notes to and forming part of the financial statements
30 June
2013
$'000
Note 19
30 June
2012
$'000
Financial assets reconciliation
Financial assets
Total financial assets as per balance sheet
Less: non-financial instrument components
Petty cash
Appropriations receivable
Reinsurance and other recoveries
Impairment allowance
GST receivable from the Australian Taxation Office
Accrued lease revenue
Insurance debtor receivable
Lease incentives
Total non-financial instrument components
Total financial assets per financial instruments note
Notes
8A
8B
8B
8B
8B
8B
8C
801,651
800,063
12
637,251
17,666
(714)
2,583
52
118,550
4,421
11
595,736
18,618
(18,044)
6,281
131,065
-
779,821
21,830
733,667
66,396
72
Notes to and forming part of the financial statements
30 June
2013
$'000
Note 20
30 June
2012
$'000
Administered expenses
Note 20A Employee benefits
168,262
153,202
Defined contribution plans
Defined benefit plans
22,478
10,262
17,835
10,759
Leave and other entitlements
Separations and redundancies
15,450
3,817
17,068
3,149
8,644
7,997
8,658
7,552
-
26,164
236,910
244,387
2,750,776
5,061,556
3,367,013
2,956,107
Parliamentary Contributory Superannuation Scheme
Governor-General Pension Scheme
57,349
672
52,307
940
Judges' Pensions Scheme
Federal Circuit Court Judges Death and Invalidity Scheme
88,000
739
72,600
675
7,959,092
6,449,642
Printing and stationery
Fees and charges
23,163
25,509
22,774
31,629
Travel expenses
Property operating expenses
57,300
11,379
56,909
10,327
COMCAR operating expenses
Communication and other office expenses
3,637
19,002
2,912
14,080
Outsourcing costs
Other goods and services
13,257
6,048
14,483
6,826
159,295
159,940
24,577
24,824
2,122
132,596
2,094
133,022
159,295
159,940
37,109
1,979
30,796
1,080
39,088
31,876
198,383
191,816
Wages and salaries
Superannuation:
Fringe benefits tax
Other employee expenses
Increase in post employment benefits liability
Total employee benefits
Note 20B Superannuation
Commonwealth Superannuation Scheme
Public Sector Superannuation Scheme
Total superannuation
Note 20C Suppliers
Goods and services:
Total goods and services
Goods and services are made up of:
Provision of goods – external parties
Rendering of services – related entities
Rendering of services - external parties
Total goods and services
Other supplier expenses
Operating lease rentals – external parties:
Minimum lease payments
Workers compensation expenses
Total other supplier expenses
Total supplier expenses
73
Notes to and forming part of the financial statements
30 June
30 June
2013
$'000
2012
$'000
680
649
680
649
10,199
5,181
14,907
4,759
15,380
19,666
190
120
Note 20D Grants
Private sector:
Non-profit organisations
Total grants
Note 20E Depreciation and amortisation
Depreciation:
Buildings
Infrastructure, plant and equipment
Total depreciation
Amortisation:
Intangibles
Total amortisation
190
120
15,570
19,786
9
3
9
3
Notional interest
129
82
Total finance costs
129
82
Total depreciation and amortisation
Note 20F Write-down and Impairment of assets
Asset write-downs and impairments from:
Impairment on receivables
Total write-down and impairment of assets
Note 20G Finance costs
Note 20H Other expenses
492
700
-
3,509
1,992
Payments to Nation-building Funds Portfolio Special Accounts
Settlements
2,118,065
-
4,324,072
286,800
Total other expenses
2,118,557
4,617,073
134,704
555,995
134,704
555,995
Act of Grace payments
Movement in Act of Grace provision
Payment to Commonwealth Superannuation Corporation
Note 20I Losses on financial investments
Realised losses on disposal of fair value investments
Total losses on financial investments1
1 To
be read in conjunction with notes 20K, 21F and 21G. The overall operating result of the Nation-building
Funds is consistent with the investment mandates for the funds.
74
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
Note 20J Losses from asset sales
Buildings:
Carrying value of assets sold
Infrastructure, plant and equipment:
Proceeds from sale
Carrying value of assets sold
Intangibles:
66
273
(137)
(50)
422
18
Carrying value of assets sold
-
37
Total losses from asset sales
351
278
394,851
2,561
394,851
2,561
Note 20K Unrealised foreign exchange losses
Non-speculative
Nation-building Funds
Total unrealised foreign exchange losses1
1 To
be read in conjunction with notes 20I, 21F and 21G. The overall operating result of the Nation-building Funds
is consistent with the investment mandates for the funds.
Note 21
Administered income
OWN-SOURCE REVENUE
Non-taxation revenue
Note 21A Rendering of services
Rendering of services - related entities:
3,989
4,136
-
1
3,989
4,137
Government securities
Housing agreements
545
16,871
922
17,320
Nation-building Fund investments
Deposits
88,994
26,054
62,881
33,937
Recovery of costs from other entities
Rendering of services - external parties:
Other services
Total rendering of services
Note 21B Interest
State and Territory Governments
Total interest
596
655
133,060
115,715
467,852
103,660
467,852
103,660
Note 21C Dividends
Australian Government entities
Total dividends
1Finance
1
accrued a special dividend from Medibank Private Ltd totalling $300.0 million in the 2012-13 financial
year.
75
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
Note 21D Superannuation contributions
214,634
231,262
1,282,680
1,847
1,097,473
1,763
1,499,161
1,330,498
Recovery of superannuation overpayments
8,995
4,508
Other
5,285
3,460
14,280
7,968
84,022
258,666
84,022
258,666
Commonwealth Superannuation Scheme
Public Sector Superannuation Scheme
Parliamentary Contributory Superannuation Scheme
Total superannuation contributions
Note 21E Other revenue
Total other revenue
GAINS
Note 21F Realised foreign exchange gains
Non-speculative gains:
Nation-building Funds
Total realised foreign exchange gains1
1 To
be read in conjunction with notes 20I, 20K and 21G. The overall operating result of the Nation-building Funds
is consistent with the investment mandates for the funds.
Note 21G Gains on financial investments
Realised gains on fair value investments:
Interest - bank bills and negotiable certificates of deposit
104,426
180,152
Interest - mortgage backed securities
Interest - corporate debt securities
52,308
120,561
82,729
220,240
Interest - Government debt securities
Interest - asset backed securities
35,982
4,995
99,349
12,977
Interest - other income fixed securities
Total realised gains on fair value of investments
6,337
324,609
11,371
606,818
Net unrealised gains in fair value of investments
575,869
483,829
Total gains on financial investments2
900,478
1,090,647
2 To
be read in conjunction with notes 20I, 20K and 21F. The overall operating result of the Nation-building Funds
is consistent with the investment mandates for the funds.
Note 21H Other gains
Resources received free of charge
Assets first found
3,900
-
3,844
-
Reversal of prior year items
Decrease in Act of Grace provision
386
581
250
-
Decrease in Same Sex Relationships Act provision
Decrease in post employment benefits liability
270
15,706
-
Total other gains
20,843
4,094
76
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
14,006
2,653
4,236
(1,080)
303,861
(520,527)
Movement in carrying amount of superannuation 1
28,686,266
(51,737,891)
Total administered other comprehensive income
29,005,706
(52,254,182)
Note 22
Administered other comprehensive income
Note 22A Administered other comprehensive income
Changes in administered reserves:
Non-financial assets revaluation reserve adjustment:
Buildings
Infrastructure, plant and equipment
Make good provision
Gains (losses) on available for sale financial assets
1
Movements in the superannuation provision are mainly due to changes in the market yield on Government
bonds used to discount these balances (30 June 2013: 4.3%, 30 June 2012: 3.1%). Further details are shown in
Note 26B Superannuation provisions.
Note 23
Administered financial assets
Note 23A Cash and cash equivalents
Official Public Account balances:
19,107,219
Official Public Account2
13,553,290
1,497,857
1,687,562
Official Term Deposit Contra Account4
(20,150,000)
(14,500,000)
Total Official Public Account balances
Cash on hand
455,076
1
740,852
1
12,148
3,425
467,225
744,278
Official Overnight Account
3
Department of Finance and Deregulation's bank accounts
Total cash and cash equivalents
2
The Official Public Account receives all administered receipts and makes appropriation payments to
Commonwealth agencies.
3
The Official Overnight Account is used for funds swept from all Commonwealth administered payments bank
accounts and all departmental payments and receipts bank accounts. These funds are used for overnight
investments and are returned to agencies’ transactional bankers the next morning (Note 25B).
4
The Official Term Deposit Contra Account is a contra account drawn on by the Office of Financial Management
(AOFM) to make term deposits. The balance in this account is always negative. AOFM is responsible for
managing investments on behalf of the Government, including term deposits.
77
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
5,834
13,096
1,198
7,032
2,890
15,986
162,611
167,710
162,611
167,710
Note 23B Trade and other receivables
Goods and services:
Goods and services - related entities
Goods and services - external parties
Total goods and services
Loans:1
State and Territory Governments
Total loans
Other receivables:
300,000
-
2,340
11,397
1,342
33,608
Superannuation overpayment recovery
Total other receivables
2,965
316,702
34,950
Total trade and other receivables (gross)
Less: allowance for impairment
486,345
(18)
218,646
(16)
Total trade and other receivables (net)
486,327
218,630
328,969
157,358
55,934
162,696
486,327
218,630
Dividends receivable
GST receivable from Australian Taxation Office
Unsettled investment sales
Receivables expected to be recovered in:
No more than 12 months
More than 12 months
Total trade and other receivables (net)
1
No security is held for State and Territory loans. In 2012-13, principal of $10.6 million (2011-12: $10.4 million)
was repaid. The average effective interest rate is 4.48% (2011-12: 4.69%). Repayments are based on a reducing
balance method.
78
Notes to and forming part of the financial statements
30 June
30 June
2013
$'000
2012
$'000
485,647
218,149
427
9
145
111
89
173
17
224
486,345
218,646
-
-
18
16
18
16
30 June
30 June
2013
$'000
2012
$'000
16
(5)
15
-
(2)
9
(2)
3
18
16
Note 23B Trade and other receivables (continued)
Receivables are 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)
The impairment allowance account is aged as follows:
Not overdue
Overdue by:
More than 90 days
Total impairment allowance account
Credit terms for goods and services were within 30 days (2011-12: 30 days)
Reconciliation of the impairment allowance account:
Goods and services
Opening balance
Amounts written off
Amounts recovered and reversed
Increase/decrease recognised in net surplus
Closing balance
79
Notes to and forming part of the financial statements
30 June
2013
30 June
2012
$'000
$'000
6,721
10,106
6,721
10,106
4,107,019
99,865
3,787,700
115,323
4,206,884
3,903,023
Negotiable certificates of deposit
Corporate debt securities
2,175,764
3,131,395
3,335,525
3,691,135
Mortgage backed securities
Government debt securities
1,741,947
458,502
2,158,023
1,900,806
292,435
9,957
385,251
-
7,810,000
11,470,740
7,688
148,414
675
15,912
1,302
1,370
24,275
151,086
Cash and cash equivalents held by NBF
Total NBF investments at fair value
3,851,179
11,685,454
1,948,655
13,570,481
Total investments
15,899,059
17,483,610
11,688,754
4,210,305
13,579,687
3,903,923
15,899,059
17,483,610
Note 23C Investments
Securities
Government securities1
Total securities
Commonwealth companies:2
Government Business Enterprises (GBEs)
Non-GBEs
Total Commonwealth companies
Nation-building Funds (NBF) investments at fair value:3
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
Investments expected to be recovered in:
No more than 12 months
More than 12 months
Total investments
1 These
consist of assets of former superannuation schemes administered by the Australian Government.
2 All
of the investments in Commonwealth companies are 100% owned by the Commonwealth. The names of
each of the Commonwealth companies held, and their principal activities, are as follows:

Commonwealth Superannuation Corporation (CSC) – Trustee of Commonwealth superannuation schemes.

Australian Submarine Corporation (ASC) 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.
80
Notes to and forming part of the financial statements
Note 23C Investments (continued)

Albury-Wodonga Corporation – operates as a majority property-owner and land developer in the AlburyWodonga 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.
GBEs are Commonwealth companies with independent legal existence and whose principal function is to engage
in commercial activities in the private sector. GBEs include Medibank Private Limited and ASC Pty Ltd and were
valued by management based on the present value of future cash flows. Non-GBEs include all other
Commonwealth companies. Albury-Wodonga Corporation has been valued by management using the present
value of future cash flows. Australian River Co Ltd has been valued using net assets as reported on
30 November 2012. CSC has been valued using net assets as reported on 30 June 2012.
3
The Nation-building Funds Act 2008 (the Act), established three financial asset funds to provide financing
sources to meet the Government’s commitment to Australia’s future by investment in critical areas of property
such as transport, communications, energy, water, education research and health. The Building Australia Fund
(BAF), Education Investment Fund (EIF) and Health and Hospitals Fund (HHF) are financial asset funds
consisting of cash and investments.
30 June
30 June
2013
$'000
2012
$'000
46,238
35,472
8,517
8
5,556
458
54,763
41,486
No more than 12 months
54,763
41,486
Total other financial assets
54,763
41,486
Note 23D Other financial assets
Accrued revenue:
Accrued employer superannuation contributions
Interest
Other
Total other financial assets
Other financial assets expected to be recovered in:
81
Notes to and forming part of the financial statements
30 June
2013
$'000
Note 24
30 June
2012
$'000
Administered non-financial assets
Note 24A Buildings
Leasehold improvements:
Fair value
Work in progress - at cost
39,855
1,486
49,910
675
Accumulated depreciation
-
(31,380)
41,341
19,205
60,025
2,784
67,624
801
-
(8,256)
62,809
60,169
Total buildings
Note 24B Infrastructure, plant and equipment
Infrastructure, plant and equipment at fair value
Work in progress - at cost
Accumulated depreciation
Total infrastructure, plant and equipment
Above assets have been valued on the fair value basis in accordance with the revaluation policy set out in
Note 1.18. All revaluations were conducted by independent valuers as at 30 June 2013.
No indicators of impairment were found for buildings or infrastructure, plant and equipment.
No buildings or infrastructure, plant and equipment are expected to be disposed of within the next 12 months.
Revaluation of non-financial assets
A revaluation increment for leasehold improvements of $14.0 million (2011-12: $nil), and an increment for
infrastructure, plant and equipment of $2.7 million (2011-12: increment of $4.2 million) were credited to the asset
revaluation reserve by asset class and included in the Administered Reconciliation Schedule.
82
Notes to and forming part of the financial statements
Note 24C Reconciliation of the opening and closing balances of property, infrastructure, plant and
equipment (2012-13)
Infrast.,
plant &
Buildings
equipment
Total
$’000
$’000
$’000
50,585
68,425
119,010
(31,380)
(8,256)
(39,636)
19,205
60,169
79,374
18,385
5,600
23,985
14,006
2,653
16,659
10
(10,199)
(10)
(5,181)
(15,380)
(66)
(422)
(488)
41,341
62,809
104,150
Gross book value
Accumulated depreciation and impairment
41,341
-
62,809
-
104,150
-
Net book value at 30 June 2013
41,341
62,809
104,150
As at 1 July 2012
Gross book value
Accumulated depreciation and impairment
Net book value 1 July 2012
Additions:
By purchase
Revaluations and impairments recognised in other
comprehensive income
Reclassification
Depreciation expense
Disposals:
Other disposals
Net book value 30 June 2013
Net book value as of 30 June 2013 represented by:
Note 24C Reconciliation of the opening and closing balances of property, infrastructure, plant and
equipment (2011-12)
Buildings
$’000
Infrast.,
plant &
equipment
$’000
Total
$’000
As at 1 July 2011
Gross book value
Accumulated depreciation and impairment
Net book value 1 July 2011
Additions:
By purchase
Revaluations and impairments recognised in other
comprehensive income
Depreciation expense
Disposals:
Other disposals
Net book value 30 June 2012
Net book value as of 30 June 2012 represented by:
Gross book value
Accumulated depreciation and impairment
Net book value at 30 June 2012
41,997
61,522
103,519
(18,164)
23,833
(5,083)
56,439
(23,247)
80,272
10,552
4,271
14,823
-
4,236
4,236
(14,907)
(4,759)
(19,666)
(273)
19,205
(18)
60,169
(291)
79,374
50,585
68,425
119,010
(31,380)
(8,256)
(39,636)
19,205
60,169
79,374
83
Notes to and forming part of the financial statements
30 June
30 June
2013
$'000
2012
$'000
2,073
1,260
809
1,260
Accumulated amortisation
Total computer software
(172)
3,161
(759)
1,310
Total intangibles
3,161
1,310
Note 24D Intangibles
Computer software:
Purchased
Internally developed - in progress
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.
84
Notes to and forming part of the financial statements
Note 24E Reconciliation of the opening and closing balances of intangibles (2012-13)
Computer
software
$’000
As at 1 July 2012
Gross book value
Accumulated amortisation and impairment
Net book value 1 July 2012
2,069
(759)
Restructuring
1,310
2,041
Amortisation
Net book value 30 June 2013
(190)
3,161
Net book value as of 30 June 2013 represented by:
Gross book value
Accumulated amortisation and impairment
3,333
(172)
Net book value at 30 June 2013
3,161
Note 24E Reconciliation of the opening and closing balances of intangibles (2011-12)
Computer
software
$’000
As at 1 July 2011
Gross book value
Accumulated amortisation and impairment
Net book value 1 July 2011
1,157
(1,025)
132
Additions:
By purchase or internally developed
Amortisation
Disposals:
Other disposals
Net book value 30 June 2012
1,335
(120)
(37)
1,310
Net book value as of 30 June 2012 represented by:
Gross book value
2,069
Accumulated amortisation and impairment
(759)
Net book value at 30 June 2012
1,310
85
Notes to and forming part of the financial statements
30 June
30 June
2013
$'000
2012
$'000
3,458
2,507
3,458
2,507
3,443
2,333
Note 24F Other non-financial assets
Prepayments
Total other non-financial assets
Other non-financial assets expected to be recovered in:
No more than 12 months
15
174
3,458
2,507
19,344
16,805
Unsettled investments purchases
Derivative financial liabilities
34,927
279,803
95,388
25,793
Total suppliers
334,074
137,986
2,269
4,670
External parties
Total supplier payables expected to be settled within 12 months
331,805
334,074
133,316
137,986
Total suppliers
334,074
137,986
4,986
4,476
5,697
1,497,857
3,196
1,687,562
3,970
152
1,344
-
934
138
965
100
1,513,734
1,697,643
1,510,519
1,696,843
3,215
800
1,513,734
1,697,643
More than 12 months
Total other non-financial assets
Note 25
Administered payables
Note 25A Suppliers
Trade creditors and accruals
Supplier payables expected to be settled within 12 months:
Related entities
Settlement is usually made within 30 days.
Note 25B 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 in:
No more than 12 months
More than 12 months
Total other payables
1
The Official Overnight Account is used for funds swept from all Commonwealth administered payments bank
accounts and all departmental payments and receipts bank accounts. These funds are used for overnight
investments and are payable to agencies’ transactional bankers the next morning.
86
Notes to and forming part of the financial statements
30 June
2013
$'000
Note 26
30 June
2012
$'000
Administered provisions
Note 26A Employee
Leave
38,446
35,586
Life Gold Pass Holders' entitlements
Severance travel entitlements
46,052
1,294
51,313
1,985
Former Prime Ministers' entitlements
100,709
110,463
Total employee
186,501
199,347
13,865
172,636
15,713
183,634
186,501
199,347
Employee provisions expected to be settled in:
No more than 12 months
More than 12 months
Total employee
Note 26B 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 Invalidity Scheme
Total superannuation
1,059,819
1,282,408
68,842,889
53,921,497
79,001,329
67,836,193
19,382
1,102,200
22,271
1,272,500
1,715
124,947,502
1,852
149,416,553
Superannuation provisions expected to be settled in:
No more than 12 months
More than 12 months
Total superannuation
4,082,816
3,903,967
120,864,686
124,947,502
145,512,586
149,416,553
The actuarial valuation at 30 June 2013 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.
Superannuation provision decreased in 2012-13 largely as a result of an increase in the market yield on
Government bonds used to discount these balances (30 June 2013: 4.3%, 30 June 2012: 3.1%). Additionally, a
new 16 year Government bond rate has been used as it best matches the duration of the liability. The effect of
using the longer dated bond results in a reduction of approximately $13.0 billion compared to a 10 year bond.
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 31.
87
Notes to and forming part of the financial statements
30 June
2013
$'000
30 June
2012
$'000
Note 26C Other provisions
13,539
14,932
1,317
5,509
1,594
3,971
20,365
20,497
2,357
18,008
812
19,685
20,365
20,497
Act of
Grace
$’000
Make good
$’000
Total
$’000
1,594
48
14,932
(1,255)
3,971
587
20,497
(620)
(56)
443
1,080
-
1,080
387
Act of Grace
Same Sex Relationships Act
Make good1
Total other provisions
Other provisions expected to be settled in:
No more than 12 months
More than 12 months
Total other provisions
Reconciliation of movements in other provisions
Same Sex
Relationships Act
$’000
Carrying amount 1 July 2012
Additional provisions made
Valuation adjustment
Amounts used
Unwinding of discount or change in discount
rate
(269)
(581)
(129)
(979)
Closing balance 30 June 2013
1,317
13,539
5,509
20,365
1Finance
currently has 106 agreements for the leasing of premises 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.
88
Notes to and forming part of the financial statements
30 June
Note 27
30 June
2013
2012
$'000
$'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:
Administered cash flow statement
Administered schedule of assets and liabilities
Difference
467,225
744,278
467,225
-
744,278
-
(7,935,551)
(9,166,887)
Reconciliation of net cost of services to net cash from operating
activities:
Net contribution (cost) of services
Adjustments for non-cash items
Depreciation / amortisation
Unrealised loss (gains) on fair value investments
Assets first found
Unrealised foreign exchange losses
Losses from assets sale
15,570
19,786
(575,869)
-
(483,829)
-
394,851
351
2,561
278
(300,510)
(13,277)
(7,260)
20,570
(951)
(12,846)
284
31,319
1,459
5,796
2,621
1,097
4,217,215
(132)
2,793,052
3,748
(4,203,894)
(6,782,660)
Changes in assets / liabilities
(Increase) decrease in net receivables
(Increase) decrease in other financial assets
(Increase) decrease in other non financial assets
Increase (decrease) in employee provisions
Increase (decrease) in supplier payables
Increase (decrease) in other payable
Increase (decrease) in superannuation provisions
Increase (decrease) in other provisions
Net cash from (used by) operating activities
89
Notes to and forming part of the financial statements
Note 28
Administered contingent assets and liabilities
Indemnities
2013
2012
Other
2013
2012
Total
2013
2012
$'000
$'000
$'000
$'000
$'000
$'000
Balance from previous period
New
-
565,208
-
10,973
-
10,973
10,973
-
565,208
10,973
Obligation discharged
Re-measurement
Total contingent liabilities
Net contingent assets
(liabilities)
-
(565,208)
-
5,751
-
5,751
(565,208)
-
-
-
16,724
10,973
16,724
10,973
-
-
(16,724)
(10,973)
(16,724)
(10,973)
Contingent liabilities
Quantifiable administered contingencies
Sale of Sydney Airport Corporation Limited (SACL)
An indemnity was provided to Southern Cross Airports Corporation as purchaser of the Sydney Airports
Corporation Limited (SACL) in the event of a liability arising under Chapter 3 of the Duties Act 1997 (New South
Wales) by reason of the sale of shares in SACL constituting a relevant acquisition in a land rich private
corporation. The NSW Office of State Revenue (NSWOSR) issued a notice of assessment on 17 November
2006, which subsequently gave rise to legal proceedings. The matter was settled on 25 June 2012 when the
Commonwealth paid an agreed amount to NSWOSR and the remainder of the assessment was extinguished.
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 June 2013 estimated a contingent severance pay
liability of $16.7m as of 30 June 2013 ($11.0m as of 30 June 2012).
Unquantifiable administered contingencies
Finance does not have any unquantifiable administered contingent assets or liabilities.
Significant remote administered contingencies
Finance does not have any significant remote contingencies.
90
Notes to and forming part of the financial statements
Note 29
Financial instruments
30 June
30 June
2013
$'000
2012
$'000
6,721
10,106
6,721
10,106
467,224
1,829
744,277
15,986
11,397
33,608
3,851,179
1,948,655
8,525
162,611
6,014
167,710
4,502,765
2,916,250
Government Business Enterprises (GBEs)
Non-GBEs
Total
Fair value through profit and loss (designated):
4,107,019
99,865
3,787,700
115,323
4,206,884
3,903,023
NBF - derivatives
NBF - interest bearing securities
Total
24,275
7,810,000
151,086
11,470,740
Note 29A Categories of financial instruments
Financial assets
Held-to-maturity:
Government securities
Total
Loans and receivables:
Cash and cash equivalents
Trade receivables
Unsettled investment sales
Nation-building Funds (NBF) investments - cash and cash
Accrued revenue
Loans to State and Territory Governments
Total
Available for sale:
equivalents1
7,834,275
11,621,826
16,550,645
18,451,205
19,344
16,805
34,927
4,233
95,388
4,617
58,504
116,810
Total derivative financial liabilities
Total
279,803
279,803
25,793
25,793
Carrying amount of financial liabilities
338,307
142,603
Carrying amount of financial assets
Financial liabilities
At amortised cost:
Suppliers
Unsettled investments purchases
Other payables
Total
Fair value through profit and loss (designated):
1
The NBF held cash with a futures broker to cover exchange traded futures positions as required under clearing
house rules. As at 30 June 2013, the NBF had $3,887.5 million (2011-12: $23.5 million) in futures margins to
cover open positions. This cash remains a financial asset of the NBF however any alternative use of this cash is
restricted.
NBF has entered into various derivative contracts which require NBF to post or receive collateral with
counterparties under certain circumstances based on minimum transfer limits. 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 alternative 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 assets of the NBF.
As at 30 June 2013 the NBF has received $nil million in cash (2012: $35.8 million) from counterparties.
91
Notes to and forming part of the financial statements
30 June
30 June
2013
$'000
2012
$'000
545
545
922
922
Interest revenue
Interest - deposits
17,467
26,054
17,975
33,937
Impairment
Net gain (loss) from loans and receivables
(9)
43,512
(3)
51,909
467,852
303,861
103,660
(520,527)
771,713
(416,867)
84,022
(394,851)
258,666
(2,561)
324,609
575,869
606,818
483,829
Realised gains (losses) on disposal of fair value of investments
Interest revenue - NBF investments
Total designated as fair value through profit and loss
Net gain (loss) at fair value through profit and loss
(134,704)
88,994
(555,995)
62,881
543,939
543,939
853,638
853,638
Net gain (loss) from financial assets
1,359,709
489,602
Note 29B Net income and expense from financial assets
Held-to-maturity
Interest revenue
Net gain (loss) held-to-maturity
Loans and receivables
Available for sale
Dividend revenue
Gain (loss) recognised in equity
Net gain (loss) from available for sale
Fair value through profit and loss
Designated as fair value through profit and loss:
Net realised exchange gains
Net unrealised exchange losses
Realised gains on fair value investments
Net unrealised changes in fair value of investments
The net income / (expense) from financial assets not at fair value from profit and loss is $815.8 million
(2011-12: ($364.0) million).
Note 29C Net income and expense from financial liabilities
There was no income and expense from financial liabilities in the current or prior year.
92
Notes to and forming part of the financial statements
Note 29D Fair value of financial instruments
The carrying value of Finance's administered financial assets and liabilities are a reasonable approximation of
their fair values.
Fair value changes due to credit risk
There are no changes in the fair value of loans and receivables designated as fair value through profit and loss
that arise due to credit risk. All changes in fair value are attributable to changes in market conditions.
Fair value measurements categorised by fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial
recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset
or liability that are not based on observable market data (unobservable inputs).
Fair value measurements categorised by fair value hierarchy
Level 1
2013
Level 2
2013
Level 3
2013
Total
2013
$'000
$'000
$'000
$'000
-
-
4,107,019
4,107,019
Non-GBEs
NBF investments:
-
-
99,865
99,865
Interest bearing securities
Derivatives
Total financial assets at fair value
Financial liabilities at fair value:
Derivatives
Total financial liabilities at fair value
-
7,810,000
24,275
-
7,810,000
24,275
-
7,834,275
4,206,884
12,041,159
-
279,803
279,803
-
279,803
279,803
Level 1
Level 2
Level 3
Total
2012
$'000
2012
$'000
2012
$'000
2012
$'000
-
-
3,787,700
115,323
3,787,700
115,323
Financial assets at fair value:
Commonwealth companies:
Government Business Enterprises (GBEs)
Financial assets at fair value
Commonwealth companies:
GBEs
Non-GBEs
NBF investments:
Interest bearing securities
-
11,470,740
-
11,470,740
Derivatives
Total financial assets at fair value
-
151,086
11,621,826
3,903,023
151,086
15,524,849
Financial liabilities at fair value:
Derivatives
Total financial liabilities at fair value
-
25,793
-
25,793
-
25,793
-
25,793
93
Notes to and forming part of the financial statements
Note 29D Fair value of financial instruments (continued)
Reconciliation of level 3 fair value hierarchy for financial assets
GBEs
2013
Non-GBEs
2013
Total
2013
$'000
$'000
$'000
3,787,699
-
115,324
5,000
3,903,023
5,000
319,319
(5,000)
(15,458)
(5,000)
303,861
4,107,018
99,866
4,206,884
GBEs
2012
Non-GBEs
2012
Total
2012
$'000
$'000
$'000
4,310,280
(522,581)
113,270
2,054
4,423,550
(520,527)
3,787,699
115,324
3,903,023
Financial assets at fair value
Opening balance
Incorporation
Restructure
Gains (losses) recognised in equity1
Closing balance
Financial assets at fair value
Opening balance
Gains (losses) recognised in equity1
Closing balance
1
These gains and losses are disclosed in the Administered Reconciliation Schedule under "administered
revaluations taken to/from reserves".
94
Notes to and forming part of the financial statements
Note 29E 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.
Gross exposure to credit risk
2013
2012
$'000
$'000
Trade and other receivables
Administered investments
175,837
4,206,884
217,304
3,903,023
NBF investments
Government securities
7,834,275
6,721
11,621,826
10,106
8,525
12,232,242
6,014
15,758,273
Financial assets
Accrued revenue
Total
As at 30 June 2013, the Nation-building Funds (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 NBF
BAF
EIF
HHF
Total NBF
2013
$'000
2013
$'000
2013
$'000
2013
$'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:
Commonwealth Bank of Australia
Westpac Banking Corporation
National Australia Bank
Australia and New Zealand Banking Group
The Northern Trust Company
Total
BAF
EIF
HHF
Total NBF
2012
$'000
2012
$'000
2012
$'000
2012
$'000
Commonwealth Bank of Australia
Westpac Banking Corporation
641,023
777,602
395,400
544,955
368,202
472,137
1,404,625
1,794,694
National Australia Bank
Australia and New Zealand Banking Group
402,061
342,074
217,606
177,100
212,127
176,759
831,794
695,933
574,631
2,737,391
540,192
1,875,253
332,120
1,561,345
1,446,943
6,173,989
Credit rating
Interest Bearing Securities issued by:
The Northern Trust Company
Total
95
Notes to and forming part of the financial statements
Note 29E 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 NBF
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
4,884,569
16,993
4,033,157
8,917
2,787,823
44,371
11,705,549
BAF
EIF
HHF
Total NBF
2012
$'000
2012
$'000
2012
$'000
2012
$'000
AAA
1,692,866
1,243,553
964,321
3,900,740
AA+
AA
96,696
925,279
67,416
801,807
54,368
496,265
218,480
2,223,351
AAA+
721,901
303,577
607,079
231,208
460,411
166,940
1,789,391
701,725
A
A-
156,225
173,065
125,279
135,434
87,028
94,265
368,532
402,764
5,083
4,701
4,314
4,064
2,823
2,629
12,220
11,394
5,720
35,978
9,207
18,573
3,178
19,494
18,105
74,045
A-1+
1,511,133
809,543
814,265
3,134,941
A-1
Other:
29,876
4,965
10,929
45,770
183,847
79,517
213,848
66,146
120,241
44,831
517,936
190,494
5,925,464
4,342,436
3,341,988
13,609,888
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
Total debt securities held by the NBF
Credit rating
Long-term rated securities:
Aa2
Aa3
A2
A3
Short-term rated securities:
US Government Guaranteed
Other non-debt financial instruments
Total debt securities held by the NBF
96
Notes to and forming part of the financial statements
Note 29E Credit risk (continued)
Credit quality of financial instruments not past due or individually determined as impaired
Not past
due nor
impaired
2013
$'000
Not past
due nor
impaired
2012
$'000
Past due or
impaired
2013
$'000
Past due or
impaired
2012
$'000
Financial assets
467,224
744,277
Trade and other receivables
NBF investments - cash and cash equivalents
175,139
3,851,179
216,807
1,948,655
698
-
497
-
Administered investments
NBF investments
4,206,884
7,834,275
3,903,023
11,621,826
-
-
6,721
8,525
10,106
6,014
-
-
16,549,947
18,450,708
698
497
Cash and cash equivalents
Government securities
Accrued revenue
Total
Ageing of financial assets that were past due but not impaired for 2013
Trade and other receivables
Total
0 to 30
days
$'000
31 to 60
days
$'000
61 to 90
days
$'000
90+
days
$'000
Total
$'000
427
427
9
9
89
89
173
173
698
698
Ageing of financial assets that were past due but not impaired for 2012
Trade and other receivables
Total
0 to 30
days
31 to 60
days
61 to 90
days
90+
days
Total
$'000
145
$'000
111
$'000
17
$'000
224
$'000
497
145
111
17
224
497
97
Notes to and forming part of the financial statements
Note 29F 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 $279.8 million (2011-12: $25.8 million) derivative financial liabilities, of which $279.8
million (2011-12: $25.8 million) are recoverable within 12 months.
The following table illustrates the maturities for financial liabilities.
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
880
538
957
1,715
34,927
4,233
4,879
50,415
538
957
1,715
58,504
Maturities for non-derivative financial liabilities 2012
On
Within 1
Suppliers
Unsettled investments
Other payables
Total
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
7,943
-
8,862
95,388
-
-
-
16,805
95,388
3,197
11,140
620
104,870
439
439
355
355
6
6
4,617
116,810
Maturities for derivative financial liabilities 2013
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 2012
On
Within 1
1 to 2
2 to 5
>5
BAF
EIF
HHF
Total
demand
$'000
year
$'000
years
$'000
years
$'000
years
$'000
Total
$'000
BAF
EIF
-
12,182
7,870
-
-
-
12,182
7,870
HHF
Total
-
5,741
25,793
-
-
-
5,741
25,793
98
Notes to and forming part of the financial statements
Note 29G 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 2013
Effect on
Risk variable
Change in
risk
variable
%
Equity
Profit and
loss
$'000
$'000
Interest rate risk1
Deposit rate
+1.20%
9,945
-
Deposit rate
Discount rate
-1.20%
+1.20%
(9,945)
-
(443)
Discount rate
Discount rate
-1.20%
+1.20%
-
602
(2,174)
Discount rate
Discount rate
-1.20%
+1.20%
35,096
2,273
-
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
Government Business Enterprises (GBEs)
Non-GBEs
Building Australia Fund (BAF)
Education Investment Fund (EIF)
Health and Hospital Fund (HHF)
Currency risk2
99
Notes to and forming part of the financial statements
Note 29G Market risk (continued)
Sensitivity analysis of the risk that Finance was exposed to in 2012
Risk variable
Change in
risk variable
Effect on
Profit and
loss
Equity
%
$'000
$'000
Deposit rate
Deposit rate
+1.40%
-1.40%
22,862
(10,659)
-
Government Business Enterprises (GBEs)
Discount rate
Discount rate
+1.40%
-1.40%
-
(446,300)
618,400
Non-GBEs
Discount rate
Discount rate
+1.40%
-1.40%
-
(2,945)
3,102
Building Australia Fund (BAF)
Discount rate
Discount rate
+1.40%
-1.40%
41,868
(38,578)
-
Education Investment Fund (EIF)
Discount rate
Discount rate
+1.40%
-1.40%
33,276
(25,153)
-
Health and Hospital Fund (HHF)
Discount rate
Discount rate
+1.40%
-1.40%
22,216
(20,655)
-
Exchange rate
+15.0%
(2,649)
-
Exchange rate
Exchange rate
-15.0%
+15.0%
2,649
(3,472)
-
Exchange rate
Exchange rate
-15.0%
+15.0%
3,472
(1,855)
-
Exchange rate
-15.0%
1,855
-
Interest rate risk
1
Overnight cash deposits with the RBA
Currency risk2
BAF
EIF
HHF
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.
100
Notes to and forming part of the financial statements
Note 29G Market risk (continued)
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
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)
Building Australia Fund (BAF)
Total physical exposure
Total derivative exposure
Total net exposure
Education Investment Fund
(EIF)
Total physical exposure
Total derivative exposure
Total net exposure
824,907
443,461
259,432
543
1,528,343
(822,685)
2,222
(444,418)
(957)
(262,180)
(2,748)
38
581
(1,529,245)
(902)
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)
Health and Hospital Fund
(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 2012:
USD
EURO
GBP
Other
Total
$'000
$'000
$'000
$'000
$'000
960,087
(937,803)
583,911
(587,706)
271,320
(271,822)
4
187
1,815,322
(1,797,144)
22,284
(3,795)
(502)
191
18,178
900,872
462,896
226,981
4
1,590,753
(880,625)
20,247
(464,831)
(1,935)
(227,265)
(284)
125
129
(1,572,596)
18,157
594,784
(580,410)
322,214
(324,042)
151,116
(151,390)
1
112
1,068,115
(1,055,730)
14,374
56,905
(1,828)
(7,558)
(274)
(1,060)
113
433
12,385
48,720
Building Australia Fund (BAF)
Total physical exposure
Total derivative exposure
Total net exposure
Education Investment Fund
(EIF)
Total physical exposure
Total derivative exposure
Total net exposure
Health and Hospital Fund
(HHF)
Total physical exposure
Total derivative exposure
Total net exposure
Total NBF exposure
101
Notes to and forming part of the financial statements
Note 29G 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 NBF financial investments is set out
below:
Exposure of NBF financial investments by class
Floating
interest rate
Fixed
interest rate
Non-interest
bearing
Total
2013
$'000
2013
$'000
2013
$'000
2013
$'000
1,510,921
-
-
1,510,921
Interest bearing securities
Other financial assets
Total BAF
Education Investment Fund
(EIF)
Cash and cash equivalents
Interest bearing securities
1,606,621
-
1,748,567
-
18,461
3,355,188
18,461
3,117,542
1,748,567
18,461
4,884,570
1,458,610
1,294,487
1,263,065
-
1,458,610
2,557,552
Other financial assets
Total EIF
2,753,097
1,263,065
16,993
16,993
16,993
4,033,155
881,647
866,340
1,030,919
-
881,647
1,897,259
Other financial assets
Total HHF
1,747,987
1,030,919
8,918
8,918
8,918
2,787,824
Total NBF
7,618,626
4,042,551
44,372
11,705,549
Floating
interest rate
2012
Fixed
interest rate
2012
Non-interest
bearing
2012
Total
2012
$'000
$'000
$'000
$'000
Building Australia Fund (BAF)
Cash and cash equivalents
Interest bearing securities
811,466
1,873,648
3,160,833
-
811,466
5,034,481
Other financial assets
Total BAF
2,685,114
3,160,833
79,517
79,517
79,517
5,925,464
Financial assets
Building Australia Fund (BAF)
Cash and cash equivalents
Health and Hospital Fund
(HHF)
Cash and cash equivalents
Interest bearing securities
Financial assets
Education Investment Fund (EIF)
Cash and cash equivalents
710,223
-
-
710,223
Interest bearing securities
Other financial assets
Total EIF
Health and Hospital Fund
(HHF)
Cash and cash equivalents
Interest bearing securities
1,444,355
-
2,121,712
-
66,146
3,566,067
66,146
2,154,578
2,121,712
66,146
4,342,436
426,966
1,118,874
1,751,317
-
426,966
2,870,191
Other financial assets
Total HHF
1,545,840
1,751,317
44,831
44,831
44,831
3,341,988
Total NBF
6,385,532
7,033,862
190,494
13,609,888
102
Notes to and forming part of the financial statements
Note 29G 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 2013. 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.
Building Australia Fund (BAF)
Education Investment Fund (EIF)
Health and Hospital Fund (HHF)
Total
Notional value
2013
2012
$'000
$'000
(82,698)
(1,208,139)
(7,381)
(843,331)
(224,538)
(702,102)
(314,617)
(2,753,572)
Fair market value
2013
2012
$'000
$'000
(18,448)
18,406
(14,944)
12,230
(12,890)
11,442
(46,282)
42,078
Note 29H Concessional loans
The following table provides information on the carrying value of concessional loans Finance holds with States
and Territories.
2013
2012
$'000
$'000
162,493
(59,206)
170,122
(63,368)
103,287
106,754
44,801
(14,108)
46,131
(14,966)
30,693
31,165
25,139
(7,724)
25,957
(8,227)
17,415
17,730
2,001
(693)
2,043
(732)
1,308
1,311
4,723
(1,325)
4,950
(1,437)
3,398
156,101
3,513
160,473
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
103
Notes to and forming part of the financial statements
30 June
2013
$'000
Note 30
30 June
2012
$'000
Administered financial assets reconciliation
Financial assets
Notes
Total financial assets as per schedule of administered
assets and liabilities
16,907,374
18,488,004
Less: non-financial instrument components
Allowance for impairment
Accrued employer superannuation contributions
23B
23D
(18)
46,238
(16)
35,472
Dividends receivable
Petty cash
23B
23A
300,000
1
1
Superannuation overpayment recovery
Superannuation additional lump sum contribution
23B
2,965
5,203
-
GST receivable from Australian Taxation Office
Total non-financial instrument components
23B
2,340
356,729
1,342
36,799
Total financial assets as per financial instruments note
29A
16,550,645
18,451,205
104
Notes to and forming part of the financial statements
Note 31
Superannuation
Finance manages the following defined benefit superannuation schemes on behalf of the government;






Commonwealth Superannuation Scheme (CSS)
Public Sector Superannuation Scheme (PSS)
Parliamentary Contributory Superannuation Scheme (PCSS)
Governor-General Pension Scheme (G-GPS)
Judges' Pensions Scheme (JPS)
Federal Circuit Court Judges Death and Invalidity Scheme (FCCJDIS)
(a) Accounting policy
Actuarial gains and losses are recognised immediately in administered equity in the year in which they occur.
(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)
The 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. 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 CSS is a partially funded defined benefit scheme that provides benefits on resignation, retirement, involuntary
retirement, invalidity, and death (to eligible spouses/children). Funded contributions generally comprise basic
member contributions of five per cent of superannuation salary 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 with the member then having their benefit paid to them from
Consolidated Revenue.
Retirement benefits comprise an unfunded employer financed lifetime indexed pension based on the member’s
age at retirement, years of contributory service and final superannuation salary. The member’s basic
contributions, employer productivity contributions and interest can be taken as a lump sum or an additional nonindexed 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.
Indexed pensions are indexed twice yearly (January and July) in line with changes in the Consumer Price Index.
Public Sector Superannuation Scheme (PSS)
The 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.
105
Notes to and forming part of the financial statements
The PSS is a partially funded defined benefit scheme that provides benefits on resignation, retirement, involuntary
retirement, invalidity and death (to eligible spouses/children). Funded contributions comprise member
contributions between two and ten per cent of superannuation salary and employer productivity (up to three per
cent) contributions. These are invested in the PSS Fund and accumulate with interest. Members can choose to
make no contributions.
In most cases, when a member’s benefit becomes payable, monies held in the PSS Fund in respect of the
member are paid to Consolidated Revenue with the member then having their benefit paid to them from
Consolidated Revenue.
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.
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.
Members can convert 50 per cent or more of their lump sum to a lifetime indexed pension based on the member’s
age at the time the benefit is taken.
Indexed pensions are indexed twice yearly (January and July) in line with changes in the Consumer Price Index.
Parliamentary Contributory Superannuation Scheme (PCSS)
The PCSS is a scheme for Federal parliamentarians and was established under the Parliamentary Contributory
Superannuation Act 1948 (the Act).
The PCSS is an unfunded defined benefit scheme that is governed by the rules set out in the Act. The scheme
was closed to new and returning members on 9 October 2004.
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.
The main benefit provided by the PCSS is a lifetime indexed 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.
Pension benefits are expressed as a percentage of the superannuation salary applicable for the PCSS and are
indexed by movements in that superannuation salary.
The Act also provides for the payment of reversionary pensions to surviving eligible spouses and/or children on
the death of a member.
Governor-General Pension Scheme (G-GPS)
The G-GPS is a scheme for Commonwealth Governors-General and was established under the GovernorGeneral Act 1974 (the Act).
106
Notes to and forming part of the financial statements
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.
Governors-General are not required to contribute towards the cost of their benefit during their term of
appointment.
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.
Judges' Pensions Scheme (JPS)
The JPS is a scheme for Federal Judges (excluding Federal Circuit Court Judges) and was established under the
Judges’ Pensions Act 1968 (the Act).
The JPS is an unfunded defined benefit scheme that is governed by the rules set out in the Act. The scheme
remains open to new members.
Judges are not required to contribute towards the cost of their benefit during their term of judicial service.
The main benefit provided by the JPS 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 (pro-rated based on length
of service) pension where a Judge has less than 10 years service, but not less than 6 years service, who must
retire due to reaching the maximum retiring age in the Constitution (age 70).
A lump sum benefit, based on the minimum Superannuation Guarantee, is payable to a Judge who does not have
sufficient judicial service to qualify for a lifetime pension.
Benefits under the JPS 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.
Federal Circuit Court Judges Death and Invalidity Scheme (FCCJDIS)
During this financial year, the Federal Magistrates Act 1999 was replaced by the Federal Circuit Court of Australia
Act 1999 (the Act). In addition to an employer funded superannuation contribution, Federal Circuit Court Judges
(previously known as Federal Magistrates) have access to a statutory death and disability scheme, established
under the Act.
The disability benefit provides a retired disabled Federal Circuit Court Judge with a pension of 60% of the salary
they would have received if they had not retired, and is payable until the earlier of age 70, or his/her death. In
addition, the Federal Circuit Court Judge continues to receive employer superannuation contributions in respect of
this pension until they reach age 65.
The scheme also provides a lump sum death benefit where a Federal Circuit Court Judge or disabled Federal
Circuit Court Judge dies before reaching age 65. The benefit is the amount of the superannuation contributions
that would have been paid if he or she had not died or retired in the period until they would have reached age 65.
The benefits are funded at the time they become payable and members are not required to contribute to the cost
of these benefits.
107
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plan (continued)
(c) Reconciliation of the present value of the defined benefit obligation - Financial year ended 30 June 2013
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'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
18,154
-
48,600
675
3,873,107
Present value of defined benefit obligations at beginning of
the year
Amounts recognised in income, expenses or equity:
Current service cost 1
Productivity contributions
Interest cost
27,728
210,085
-
-
-
-
237,813
2,657,631
2,461,478
39,195
672
39,400
64
5,198,440
77,420
570,193
-
-
-
-
647,613
Actuarial losses (gains)
(9,602,270)
(17,748,262)
(244,239)
(2,348)
(217,400)
(640)
(27,815,159)
Net amounts recognised in income, expenses or equity
(6,487,095)
(11,053,224)
(186,890)
(1,676)
(129,400)
99
(17,858,186)
Net benefits paid
(3,683,337)
(1,080,608)
(35,699)
(1,213)
(40,900)
(236)
(4,841,993)
(4,370)
(31,758)
-
-
-
-
(36,128)
72,737,546
67,777,214
1,059,819
19,382
1,102,200
1,715
142,697,876
Contributions by scheme participants
Taxes, premiums and expenses paid
Present value of defined benefit obligations at end of the
year
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.
108
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plan (continued)
(c) Reconciliation of the present value of the defined benefit obligation - Financial year ended 30 June 2012
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
64,271,126
44,719,652
836,468
18,358
853,900
1,801
110,701,305
270,182
1,430,915
8,897
-
28,000
582
1,738,576
30,749
210,600
-
-
-
-
241,349
3,378,020
2,344,926
43,410
940
44,600
93
5,811,989
-
-
-
-
(5,200)
-
(5,200)
Present value of defined benefit obligations at beginning of the
year
Amounts recognised in income, expenses or equity:
Current service cost 1
Productivity contributions
Interest cost
Adjustment to prior year liability
Contributions by scheme participants
84,742
556,581
-
-
-
-
641,323
18,528,873
31,663,235
428,462
4,207
390,500
69
51,015,346
Net amounts recognised in income, expenses or equity
22,292,566
36,206,257
480,769
5,147
457,900
744
59,443,383
Net benefits paid
(3,646,731)
(951,515)
(34,829)
(1,234)
(39,300)
(693)
(4,674,302)
Actuarial losses (gains)
Taxes, premiums and expenses paid
Present value of defined benefit obligations at end of the year
1
(4,613)
(31,590)
-
-
-
-
(36,203)
82,912,348
79,942,804
1,282,408
22,271
1,272,500
1,852
165,434,183
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.
109
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plan (continued)
(d) Reconciliation of the fair value of scheme assets - Financial year ended 30 June 2013
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
3,911,019
12,106,610
-
-
-
-
16,017,629
Expected return on scheme assets
259,251
853,204
-
-
-
-
1,112,455
Actuarial gains (losses)
139,246
731,861
-
-
-
-
871,107
77,420
570,193
-
-
-
-
647,613
Fair value of scheme assets at beginning of the year
Changes in fair value of plan assets:
Contributions by scheme participants
Contributions by employer - productivity contribution
Net changes in fair value of plan 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
27,728
210,085
-
-
-
-
237,813
503,645
2,365,343
-
-
-
-
2,868,988
3,167,700
496,130
35,699
1,213
40,900
236
3,741,878
(3,683,337)
(1,080,608)
(35,699)
(1,213)
(40,900)
(236)
(4,841,993)
(4,370)
(31,758)
-
-
-
-
(36,128)
3,894,657
13,855,717
-
-
-
-
17,750,374
Reconciliation of the fair value of scheme assets - Financial year ended 30 June 2012
Fair value of scheme assets at beginning of the year
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
4,231,986
11,583,709
-
-
-
-
15,815,695
Changes in fair value of plan assets:
Expected return on scheme assets
281,189
819,734
-
-
-
-
1,100,923
(172,151)
(550,394)
-
-
-
-
(722,545)
Contributions by scheme participants
84,742
556,581
-
-
-
-
641,323
Contributions by employer - productivity contribution
30,749
210,600
-
-
-
-
241,349
1,261,050
Actuarial gains (losses)
Net changes in fair value of plan 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
224,529
1,036,521
-
-
-
-
3,105,848
469,485
34,829
1,234
39,300
693
3,651,389
(3,646,731)
(951,515)
(34,829)
(1,234)
(39,300)
(693)
(4,674,302)
(4,613)
(31,590)
-
-
-
-
(36,203)
3,911,019
12,106,610
-
-
-
-
16,017,629
The fair value of scheme assets and return on assets is based on year to date May plus best estimates for June returns. The final valuations prepared by the trustee may result in differences.
110
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plan (continued)
(e) Reconciliation of the net superannuation liabilities administered on behalf of Government - Financial year ended 30 June 2013
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Defined benefit obligation
72,737,546
67,777,214
1,059,819
19,382
1,102,200
1,715
142,697,876
Less: fair value of scheme assets
(3,894,657)
(13,855,717)
-
-
-
-
(17,750,374)
Net superannuation liability (Refer Note 26B)
68,842,889
53,921,497
1,059,819
19,382
1,102,200
1,715
124,947,502
Reconciliation of the net superannuation liabilities administered on behalf of Government - Financial year ended 30 June 2012
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Defined benefit obligation
82,912,348
79,942,803
1,282,408
22,271
1,272,500
1,852
165,434,182
Less: fair value of scheme assets
(3,911,019)
(12,106,610)
-
-
-
-
(16,017,629)
Net superannuation liability (Refer Note 26B)
79,001,329
67,836,193
1,282,408
22,271
1,272,500
1,852
149,416,553
PCSS
G-GPS
JPS
FCCJDIS
Total
(f) Total expense recognised in the schedule of administered comprehensive income - Financial year
ended 30 June 2013
CSS
Current service cost
Interest cost
PSS
$'000
$'000
$'000
$'000
$'000
$'000
$'000
352,396
3,453,282
18,154
-
48,600
675
3,873,107
2,657,631
2,461,478
39,195
672
39,400
64
5,198,440
Less: expected return on assets
(259,251)
(853,204)
-
-
-
-
(1,112,455)
Net superannuation expense (Refer Note 20B)
2,750,776
5,061,556
57,349
672
88,000
739
7,959,092
Total expense recognised in the schedule of administered comprehensive income - Financial year ended 30 June 2012
Current service cost
Interest cost
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
270,182
1,430,915
8,897
-
28,000
582
1,738,576
3,378,020
2,344,926
43,410
940
44,600
93
5,811,989
Less: expected return on assets
(281,189)
(819,734)
N/A
N/A
N/A
N/A
(1,100,923)
Net superannuation expense (Refer Note 20B)
3,367,013
2,956,107
52,307
940
72,600
675
6,449,642
111
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plan (continued)
(g) Cumulative amount of actuarial gains and losses recognised in administered equity - Financial year ended 30 June 2013
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
(27,293,314)
(41,651,070)
(487,596)
(7,119)
(451,100)
1,226
(69,888,973)
Defined benefits
9,602,270
17,748,262
244,239
2,348
217,400
640
27,815,159
Scheme Assets
139,246
731,861
-
-
-
-
871,107
Actuarial gains and losses at beginning of the year
Current year actuarial gains (losses):
Current year actuarial gains (losses)
Actuarial gains and losses at end of the year
9,741,516
18,480,123
244,239
2,348
217,400
640
28,686,266
(17,551,798)
(23,170,947)
(243,357)
(4,771)
(233,700)
1,866
(41,202,707)
Cumulative amount of actuarial gains and losses recognised in administered equity - Financial year ended 30 June 2012
Actuarial gains and losses at beginning of the year
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
(8,592,290)
(9,437,441)
(59,134)
(2,912)
(60,600)
1,280
(18,151,097)
(18,528,873)
(31,663,235)
(428,462)
(4,207)
(390,500)
(54)
(51,015,331)
Current year actuarial gains (losses):
Defined benefits
(172,151)
(550,394)
-
-
-
-
(722,545)
Current year actuarial gains (losses)
Scheme Assets
(18,701,024)
(32,213,629)
(428,462)
(4,207)
(390,500)
(54)
(51,737,876)
Actuarial gains and losses at end of the year
(27,293,314)
(41,651,070)
(487,596)
(7,119)
(451,100)
1,226
(69,888,973)
112
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plans (continued)
Scheme Assets
(h) The fair value of scheme assets is represented by:
CSS
Financial year ended
PSS
30 June
2013
30 June
2012
30 June
2013
30 June
2012
24.8%
Australian equity
34.3%
International equity
12.4%
Property
8.8%
Market neutral funds
6.3%
Objective based funds
6.8%
Credit
4.8%
Sovereign bonds
1.8%
Cash
Note: schemes that are not included in this table do not hold assets.
23.1%
28.6%
14.7%
10.2%
5.6%
8.0%
6.0%
3.8%
24.8%
34.3%
12.4%
8.8%
6.3%
6.8%
4.8%
1.8%
23.1%
28.6%
14.7%
10.2%
5.6%
8.0%
6.0%
3.8%
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: $25.0 million (ARIA Investments Trust) as at
30 June 2013 ($30.2 million as at 30 June 2012) and PSS: $99.4 million (ARIA Investments Trust) as at
30 June 2013 ($106.7 million as at 30 June 2012).
Expected rate of return on scheme assets
The expected return on assets assumption is determined by weighting the expected long-term return for each
asset class by the target allocation of assets to each asset class. The returns used for each asset class are net of
investment tax and investment fees.
(i) Actual return on scheme assets
CSS
Financial year ended
PSS
30 June
2013
30 June
2012
30 June
2013
30 June
2012
$'000
398,497
Actual return on scheme assets
13.6%
Actual return on scheme assets as a percentage
Note: schemes that are not included in this table do not hold assets.
$'000
109,038
2.7%
$'000
1,585,065
13.6%
$'000
269,340
2.5%
113
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plans (continued)
(j) Principal actuarial assumptions at balance sheet date
Assumptions for CSS/PSS
Financial year ended
Discount rate (active members)
Discount rate (pensioners)
Expected rate of return on plan assets (active
members)
Expected salary increase rate
Expected pension increase rate
1
Assumptions for
Other
Superannuation
Schemes1
30 June
30 June
30 June
30 June
2013
2012
2013
2012
4.3% pa
4.3% pa
3.1% pa
3.1% pa
4.3% pa
4.3% pa
3.1% pa
3.1% pa
7.0% pa
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
4.0% pa
4.0% pa
PCSS, G-GPS, JPS and FCCJDIS.
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. Unless
stated otherwise in this report, all assumptions are the same as those used for the Long Term Cost Report as at
30 June 2011.
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 2013 was estimated using the audited fair value of scheme assets
at 30 June 2012 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 2013 was used in determining
the fair value of scheme assets.
In relation to the defined benefit obligation, member data as at 30 June 2012 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 2013.
Other Schemes – G-GPS, JPS and FCCJDIS
The demographic assumptions used as at 30 June 2013 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.
114
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plans (continued)
(k) Historical information
CSS
30 June
2009
$'000
30 June
2010
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2013
$'000
Present value of defined benefit obligation
Less: fair value of scheme assets
Total deficit in scheme
59,837,471
(4,259,430)
55,578,041
64,446,182
(4,380,424)
60,065,758
64,271,126
(4,231,986)
60,039,140
82,912,348
(3,911,019)
79,001,329
72,737,546
(3,894,657)
Experience adjustments (gain) loss - scheme assets
Experience adjustments (gain) loss - scheme liabilities
1,048,332
(2,863,710)
(221,343)
1,541,732
(13,779)
442,361
172,151
(450,845)
68,842,889
(139,246)
1,819,931
30 June
2009
$'000
30 June
2010
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2013
$'000
34,153,268
(9,307,754)
24,845,514
41,543,533
(10,551,432)
30,992,101
44,719,652
(11,583,709)
33,135,943
79,942,803
(12,106,610)
67,836,193
67,777,214
(13,855,717)
2,273,405
(251,498)
(226,380)
1,457,523
(29,209)
446,882
550,394
1,824,948
Financial year ended
PSS
Financial year ended
Present value of defined benefit obligation
Less: fair value of scheme assets
Total deficit in scheme
Experience adjustments (gain) loss - scheme assets
Experience adjustments (gain) loss - scheme liabilities
53,921,497
(731,861)
1,324,793
115
Notes to and forming part of the financial statements
Note 31k Historical information (continued)
PCSS
Financial year ended
Present value of defined benefit obligation - total deficit
Experience adjustments (gain) loss - scheme liabilities
30 June
2009
$'000
737,714
(57,533)
30 June
2010
$'000
802,604
(3,682)
30 June
2011
$'000
836,468
29,420
30 June
2012
$'000
1,282,408
43,484
30 June
2013
$'000
1,059,819
(19,723)
30 June
2009
$'000
16,014
1,417
30 June
2010
$'000
18,385
2,636
30 June
2011
$'000
18,358
276
30 June
2012
$'000
22,271
4,207
30 June
2013
$'000
19,382
(2,348)
30 June
2009
$'000
680,500
84,400
30 June
2010
$'000
814,200
54,500
30 June
2011
$'000
853,900
6,300
30 June
2012
$'000
1,272,500
390,500
30 June
2013
$'000
1,102,200
(217,400)
30 June
2009
$'000
-
30 June
2010
$'000
1,991
(104)
30 June
2011
$'000
1,801
(1,176)
30 June
2012
$'000
1,852
54
30 June
2013
$'000
1,715
(640)
G-GPS
Financial year ended
Present value of defined benefit obligation - total deficit
Experience adjustments (gain) loss - scheme liabilities
JPS
Financial year ended
Present value of defined benefit obligation - total deficit
Experience adjustments (gain) loss - scheme liabilities
FCCJDIS
Financial year ended
Present value of defined benefit obligation - total deficit
Experience adjustments (gain) loss - scheme liabilities
116
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plans (continued)
(l) Expected contributions
Expected contributions - financial year ended 30 June 20141
Actual contributions - financial year ended 30 June 20131
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDIS
$'000
24,588
212,016
41,080
1,300
42,000
263
27,728
210,085
35,699
1,213
40,900
236
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) Funding arrangements for employer contributions
The following is a summary of the most recent financial position of the various schemes, determined in accordance with AAS 25 Financial Reporting by Superannuation
Plans.
The valuation is sourced from the various schemes Long Term Cost Reports (LTCR) which are completed every three years. These values are not updated in the years
between LTCRs. The most recent LTCR was completed as at 30 June 2011, with the comparative completed as at 30 June 2008.
LTCR valuation differs from the superannuation provision disclosed under primary financial statements (Note 26B) as follows:
• LTCR is based on June 2011 membership, whereas Note 26B uses estimated membership at June 2013.
• LTCR uses a long term discount rate (6%), whereas Note 26B uses a discount rate based on yields on government bonds at reporting date.
• LTCR values the whole scheme, whereas Note 26B values reflect the responsibility of the Australian Government and excludes liability relating to ACT Government, NT
Government and Australian National University.
(i) Deficit
Financial year ended 30 June 2011
Accrued benefits - unfunded liability as at 30 June 2011
Financial year ended 30 June 2008
Accrued benefits - unfunded liability as at 30 June 2008
CSS
PSS
PCSS
G-GPS
JPS
FCCJDIS
$'000
59,900,000
$'000
33,100,000
$'000
778,900
$'000
17,300
$'000
782,000
$'000
1,786
CSS
$'000
PSS
$'000
PCSS
$'000
G-GPS
$'000
JPS
$'000
FCCJDIS
$'000
59,200,000
20,900,000
701,600
N/A
615,000
N/A
117
Notes to and forming part of the financial statements
Note 31 Defined benefit superannuation plans (continued)
(ii) Contribution recommendations
CSS and PSS are largely unfunded. While employers pay productivity contributions of between 2% and 3% into
the CSS / PSS Fund, the remaining employer contributions are not funded in advance.
The other schemes, including PCSS, G-GPS, JPS and FCCJDIS are unfunded. The defined benefits are not
funded in advance.
(iii) Funding method
Where a benefit in the Scheme becomes payable, the Australian Government assumes responsibility for the
payment from the Consolidated Revenue Fund.
(iv) Economic assumptions
The long-term economic assumptions adopted for the last actuarial review of the schemes as at 30
June 2011 were:
Assumptions for
CSS/PSS
Expected rate of return on assets (discount rate)
Expected salary increase rate
Expected CPI increase
Expected pension increase
1
6.0% pa
4.0% pa (nominal) +
a promotional salary
increase
2.5% pa
2.5% pa
Assumptions for
Other
Superannuation
Schemes1
6.0% pa
4.0% pa
4.0% pa
PCSS, G-GPS, JPS and FCCJDIS.
Nature of asset/liability
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.
118
Notes to and forming part of the financial statements
Note 32
Appropriations
Note 32A Annual appropriations ('recoverable GST exclusive')
2012-2013 Appropriations
Appropriation Act
DEPARTMENTAL
Ordinary annual services
Other services
Equity
Total departmental
ADMINISTERED
Ordinary annual services
Outcome 13
Outcome 2
Outcome 3
Other services
Administered assets and
liabilities
Total administered
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
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
291,477
(17,829)
491
-
-
11,822
274,139
(5,826)
(265,929)
5,996
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 effected 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, refer to Note 2 – Events after the reporting period, this reduction is not reflected in the table above.
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, refer to Note 2 – Events after the reporting period, this reduction is not reflected in the table above.
2
‘Appropriation applied’ includes cash payments made from current and prior year appropriations compared to ‘Annual Appropriation’ which includes only current year appropriations.
3
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.
119
Notes to and forming part of the financial statements
Note 32A Annual appropriations ('recoverable GST exclusive') (continued)
2011-2012 Appropriations
FMA Act
Appropriation Act
DEPARTMENTAL
Ordinary annual services
Other services
Equity
Total departmental
Annual
Appropriation
$'000
Appropriations
reduced1
$'000
Section 30
$'000
Section 31
$'000
Section 32
$'000
Total
appropriation
$'000
Appropriation
applied2
$'000
Variance
$'000
252,126
(735)
10
25,204
(472)
276,133
(272,991)
3,142
208,000
460,126
(735)
10
25,204
(472)
208,000
484,133
(228,075)
(501,066)
(20,075)
(16,933)
14,689
681
237,190
(1,575)
(32)
(5,791)
2,606
-
(236)
13,114
649
233,769
(14,321)
(649)
(229,518)
(1,207)
4,251
ADMINISTERED
Ordinary annual services
Outcome 13
Outcome 2
Outcome 3
Other services
Administered assets and
liabilities
Total administered
1,789
-
-
-
-
1,789
(2,303)
(514)
254,349
(7,398)
2,606
-
(236)
249,321
(246,791)
2,530
1 Appropriations
reduced under Appropriation Acts (No. 1, 3 & 5) 2011-12: sections 10, 11, and 12 and under Appropriation Acts (No. 2, 4 & 6) 2011-12: sections 12, 13, and 14.
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.
On 26 June 2012, the Finance Minister issued a determination to reduce departmental appropriations. The amount of the reduction under Appropriation Act (No.1) 2011-12 was
$0.8 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) 2011-12 and section 12 of Appropriation Acts
(No. 2, 4 & 6) 2011-12, 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 ComSuper spent money from the Consolidated Revenue Fund (CRF) on behalf of Finance. The money spent has been included in the table above.
120
Notes to and forming part of the financial statements
Note 32B Departmental and administered capital budgets ('recoverable GST exclusive')
Capital Budget Appropriations applied in
2012-13 (current and prior years)
2012-13 Capital Budget Appropriations
Appropriation Act
FMA Act
Section 32
$'000
Total Capital
Budget
Appropriations
$'000
Payments
for nonfinancial
assets3
$'000
Payments
for other
purposes
$'000
Total
payments
$'000
Variance
$'000
-
-
8,290
5,603
-
5,603
2,687
-
-
3,197
1,009
-
1,009
2,188
Annual
Capital
Budget
$'000
Appropriations
reduced2
$'000
8,290
3,197
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 32 A: 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.
121
Notes to and forming part of the financial statements
Note 32B Departmental and administered capital budgets ('recoverable GST exclusive') (continued)
Capital Budget Appropriations applied in
2011-12 (current and prior years)
2011-12 Capital Budget Appropriations
Appropriation Act
FMA Act
Payments
for nonfinancial
assets3
$'000
Payments
for other
purposes
$'000
Total
payments
$'000
Variance
$'000
Annual
Capital
Budget
$'000
Appropriations
reduced2
$'000
Section 32
$'000
Total Capital
Budget
Appropriations
$'000
16,631
-
-
16,631
21,614
-
21,614
(4,983)
3,320
-
-
3,320
3,320
-
3,320
-
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 Table A: Annual Appropriations.
2 Appropriations reduced under Appropriations Acts (No. 1, 3, 5) 2011-12: sections 10, 11, 12 and 15, under Appropriation Acts (No.2, 4, 6) 2011-12: 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.
122
Notes to and forming part of the financial statements
Note 32C Unspent annual appropriations ('recoverable GST exclusive')
Authority
DEPARTMENTAL
Appropriation Act (No. 2) 2007 - 20082
Appropriation Act (No. 2) 2008 - 20091, 2
Appropriation Act (No. 2) 2009 - 20101, 2
Appropriation Act (No. 2) 2010 - 20112
Appropriation Act (No. 2) 2011 - 20122
Appropriation Act (No. 2) 2012 - 2013
Appropriation Act (No. 4) 2006 - 20072
Appropriation Act (No. 4) 2007 - 20082
Appropriation Act (No. 1) 2011 - 2012
Appropriation Act (No. 1) 2012 - 2013
Appropriation Act (No. 1) 2011 - 2012 – Capital
Appropriation Act (No. 1) 2012 - 2013 – Capital
Appropriation Act (No. 3) 2011 - 2012
Total unspent departmental annual appropriations
2013
2012
$'000
$'000
762
8,907
58,256
74,463
81,430
4,393
-
69,721
46,954
27,038
15,841
3,522
613
2,150
56,545
1,706
100
228,211
224,190
407
32
273
1,451
1,732
1,406
5,000
5
20,800
2,188
33,294
407
32
781
1,314
1,769
27,093
656
32,052
ADMINISTERED
Appropriation Act (No. 2) 2004 - 20051
Appropriation Act (No. 2) 2009 - 20101
Appropriation Act (No. 2) 2010 - 20112
Appropriation Act (No. 2) 2011 - 20122
Appropriation Act (No. 2) 2012 - 2013
Appropriation Act (No. 4) 2008 - 20091, 2
Appropriation Act (No. 4) 2012 - 2013
Appropriation Act (No. 1) 2011 - 2012
Appropriation Act (No. 1) 2012 - 2013
Appropriation Act (No. 1) 2012 - 2013 - Capital
Appropriation Act (No. 3) 2011 - 2012
Total unspent administered annual appropriations
1
Under the Statue Stocktake (Appropriations) Act 2013 these Acts have been repealed, as disclosed in Note 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. The
following is a summary of updated prior year unspent balances:
2
Appropriation Act
Revised balance
Appropriation Act (No. 2) 2007 - 2008
Appropriation Act (No. 2) 2008 - 2009
Appropriation Act (No. 2) 2009 - 2010
Appropriation Act (No. 2) 2010 - 2011
Appropriation Act (No. 2) 2011 - 2012
Appropriation Act (No. 4) 2006 - 2007
Appropriation Act (No. 4) 2007 - 2008
6,695
27,539
11,458
120,147
-
Appropriation Act (No. 2) 2010 - 2011
Appropriation Act (No. 2) 2011 - 2012
Appropriation Act (No. 4) 2008 - 2009
786
1,495
1,583
123
Notes to and forming part of the financial statements
Note 32D Special Appropriations ('recoverable GST exclusive')
Appropriation applied
2013
2012
$'000
$'000
(117,754)
(129,135)
Authority
Type
Purpose
Superannuation Act 1922
s.119T(2)(b), s.119ZC(5),
s.134(1)
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.
Superannuation Act 1976
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
(3,967,312)
(3,862,002)
Superannuation Act 1990
s.18, s.33E(2), s.37(1),
s.37(3), s.37A(2), s.38(2)
Administered
Unlimited
amount
(1,216,035)
(1,016,486)
Superannuation Act 2005
Appropriation provision
removed from 1 July 2011.
Administered
Unlimited
amount
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.
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.
-
-
Governance of Australian
Government Superannuation
Schemes Act 2011
s.35(3)(a), s.35(4)
Administered
Unlimited
amount
An Act to provide for the
administration of certain
Australian Government
superannuation schemes by a
single body and for related
purposes.
(243)
(366)
Parliamentary Contributory
Superannuation Act 1948
s.15C(11), s.22DH(4), s.26D,
s.27
Administered
Parliamentary
Superannuation Act 2004
s.18
Administered
Unlimited
amount
An Act to make provision for
contributory superannuation
for persons who have served
as Members of the Parliament.
(35,701)
(34,820)
Unlimited
amount
An Act to provide for the
making of superannuation
contributions in respect of
Members of Parliament and for
related purposes.
(4,462)
(3,506)
124
Notes to and forming part of the financial statements
Note 32D Special Appropriations ('recoverable GST exclusive')
(continued)
Appropriation applied
2013
2012
$'000
$'000
(2,643)
(2,695)
Authority
Type
Purpose
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 set out the
entitlements of holders of a life
gold pass.
Unlimited
amount
An Act relating to the provision
of benefits to Members of each
House of the Parliament.
(160,793)
(140,914)
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.
(1,213)
(1,234)
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
Financial Management and
Accountability Act 1997
s.28
Administered
Same-Sex Relationships
(Equal Treatment in
Commonwealth Laws –
Superannuation) Act 2008,
s.4(7)
Administered
Unlimited
amount
An Act to make provision for
pensions for Judges and their
families.
(40,742)
(39,341)
Unlimited
amount
An Act relating to Federal
Magistrates, and for other
purposes.
(236)
(693)
Refund
Repayments required or
permitted by law (where no
other appropriation for
repayment exists).
An Act to address
discrimination against samesex couples and their children
in Commonwealth laws and for
other purposes.
(3,422)
(289,934)
(56)
(55)
Unlimited
amount
125
Notes to and forming part of the financial statements
Note 32D Special Appropriations ('recoverable GST exclusive')
(continued)
Appropriation applied
2013
2012
$'000
$'000
(4,763)
(3,935)
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
Airports (Transitional) Act
1996, s.39, s.44, s.70, s.78
and s.86(1)
Administered
Australian Industry
Development Corporation Act
1970, s.34 and s.34ZX(2)
Administered
Lands Acquisitions Act 1989,
s.124(5)
Administered
Limited
amount
An Act to determine the
number of the Ministers of
State and to make provision
for their salaries and
allowances.
Unlimited
amount
An Act relating to the leasing
of airports, and for related
purposes.
-
-
Unlimited
amount
An Act to establish an
Australian Industry
Development Corporation.
-
-
Unlimited
amount
-
-
Parliamentary Retiring
Allowances (Increases) Act
1967, s.5(c)
Administered
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 relating to the
acquisition of land by the
Commonwealth and certain
authorities and dealings with
land so acquired, and for other
purposes.
An Act to provide for increases
in certain parliamentary retiring
allowances.
-
-
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.
-
-
126
Notes to and forming part of the financial statements
Note 32D Special Appropriations ('recoverable GST exclusive')
(continued)
Appropriation applied
2013
2012
$'000
$'000
-
Authority
Type
Purpose
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(2)
and s.6(4). Appropriation
provision removed from 16
September 2011.
Administered
Superannuation (Pension
Increases) Act 1971, s.11(2)
and s.11(4).
Appropriation provision
removed from 16 September
2011.
Administered
Transferred Officers'
Allowances Act 1948, s.8
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.
-
-
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.
-
-
Western Australia (SouthWest Region Water Supplies)
Agreement Act 1965, s.4
Limited to $12,000,000
Administered
Limited
amount
An Act relating to an
Agreement between the
Commonwealth and the State
of Western Australia in relation
to water supplies in the southwest region of that state.
-
-
Aboriginal and Torres Strait
Islander Act 2005, Part 4B
Administered
Unlimited
amount
-
-
Aerospace Technologies of
Australia Limited Sale Act
1994
Administered
Unlimited
amount
An Act to establish a Torres
Strait Regional Authority, an
indigenous land corporation
and a corporation to be known
as Indigenous Business
Australia, and for related
purposes.
An Act relating to the sale of
AeroSpace Technologies of
Australia Limited, and for
related purposes.
-
-
127
Notes to and forming part of the financial statements
Note 32D Special Appropriations ('recoverable GST exclusive')
(continued)
Authority
Type
Purpose
AIDC Sale Act 1997
Administered
Unlimited
amount
An Act to amend the Australian
Industry Development
Corporation Act 1970, and for
other purposes
Albury-Wodonga
Development Act 1973
Administered
Unlimited
amount
An Act relating to the
Development of the AlburyWodonga Area.
Total
Appropriation applied
2013
2012
$'000
$'000
-
-
-
(5,555,375)
(5,525,116)
ComSuper drew from the special appropriation authorised by the Superannuation Act 1922 s.7(4), s.119T(2)(b),
s.119ZC(5), s.134(1), the Superannuation Act 1976 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), the
Superannuation Act 1990 s.18, s.33E(2), s.37(1), s.37(3), s.37A(2), s.38(2), Superannuation Act 2005 s.19, the
Governance of Australian Government Superannuation Schemes Act 2011 s. 35(4), (3)(a) and the Same-Sex
Relationships (Equal Treatment in Commonwealth Laws – Superannuation) Act 2008 s.4. Additionally, ComSuper drew
down from the Financial Management and Accountability Act 1997 s.28. 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 s.18 and the Commonwealth of Australia Constitution Act s.66
(Ministers of State Act 1952, s.5). The money spent has been included in the table above.
The Department of the Attorney-General, House of Representatives, House of the Senate and the Department of
Parliamentary Services drew from the special appropriation authorised by the Parliamentary Entitlements Act 1990 s.11.
The money spent has been included in the table above.
Fair Work Australia drew from the special appropriation authorised by the Judges Pension Act 1968 s.12A(5), s.14(b).
The money spent has been included in the table above.
128
Notes to and forming part of the financial statements
Note 32E Disclosure by agent in relation to annual and special appropriations ('recoverable GST
exclusive')
2013
Total receipts
Total payments
2012
Total receipts
Total payments
Department
of Defence1
$'000
AUSAID2
$'000
$'000
Australian
Secret
Intelligence
Organisation4
$'000
77
(77)
59
(59)
370
(370)
59,631
(59,631)
212
(212)
AUSAID
$'000
-
AttorneyGeneral's
Department
$'000
393
(393)
Australian
Secret
Intelligence
Organisation
$'000
108,441
(108,441)
Department
of Prime
Minister and
Cabinet
$'000
3,382
(3,382)
Department
of Defence
$'000
-
AttorneyGeneral's
Department
Department
of Prime
Minister
and
Cabinet5
$'000
3
Relationship between Finance and agency:
1 Chiefs of Defence Conference Memorandum of Understanding – provision of COMCAR car-with-driver and associated
services.
2 COMCAR provided for Malaria conference held in December 2012.
3 Solicitors-General pension payments.
4 Commonwealth New Building Project undertaken on behalf of ASIO.
5 COMCAR services provided for G20.
129
Notes to and forming part of the financial statements
Note 32F Reduction in Administered Items ('recoverable GST exclusive')
As per Appropriation Act (Act 1 s.11; Act 2 s.12)
Total amount
Total amount
Total reduction
required
appropriated in
effective in 2013-14
Amount required - by Appropriation Act
2012-13
Act (No.1)
Act (No.3)
2012-13
Outcome 1
11,021,740.73
0.00
11,021,740.73
11,434,000.00
Outcome 2
679,994.00
0.00
679,994.00
697,000.00
17,006.00
Outcome 3
219,340,000.00
27,587,000.00
246,927,000.00
264,327,000.00
17,400,000.00
Ordinary Annual Services
Administered capital budget
Total
412,259.27
3,197,000.00
0.00
3,197,000.00
3,197,000.00
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 section of the table are disclosed to the cent.
2. Administered items for 2012-13 will be reduced to these amounts when the financial statements are tabled in Parliament as part of Finance’s 2012-13 annual report.
This reduction is effective in 2013-14, but the amounts are reflected in the 2012-13 financial statements in Table A of this note, in column ‘Appropriations reduced’ as they are
adjustments to the 2012-13 appropriations.
As per Appropriation Act (Act 1 s.11; Act 2 s.12)
Amount required - by Appropriation Act
2011-12
Act (No.1)
Act (No.3)
13,113,811.31
0.00
Total amount
Total amount
required
appropriated in
Total reduction effective
2011-12
in 2012-13
14,689,000.00
1,575,188.69
Ordinary Annual Services
Outcome 1
13,113,811.31
Outcome 2
648,704.00
0.00
648,704.00
681,000.00
32,296.00
Outcome 3
227,186,525.31
656,000.00
227,842,525.31
233,633,684.46
5,791,159.15
3,320,000.00
0.00
3,320,000.00
3,320,000.00
0.00
244,269,040.62
656,000.00
244,925,040.62
252,323,684.46
7,398,643.84
Administered capital budget
Total
Notes:
1. Numbers in this section of the table are disclosed to the cent.
2. Administered items for 2011-12 were reduced to these amounts when the financial statements were tabled in Parliament as part of Finance’s 2011-12 annual report.
This reduction was effective in 2012-13, but the amounts were reflected in the 2011-12 financial statements in Table A of this note, in column ‘Appropriations reduced’ as they were
adjustments to the 2011-12 appropriations.
130
Notes to and forming part of the financial statements
Note 33
Special accounts
Note 33A Special accounts ('recoverable GST exclusive')
Departmental Special Accounts
Coordinated
Comcover 1
Property 2
Business Services 3
Procurement
Total Departmental
Contracting 4
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
256,631
240,047
226,837
242,579
901
928
42,084
33,712
526,453
517,266
13,092
15,022
116,755
175,500
-
-
4,813
4,953
134,660
195,475
68
-
53,193
98,546
-
5
73,868
78,493
127,129
177,044
83,960
101,472
-
-
-
-
-
-
83,960
101,472
6,106
10,060
-
-
-
-
-
-
6,106
10,060
Proceeds from sale of property, plant and equipment
-
-
260
204
-
-
-
-
260
204
Other
-
-
5,906
2,175
6,217
9,734
12,123
11,909
Total increases
103,226
126,554
176,114
276,425
-
5
84,898
93,180
364,238
496,164
Available for payments
359,857
366,601
402,951
519,004
901
933
126,982
126,892
890,691
1,013,430
Balance brought forward from previous period
Increases:
Appropriation credited to the special account
Other receipts
Rendering of services
Insurance premiums
Reinsurance and other recoveries
Decreases:
Payments made
Employees
(2,824)
(2,173)
(8,031)
(7,740)
-
-
(8,279)
(9,355)
(19,134)
(19,268)
Suppliers
(8,469)
(31,635)
(46,483)
(25,698)
(5)
(32)
(76,212)
(75,453)
(131,169)
(132,818)
(54,738)
(71,058)
-
-
-
-
-
-
(54,738)
(71,058)
Purchase of property, plant and equipment
-
-
(84,553)
(199,989)
-
-
-
-
(84,553)
(199,989)
Purchase of intangibles
-
-
-
-
-
-
(247)
-
(247)
-
Capital repayments
-
-
(34,221)
(39,785)
-
-
(6,200)
-
(40,421)
(39,785)
(5,000)
Insurance claims paid
(5,104)
(8,095)
(18,955)
-
-
-
-
(13,095)
(24,059)
Total decreases
(71,031)
(109,970)
(181,383)
(292,167)
(5)
(32)
(90,938)
(84,808)
(343,357)
(486,977)
Total balance carried forward to the next period
288,826
256,631
221,568
226,837
896
901
36,044
42,084
547,334
526,453
244
233
695
55
-
-
662
862
1,601
1,150
Appropriation receivable
288,582
256,398
220,873
226,782
896
901
35,382
41,222
545,733
525,303
Total cash
288,826
256,631
221,568
226,837
896
901
36,044
42,084
547,334
526,453
Competitive neutrality
Represented by:
Cash and bank
131
Notes to and forming part of the financial statements
Note 33B Special accounts ('recoverable GST exclusive') (continued)
Administered Special Accounts
Services for Other
Balance brought forward
Other Trust
Building Australia
Education Investment
Health and Hospital
Entities
Moneys 5
Fund 6
Fund 7
Fund 8
and Trust Moneys 9
Total Administered
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
-
258
-
32
-
26
-
25
257
-
257
341
60,747
Increases: Receipts
Interest
-
-
34,038
25,488
30,381
19,694
21,937
15,565
-
-
86,356
Net realised gain
-
-
87,054
19,214
54,190
20,552
48,662
11,058
-
-
189,906
50,824
Net realised exchange gains
-
-
32,229
127,750
26,600
69,425
25,192
61,491
-
-
84,021
258,666
Other transfers
-
-
-
-
-
-
-
-
-
257
-
257
Investments realised
-
-
14,312,404
15,128,511
10,775,202
8,885,761
8,137,495
7,879,494
-
-
33,225,101
31,893,766
Other
-
17
-
-
-
-
-
-
6
-
6
17
Total increases
-
17
14,465,725
15,300,963
10,886,373
8,995,432
8,233,286
7,967,608
6
257
33,585,390
32,264,277
Available for payments
-
275
14,465,725
15,300,995
10,886,373
8,995,458
8,233,286
7,967,633
263
257
33,585,647
32,264,618
Decreases: Payments
Suppliers
-
(18)
(6,268)
(9,028)
(5,208)
(6,148)
(3,851)
(5,149)
(6)
-
(15,333)
(20,343)
Other transfers
-
(257)
-
-
-
-
-
-
-
-
-
(257)
Purchase of investments
-
-
(13,111,402)
(12,591,696)
(10,332,061)
(8,142,790)
(7,500,161)
(6,721,631)
-
-
(30,943,624)
(27,456,117)
Distributions
-
-
(1,348,055)
(2,700,271)
(549,104)
(846,520)
(729,274)
(1,240,853)
-
-
(2,626,433)
(4,787,644)
Transfer to OPA
-
-
-
-
-
-
-
-
(257)
-
(257)
Total decreases
-
(275)
(14,465,725)
(15,300,995)
(10,886,373)
(8,995,458)
(8,233,286)
(7,967,633)
(263)
-
(33,585,647)
(32,264,361)
Total balance carried forward
-
-
-
-
-
-
-
-
-
257
-
257
Appropriation receivable
-
-
-
-
-
-
-
-
-
257
-
257
Total cash
-
-
-
-
-
-
-
-
-
257
-
257
Represented by:
132
Notes to and forming part of the financial statements
Note 33
1
Special accounts (continued)
Comcover Special Account
Legal Authority: Financial Management and Accountability Act 1997, s20. Purpose: For receipts and expenditure relating
to the administration of Comcover including direct and indirect costs for staff and the Advisory Council, and for
expenditure in relation to Comcover's operations in meeting liabilities that arise from its function as the Commonwealth's
insurable risks claims manager. 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
Other Trust Moneys Special Account
Legal Authority: Financial Management and Accountability Act 1997, s20. Purpose: For the receipt of moneys temporarily
held in trust for other persons. The account is non-interest bearing. This account was abolished on 26 June 2012 as it
was no longer required.
6
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.
7
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.
8
Health and Hospital 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.
9
Services for Other Entities and Trust Moneys Special Account – Department of Finance and Deregulation
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
133
Notes to and forming part of the financial statements
Note 33
Special accounts (continued)
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, s20. 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.
134
Notes to and forming part of the financial statements
Note 33C Investments made under Nation-building Funds Act 2008
Movements in Nation-building Funds
investments established under the
Nation-building Funds Act 2008
Opening balance
Investments realised
Interest earned
Foreign currency realised
Amounts paid to other portfolio special
accounts
Investments made
Amounts transferred to operations1
Closing fund balance
1 The
Building Australia
Fund
Education Investment
Fund
Health and Hospital
Fund
Total
Administered
2013
$'000
2012
$'000
2013
$'000
2012
$'000
2013
$'000
2012
$'000
2013
$'000
2012
$'000
5,895,496
13,785,544
202,203
32,229
8,417,985
14,590,375
320,999
127,750
4,320,412
10,541,297
147,478
26,600
5,057,298
8,578,111
197,159
69,425
3,326,755
7,854,135
118,002
25,193
4,477,418
7,585,382
177,316
61,491
13,542,663
32,180,976
467,683
84,022
17,952,701
30,753,868
695,474
258,666
(1,348,055)
(13,840,292)
(6,276)
(2,700,271)
(14,852,212)
(9,130)
(549,104)
(10,588,295)
(5,209)
(846,520)
(8,728,848)
(6,213)
(729,274)
(7,887,093)
(3,848)
(1,240,853)
(7,728,801)
(5,198)
(2,626,433)
(32,315,680)
(15,333)
(4,787,644)
(31,309,861)
(20,541)
4,720,849
5,895,496
3,893,179
4,320,412
2,703,870
3,326,755
11,317,898
13,542,663
operations of the Nation-building Funds are funded from revenues generated by the funds.
135
Notes to and forming part of the financial statements
Note 34
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 and Deregulation (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. The
possibility of this being an issue for Finance itself was reported in the notes to the 2010-11 financial statements and
Finance undertook to investigate the issue during 2011-12. These requirements arose because of the outcome of the
June 2011 financial statements audit, which highlighted the existence of risk for all agencies that they may be in noncompliance with section 83, where payments are made from special appropriations that do not accord with conditions in
the relevant legislation.
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 2011-12, Finance developed a plan to review exposure to risks of not complying with statutory conditions on
payments from appropriations. The plan involved:

identifying each special appropriation and special account;

determining the risk of non-compliance by assessing the difficulty of administering the statutory conditions and
assessing the extent to which existing payment systems and processes satisfy those conditions;

determining procedures to confirm risk assessments in medium risk cases and to quantify the extent of noncompliance, if any, in higher risk situations; and

considering legislative or procedural changes to reduce the risk of non-compliance in the future to an acceptably
low level.
Finance identified 24 appropriations involving statutory conditions for payment, comprising:

11 Superannuation special appropriations;

3 Ministerial and Parliamentary Services special appropriations;

4 Departmental special accounts;

5 Administered special accounts; and

1 other special appropriation.
As at 30 June 2012, risk assessments had been completed in respect of all appropriations with statutory conditions for
cash payments and with the exception of four appropriations, were remediated where necessary to bring the risk of noncompliance to a low level.
During 2012-13, Finance progressed the four appropriations that were not finalised in 2011-12, which comprise:

1 Superannuation special appropriation; and

3 Ministerial and Parliamentary Services special appropriations.
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. Finance will review its processes and controls over payments for these items to minimise the
possibility for future breaches as a result of these payments. Finance will undertake risk assessments to determine the
level of risk of non-compliance for the circumstances mentioned in the legal advice applying to the department.
The current status of the reviews, identified breaches and remedial action is set out in the table on the following page.
136
Notes to and forming part of the financial statements
Note 34
Compliance with Statutory Conditions for Payments from the Consolidated Revenue Fund (continued)
Appropriations identified as subject to
conditions
Expenditure
in 2012-13
$'000
Review
complete?
(Yes/No) 1
Breaches identified to date 2
Were any
breaches
identified?
Special appropriation –
Superannuation payments
Judges Pensions Act 1968
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
40,742
Yes
Yes
2
19
19
-
-
LM
160,793
Yes
Yes
45
23
23
-
-
LP
2,643
Yes
No
N/A
N/A
N/A
N/A
N/A
LP
4,763
Yes
No
N/A
N/A
N/A
N/A
N/A
LP
5,069
No
Yes
1
-
-
-
-
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 2012-13. There exist business processes to ensure that identified overpayments are recovered. The numbers and amounts represent the overpayments made during 2012-13 under relevant schemes.
3
Remedial action taken or proposed (L= legislative change; S= systems change; P= planned change; M= change made)
Legislative changes made (LM) in relation to the Judges Pension Act 1968 were included in the recently enacted Financial Framework Legislative Amendment (FFLA) Act No. 2, 2013.
In 2011-12, FFLA No.1, FFLA Act No.2 and FFLA Act No.3 provided remediation mechanisms for the following legislations: Superannuation Act 1922,Superannuation Act 1976,Superannuation Act 1990,
Parliamentary Contributory Superannuation Act 1948, Parliamentary Superannuation Act 2004, Governor-General Act 1974, and Federal Magistrates Act 1999.
4
Finance has identified one overpayment of $203 that has breached the provision of Long Service Leave (Commonwealth employees) ACT 1976.
137
Notes to and forming part of the financial statements
Note 35
Compensation and debt relief
Departmental
2013
$
2012
$
No ‘Act of Grace’ payments were expended during the reporting period
(2012: 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 (2012: no waivers).
-
-
No payments were provided under the Compensation for Detriment caused
by Defective Administration (CDDA) Scheme during the reporting period
(2012: no payments).
-
-
No ex-gratia payments were provided for during the reporting period
(2012: 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 (2012: no payments).
-
-
2013
$
2012
$
1,255,373
1,310,034
4,809
2,642
No payments were provided under the Compensation for Detriment caused
by Defective Administration (CDDA) Scheme during the reporting period
(2012: no payments).
-
-
No ex-gratia payments were provided for during the reporting period (2012:
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 (2012: no payments).
-
-
Administered
61 ‘Act of Grace’ payments were expensed during the reporting period
(2012: 64 expenses).
61 of the above payments amounting to $1,255,373 were paid on a periodic
basis (2012: 64 payments amounting to $1,310,034). 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 2013 was
$13,538,000 ($14,932,000 at 30 June 2012).
2 waivers of amounts owing to the Australian Government were made
pursuant to subsection 34(1) of the Financial Management and
Accountability Act 1997 (2012: 3 waivers).
138
Notes to and forming part of the financial statements
Note 36
Reporting of outcomes
Note 36A Net cost of outcome
delivery
Outcome 1
2013
2012
$'000
$'000
Departmental
Expenses (incl tax expense)
Own-source income
Outcome 2
2013
2012
$'000
$'000
Outcome 3
2013
2012
$'000
$'000
Not attributed
2013
2012
$'000
$'000
Total
2013
$'000
2012
$'000
227,596
100,483
134,259
10,052
242,011
192,753
350,255
316,004
43,676
8,225
46,563
11,750
-
-
513,283
301,461
531,077
337,806
Net cost (contribution) of outcome
delivery
Administered
Expenses
Own-source income
127,113
124,207
49,258
34,251
35,451
34,813
-
-
211,822
193,271
10,636,957
2,600,777
11,374,365
2,766,559
680
469,850
287,450
103,678
421,599
27,004
420,457
11,211
26,054
33,937
11,059,236
3,123,685
12,082,272
2,915,385
Net cost (contribution) of outcome
delivery
8,036,180
394,595 409,246
(26,054)
7,935,551
8,607,806 (469,170)
183,772
(33,937)
9,166,887
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
2011-12 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.
139
Notes to and forming part of the financial statements
Note 36B Major classes of departmental expenses, income, assets and liabilities by outcome
Outcome 1
2013
2012
$'000
$'000
Outcome 2
2013
2012
$'000
$'000
Outcome 3
2013
2012
$'000
$'000
Not attributed
2013
2012
$'000
$'000
Total
2013
$'000
2012
$'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
109,210
110,828
7,277
26
229
26
227,596
92,551
35,261
6,254
28
35
130
134,259
43,299
74,673
15,149
14
781
2,361
92,849
12,885
242,011
60,838
153,629
10,627
17
62,947
656
37,272
24,269
350,255
29,227
10,956
3,393
11
82
7
43,676
30,965
13,437
2,088
12
16
45
46,563
-
-
181,736
196,457
25,819
51
1,092
2,394
92,849
12,885
513,283
184,354
202,327
18,969
57
62,998
831
37,272
24,269
531,077
Departmental income
Revenue from Government
Rendering of services
Rental income
Insurance premiums
Reinsurance and other recoveries
Other revenue
Other gains
Interest
Total income
118,237
93,122
6,251
1,110
218,720
122,616
9,283
733
36
132,668
118,219
10,360
47,666
82,705
5,154
41,398
5,470
310,972
71,538
93,467
88,806
99,698
2,216
9,734
16,070
6,013
387,542
37,992
8,077
148
46,217
41,341
11,679
69
2
53,091
-
-
274,448
111,559
47,666
82,705
5,154
6,251
42,656
5,470
575,909
235,495
114,429
88,806
99,698
2,216
9,734
16,872
6,051
573,301
140
Notes to and forming part of the financial statements
Note 36B Major classes of departmental expenses, income, assets and liabilities by outcome (continued)
Outcome 1
2013
2012
$'000
$'000
Departmental assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Land and buildings
Infrastructure, 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 2
2013
2012
$'000
$'000
Outcome 3
2013
2012
$'000
$'000
Not attributed1
2013
2012
$'000
$'000
Total
2013
$'000
2012
$'000
662
82,994
4,393
6,832
41,464
3,010
139,355
352
11,016
1,433
2,998
33,679
1,022
50,500
939
642,909
4,484
925,259
793
608,303
9,162
327
2,192,176
940
740,149
7,284
807,044
1,471
582,857
9,257
398
2,149,400
43,825
347
1,384
325
6,685
54
52,620
5
31,304
653
1,682
328
7,075
31
41,078
1,683
19,415
6,838
8,610
12,113
1,888
50,547
3,692
3,191
44
6,517
6,389
13,261
2,133
35,227
3,284
789,143
9,224
933,481
16,560
608,303
69,424
5,279
2,434,698
4,989
785,660
9,414
815,243
11,186
582,857
63,272
3,584
2,276,205
10,920
2,402
1,475
24,087
38,884
1,233
1,016
1,442
21,328
(106)
24,913
17,050
34,112
10,636
295,170
2,033
10,796
5,610
375,407
17,548
42,296
57,909
257,059
7,378
13,899
5,716
401,805
531
2,285
575
5,710
50
9,151
1,563
529
319
5,805
45
8,261
3,536
2,554
16,245
750
23,085
1,306
2,301
17,348
1,129
22,084
32,037
34,112
15,323
295,170
6,637
56,838
6,410
446,527
21,650
42,296
59,454
257,059
11,440
58,380
6,784
457,063
Assets and liabilities that cannot be reliably attributed to outcomes.
141
Notes to and forming part of the financial statements
Note 36C Major classes of administered expenses, income, assets and liabilities by outcomes
Outcome 1
Outcome 2
Not attributed1
Outcome 3
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
-
-
680
649
-
-
-
-
680
649
Administered expenses
Grants
Employee benefits
Superannuation
4,462
3,506
-
-
232,448
240,881
-
-
236,910
244,387
7,959,092
6,449,642
-
-
-
-
-
-
7,959,092
6,449,642
25,291
32,389
-
-
173,092
159,427
-
-
198,383
191,816
Depreciation and amortisation
-
-
-
-
15,570
19,786
-
-
15,570
19,786
Write-down and impairment of assets
-
-
-
-
9
3
-
-
9
3
Finance costs
-
-
-
-
129
82
-
-
129
82
-
-
-
-
351
278
-
-
351
278
2,118,557
4,330,273
-
286,800
-
-
-
-
2,118,557
4,617,073
Suppliers
Losses from asset sales
Other expenses
Unrealised foreign exchange losses
394,851
2,561
-
-
-
-
-
-
394,851
2,561
Losses on financial investments
134,704
555,994
-
1
-
-
-
-
134,704
555,995
10,636,957
11,374,365
680
287,450
421,599
420,457
-
-
11,059,236
12,082,272
-
6
-
-
3,989
4,131
-
-
3,989
4,137
107,006
81,778
-
-
-
-
26,054
33,937
133,060
115,715
-
-
467,852
103,660
-
-
-
-
467,852
103,660
1,499,161
1,330,498
-
-
-
-
-
-
1,499,161
1,330,498
Total expenses
Administered income
Rendering of services
Interest
Dividends
Superannuation contributions
Other revenue
Realised foreign exchange gains
Gains on financial investments
Other gains
Total income
9,259
4,964
1,998
18
3,023
2,986
-
-
14,280
7,968
84,022
258,666
-
-
-
-
-
-
84,022
258,666
900,478
1,090,647
-
-
-
-
-
-
900,478
1,090,647
851
-
-
-
19,992
4,094
-
-
20,843
4,094
2,600,777
2,766,559
469,850
103,678
27,004
11,211
26,054
33,937
3,123,685
2,915,385
¹ Expenses and income that cannot be reliably attributed to outcomes.
142
Notes to and forming part of the financial statements
Note 36C Major classes of administered expenses, income, assets and liabilities by outcomes (continued)
Outcome 1
Outcome 2
Not attributed1
Outcome 3
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Administered assets
8,283
(3,446)
-
-
3,866
6,872
455,076
740,852
467,225
744,278
143,857
189,532
299,999
-
42,471
29,098
-
-
486,327
218,630
11,692,175
13,580,587
4,206,884
3,903,023
-
-
-
-
15,899,059
17,483,610
54,756
41,028
-
-
7
458
-
-
54,763
41,486
Land and buildings
-
-
-
-
41,341
19,205
-
-
41,341
19,205
Infrastructure, plant and equipment
-
-
-
-
62,809
60,169
-
-
62,809
60,169
Intangibles
-
-
-
-
3,161
1,310
-
-
3,161
1,310
Other non financial assets
-
-
-
-
3,458
2,507
-
-
3,458
2,507
11,899,071
13,807,701
4,506,883
3,903,023
157,113
119,619
455,076
740,852
17,018,143
18,571,195
318,597
126,538
-
-
15,477
11,448
-
-
334,074
137,986
-
(4,229)
123
59
15,754
14,251
1,497,857
1,687,562
1,513,734
1,697,643
Cash and cash equivalents
Trade and other receivables
Investments
Other financial assets
Total assets
Administered liabilities
Suppliers
Other payables
-
-
-
-
186,501
199,347
-
-
186,501
199,347
Superannuation
124,947,502
149,416,553
-
-
-
-
-
-
124,947,502
149,416,553
Other provisions
14,856
16,526
-
-
5,509
3,971
-
-
20,365
20,497
125,280,955
149,555,388
123
59
223,241
229,017
1,497,857
1,687,562
127,002,176
151,472,026
Employee provisions
Total liabilities
¹ Assets and liabilities that cannot be reliably attributed to outcomes.
143
Notes to and forming part of the financial statements
Note 37
Competitive neutrality and cost recovery
Note 37A Competitive neutrality - expenses and dividend declared
Competitive neutrality - regulatory
Competitive neutrality - rates and other taxes
Commonwealth tax equivalent expense1
Total expenses and dividend declared
30 June
2013
$'000
30 June
2012
$'000
2,343
5,542
104
10,137
9,028
7,885
19,269
1
The amount of Commonwealth tax equivalent payable on the taxable profit for the period was $nil (2012: $0.2 million),
therefore there were no adjustments for timing differences in 2012-13 in accordance with AASB 112 Income Taxes.
Note 37B Receipts subject to cost recovery policy
Finance received no departmental receipts subject to the cost recovery policy for the period (2012: nil).
Note 37C Competitive neutrality - administered expenses and dividend declared
Finance made no administered competitive neutrality payments during the period (2012: nil).
Note 37D Administered receipts subject to cost recovery policy
Finance received no administered receipts subject to the cost recovery policy for the period (2012: nil).
Note 38
Net cash appropriation arrangements
Total comprehensive income (loss) less depreciation/amortisation
expenses previously funded through revenue appropriations 1
Add: depreciation/amortisation expenses previously funded through revenue
appropriation2
Total comprehensive income (loss) - as per Statement of
Comprehensive Income
52,532
(28,567)
14,682
12,267
67,214
(16,300)
1
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 cash payment for capital
expenditure is required.
2 Excludes depreciation and amortisation of $11.1 million (2012: $6.7 million) for Special Accounts, which are
appropriated through their own determination.
144