Note 2: Reconciliation of cash
2001
$m
2000
$m
8,092
24,048
(44)
(3,192)
(1,422)
(1,414)
(14,936)
(1,366)
(214)
(4,658)
(17,930)
2,118
6,499
417
2,190
595
584
2,983
5,826
363
777
1,129
(209)
12,403
10,869
482
3,410
7
35
42
3,594
3,892
3,678
(360)
(4,885)
(204)
(464)
(103)
(1,577)
(107)
-
Total cash used by working capital items
(6,016)
(1,684)
Net operating cashflows from financial institutions
(1,224)
(883)
12,489
18,098
(6,055)
94
6,434
18,192
(2,565)
(3,728)
(12,256)
(5,388)
141
548
Note 2 (a): Reconciliation of operating result to net
increase/(decrease) in cash
Operating result after abnormal items
less Revenues not providing cash
Net foreign exchange gains
Net gains from asset sales program
Net gains from sale of assets
Other
Total revenues not providing cash
plus Expenses not requiring cash
Increase in employee entitlements
Depreciation/amortisation expense
Provision for bad and doubtful debts
Provision for diminution in value of assets
Net foreign exchange losses
Other non-cash expenses
Total expenses not requiring cash
plus Cash provided by working capital items
Decrease in inventories
Decrease in other non-financial assets
Increase in suppliers
Increase in other provisions and payables
Total cash provided by working capital items
less Cash used by working capital items
Increase in inventories
Increase in receivables
Increase in other financial assets
Increase in other non-financial assets
Decrease in other provisions and payables
equals Net cash from/(to) operating activities
Net cash from/(to) investing activities
equals Cash surplus/(deficit)
Net cash from/(to) financing activities
Net cash flows from financial institutions
equals Net (decrease)/increase in cash
81
Note 2: Reconciliation of cash (continued)
2001
$m
2000
$m
Items in the Statement of financial position
Financial assets - cash
Financial assets - Bills of exchange and promissory notes
less Borrowings - overdrafts
2,236
1,161
(10)
2,569
684
(7)
Total items in the Statement of financial position
3,387
3,246
Total as per the statement of cash flows
3,387
3,246
2001
$m
2000
$m
Note 2 (b): Reconciliation of cash at the end of the reporting
period as shown in the primary statement of cash flows
to the related items in the primary statement of financial
position
Note 2 (c): Cash flows associated with entities disposed
of during the year
Proceeds from asset sales program
During the year Telstra's interest in certain controlled entities were sold.
Total proceeds on sale:
Cash
Debtors
Share issue
680
1,692
10,128
6,287
391
Total proceeds
2,372
16,806(a)
Assets
Total cash held at date of disposal
Other financial assets
Total non-financial assets
64
142
734
60
1,477
4,345
Total assets
940
5,882
Liablities
Total debt
Total provisions and payables
16
403
1,708
2,102
Total liabilities
419
3,810
Net assets
521
2,072
(representing proceeds received or receivable from sale)
Assets and liabilities held at disposal date in total for
entities sold were:
Associated costs and other items
147
Book value of entities disposed and associated costs
668
n/a
2,072
(a) During the 1999-2000 financial year, the second tranche of the Commonwealth's interest in Telstra was
sold and the Commonwealth's interest in ADI Limited and Removals Australia was sold through the assets
sales program. In addition, Telstra's and the Australian River Company's interest in certain controlled
entities were sold.
82
Note 2: Reconciliation of cash (continued)
2001
$m
2000
$m
Consideration for acquisition:
Cash
Other
3,140
426
-
Total consideration
3,566
-
Assets
Total cash
Other financial assets
Total non-financial assets
41
150
1,312
-
Total assets
Note 2 (d): Cash flows associated with entities acquired
during the year
During the year, Telstra and the Australian Industry Development
Corporation acquired interests in certain controlled entities.
Fair value of assets and liabilities of entities acquired were:
1,503
-
Liablities
Total debt
Total provisions and payables
47
351
-
Total liabilities
398
-
1,105
-
Net assets
Commonwealth share of net assets acquired
Goodwill / (Discount) on acquisition
Acquisition costs w ritten-off
672
1,469
1,425
-
Fair value of Commonwealth's share of net assets
acquired and goodwill
3,566
-
83
Note 2: Reconciliation of cash (continued)
2001
$m
2000
$m
Cash flows from operating activities
Sales of goods and services
Interest
Dividends
Payments re employees and suppliers
Interest on debt and other financing costs
Other
88
1,645
3
(160)
(365)
13
140
1,376
3
(223)
(413)
-
Net cash from/(to) operating activities
1,224
883
Cash flows from investing activities
Proceeds from sales of property, plant and equipment
Purchases of property, plant and equipment
Net proceeds from the sale of investments
Loans
Other
14
(8)
(6,401)
145
142
1
(24)
(2,038)
(233)
(329)
Net cash from/(to) investing activities
(6,108)
(2,624)
Cash flows from financing activities
Proceeds from issues of currency
Net increase/(decrease) in borrowings
Net increase/(decrease) in deposits
1,733
(235)
(342)
1,882
114
(5,643)
Net cash from/(to) financing activities
1,156
(3,647)
(3,728)
(5,388)
Note 2 (e): Net cash flows from financial institutions(b)
Net cash flows from financial institutions
(b) Commonwealth entities classified as financial institutions are the Reserve Bank of Australia and the Export
Finance Insurance Corporation.
84
Note 3: Analysis of sub-functions
2001
$m
2000
$m
4,129
5,409
690
1,103
42
3,887
4,848
644
1,591
40
11,373
11,010
Health sub-function
Medical services and benefits
Hospital services
Pharmaceutical services and benefits
Nursing home subsidies and domicile care (a)
General administration
Aboriginal and Torres Strait Islander health
Other health services
12,336
7,457
5,050
61
1,001
160
1,050
11,451
7,035
4,173
450
1,302
162
743
Total health expenses by sub-function
27,115
25,316
Social security and welfare sub-function
Assistance to families with children
Assistance to the aged
Assistance to unemployed and sick
Assistance to people with disabilities
Assistance to veterans and dependents
Assistance to the young
General administration
Aboriginal advancement
Other welfare programs
18,047
25,056
5,714
7,357
5,415
2,110
1,758
2,574
298
15,047
19,636
5,806
6,810
4,568
1,946
1,824
1,170
221
Total social security and welfare expenses by sub-function
68,329
57,028
Transport and communication sub-function
Communication
Rail transport
Air transport
Road transport
Sea transport
Other transport and communication expenses
20,767
448
971
947
169
144
18,399
518
1,007
879
273
133
Total transport and communication expenses
by sub-function
23,446
21,209
Note 3 (a): Education expenses by sub-function
Education sub-function
Higher education
Schools
Student assistance
Vocational and other education
General administration
Total education expenses by sub-function
Note 3 (b): Health expenses by sub-function
(a) Expenses for assistance to the aged have been reclassified from
Health to Social security and welfare.
Note 3 (c): Social security and welfare expenses
by sub-function
Note 3 (d): Transport and communication expenses
by sub-function
85
Note 3: Analysis of sub-functions (continued)
2001
$m
2000
$m
General purpose inter-government transactions sub-function
Assistance to State and Territory governments
Assistance to local governments
4,481
1,328
17,916
1,279
Total general purpose inter-government transactions
expenses by sub-function
5,809
19,195
2001
$m
2000
$m
Gross PAYG and PAYE
Gross prescribed payments system
Gross other
73,602
559
2,437
76,679
3,159
3,340
Total income tax from individuals
76,598
83,178
33,580
4,652
1,452
2,388
634
22,816
3,245
1,427
1,205
667
Note 3 (e): General purpose inter-government transactions
expenses by sub-function
Note 4: Income tax revenue
Individuals
Other sources
Companies
Superannuation funds
Withholding tax
Petroleum resources rent tax
Superannuation contributions surcharge
Total income tax from other sources
Total income tax
42,706
29,360
119,304
112,538
2001
$m
2000
$m
19,000
4,571
1,977
14,070
3,746
15,189
25,548
33,005
Note 5: Indirect tax revenue
Excise duty
Customs duty
Sales tax and other indirect taxes
Total indirect tax
86
Note 6: Other taxes
2001
$m
2000
$m
43
408
345
121
210
927
92
458
194
97
214
727
2,054
1,782
2001
$m
2000
$m
Sales of goods
Rendering of services
Immigration fees
Corporation law fees
Passenger processing fee
Operating lease rental
Licence fees (excluding broadcasting)
Other fees from regulatory services
22,272
5,536
236
387
263
32
36
122
22,520
4,848
206
360
246
160
8
143
Total charges for goods and services
28,884
28,491
3,965
n/a
Wool tax
Agricultural production taxes
Levies (other than agricultural)
Superannuation guarantee charge
Broadcasting license fees
Other taxes
Total other taxes, fees and fines
Note 7: Charges for goods and services
Cost of sales
87
Note 8: Interest and dividends
2001
$m
2000
$m
Interest from other governments
State and Territory debt
Housing agreements
General purpose advances
74
188
315
148
191
286
Total interest from other governments
577
625
Interest from other sources
Swap interest
Foreign securities and loans
Deposits
Advances
Bills receivable
Bank deposits
Other loans
Other
3,128
1,497
118
192
86
77
274
9
2,484
1,155
109
126
93
56
255
37
Total interest from other sources
5,381
4,315
Total interest
5,958
4,940
8
71
5
24
48
INTEREST
DIVIDENDS
Associated entities
International financial institutions
Other dividends
Total dividends
79
77
6,037
5,017
2001
$m
2000
$m
Foreign exchange gains
Non-speculative
1,329
1,427
Total foreign exchange gains
1,329
1,427
1,904
1,127
Total foreign exchange losses
1,904
1,127
Net foreign exchange gains/(losses)
(575)
300
Total interest and dividends
Note 9: Net foreign exchange gains/(losses)
less Foreign exchange losses
Non-speculative
88
Note 10: Net gains/(losses) from sale of assets
2001
$m
2000
$m
6,256
4,742
782
1
874
1,514
(93)
Proceeds from sale of land and buildings
less selling costs of sale of land and buildings
less written down value of land and buildings sold
796
52
642
986
29
796
Net gain/(loss) from sale of land and buildings
102
161
368
448
432
(1)
523
(80)
(90)
1,614
11
1,363
4
Net gain/(loss) from sale of intangibles
1,603
1,359
Net gains/(losses) from sale of non-financial assets
1,625
1,430
Net gains/(losses) from sale of assets
3,139
1,337
FINANCIAL ASSETS
Proceeds from sale of investments
less selling costs of investments
less value of investments sold
Net gain/(loss) from sale of investments
NON-FINANCIAL ASSETS
Proceeds from sale of infrastructure, plant and equipment
less selling costs of infrastructure, plant and equipment
less written down value of infrastructure, plant and equipment sold
Net gain/(loss) from sale of infrastructure, plant and equipment
Proceeds from sale of intangibles
less written down value of intangibles
89
Note 11: Asset sales program
2001
$m
2000
$m
Gains from asset sales program
Revenue from asset sales
less written down value of assets sold
less selling costs of asset sales
44
-
15
(1)
(1)
Total gains from asset sales program
44
13
Summary of gains/(losses) from asset sales program
Removals Australia
Other
-
8
5
Total summary of net gains/(losses) from asset sales program
-
13
Gains from asset sales program considered significant and unusual
Revenue from asset sales
add gains to the economic entity on disposal
less written down value of assets sold
less selling costs of asset sales
-
16,360
604
(1,866)
(176)
Total significant and unusual gains
-
14,922
Summary of significant and unusual gains from asset sales program
Telstra - Second Tranche
ADI Limited
-
14,770
152
Total summary of significant and unusual gains
-
14,922
GAINS FROM THE ASSET SALES PROGRAM CONSIDERED
SIGNIFICANT AND UNUSUAL
The following gains are of such a size and nature that their separate disclosure
is relevant in explaining the financial performance of the Commonwealth.
Note 12: Other sources of non-taxation revenues
2001
$m
2000
$m
Superannuation premiums
Industry contributions
IMF related revenue
Seigniorage
Indexation on HECS receivable other student loans
Royalties
Writedown of liabilities
Other fines
Other
60
32
82
70
412
10
749
32
2,488
44
77
79
115
130
11
85
4
2,467
Total other sources of non-taxation revenues
3,935
3,012
90
Note 13: Employees
Wages and salaries
Superannuation
Leave and other entitlements
Separations and redundancies
Workers compensation premiums and claims
Other
2001
$m
2000
$m
14,531
7,231
1,287
218
557
176
14,421
7,219
1,109
323
331
424
Employee expenses considered significant and unusual
The following employee expenses are of such a size and nature that their
separate disclosure is relevant in explaining the financial performance of the
Commonwealth.
Telstra redundancy and restructuring provision
572
Total employees
24,000
24,399
2001
$m
2000
$m
Supply of goods and services
Operating lease rental expenses
Licence fees
Other
18,364
1,942
3
147
18,057
1,815
9
167
Total suppliers
20,456
20,048
2001
$m
2000
$m
Depreciation
Other infrastructure, plant and equipment
Specialist military equipment
Buildings
3,424
1,628
659
3,364
1,253
647
Total depreciation
5,711
5,264
103
80
528
158
397
85
789
562
6,500
5,826
Note 14: Suppliers
Note 15: Depreciation and amortisation
Amortisation
Assets held under finance leases
Intangibles
Computer software
Other
Total amortisation
Total depreciation and amortisation
91
Note 16: Net write-down and impairment of assets
FINANCIAL
Receivables - bad and doubtful debts
Goods and services
Taxes due
Other loans and advances
Penalty remission
HECS loans
Other student loans
Other
2001
$m
2000
$m
204
1,055
21
236
279
117
184
222
746
95
167
175
93
101
Total receivables - bad and doubtful debts
2,096
1,599
Net write-down/(reversal) and impairment arising from the revaluation
of investments and other financial assets
1,104
69
Total financial write-down and impairment
3,200
1,668
66
4
1,020
39
8
15
69
33
45
95
192
18
7
Net write-down and impairment arising from the
revaluation of non-financial assets
1,152
459
Total net write-down and impairment of assets
4,352
2,127
2001
$m
2000
$m
Claims
Other
2,332
4,529
1,761
3,756
Total other goods and services expenses
6,861
5,517
NON-FINANCIAL
Inventories
Buildings
Specialist military equipment
Other infrastructure, plant and equipment
Other non-financial assets
Intangibles
Land
Note 17: Other goods and services expenses
92
Note 18: Grants
2001
$m
2000
$m
Public sector
Grants to State and Territory governments
Grants through State and Territory governments
Grants to local governments
Grants to the multi-jurisdictional sector
Other
18,226
4,729
109
4,159
2,986
31,264
4,198
206
4,020
2,052
Total grants to public sector
30,209
41,740
Private sector
Grants to non-profit organisations
Grants to commercial organisations
Other
1,578
417
528
1,678
222
309
Total grants to private sector
2,523
2,209
Overseas
Grants to overseas commercial organisations
Grants to overseas non-profit organisations
Other
586
1
10
255
4
Total grants to overseas
587
269
Grant expenses considered significant and unusual
The following grants are of such a size and nature that their separate
disclosure is relevant in explaining the financial performance of the
Commonwealth.
Recognition of grant liability in relation to the Vocational
Education and Training Funding Act 1992
-
423
Recognition of liability for the Medical Research Endowment Reserve
and other Health special accounts
-
513
Total grants considered significant and unusual
-
936
33,319
45,154
Total grants
93
Note 19: Borrowing costs
2001
$m
2000
$m
Interest on debt
Government securities
Swaps
Loans
Taxation overpayments
Exchange settlement funds
Deposits
Other
Net repurchase premia
5,342
3,256
610
172
50
9
18
314
5,986
2,367
1,069
239
55
52
16
102
Total interest on debt
9,771
9,886
Other financing costs
Finance charges for finance leases
Amortisation of discount on borrowings
Other
62
(200)
673
24
(209)
176
535
(9)
10,306
9,877
2001
$m
2000
$m
Trade creditors
Operating lease rental payable
Other creditors
2,939
122
421
2,196
114
896
Total suppliers liabilities
3,482
3,206
Total other financing costs
Total borrowing costs
Note 20: Suppliers liabilities
94
Note 21: Grants payable
2001
$m
2000
$m
Public sector
Grants to State and Territory governments
Grants through State and Territory governments
Grants to local governments
Grants to the multi-jurisdictional sector
2,747
1,571
1
2,685
2,332
1,380
1
2,653
Total grants to public sector
7,004
6,366
Private sector
Grants to non-profit organisations
Grants to commercial organisations
11
68
25
1
Total grants to private sector
79
26
Overseas
Aid program
Grants to overseas non-profit organisations
1,164
1,173
Total grants to overseas
1,164
1,173
Total grants payable
8,247
7,565
2001
$m
2000
$m
2,895
26
446
2,781
186
3,367
2,967
2001
$m
2000
$m
839
834
455
295
506
140
1,164
930
343
242
418
437
3,069
3,534
Note 22: Other payables
Interest payable
GST payable
Other payables
Total other payables
Note 23: Deposits
Exchange settlement funds
Drawing accounts held with the Reserve Bank of Australia
State governments
Monies held in trust
Foreign governments
Other
Total deposits
95
Note 24: Government securities
2001
$m
2000
$m
Treasury bonds
Treasury notes
Treasury indexed bonds
Foreign currency loans
Unamortised net premiums on borrowings
Other
41,215
4,931
6,202
380
1,096
631
47,758
4,471
5,902
532
1,109
652
Total government securities
54,455
60,424
2001
$m
2000
$m
Bills of exchange and promissory notes
Non-bank loans
Bonds (non-Treasury)
Bank loans
Debentures and notes
Student Supplement Loan Scheme
Other loans
10,927
8,657
2,985
3,325
637
938
64
10,483
6,225
3,726
1,266
663
1,009
10
Total loans
27,533
23,382
Loan maturity schedule
Not later than one year
Later than one year and not later than 2 years
Later than 2 years and not later than 5 years
Later than 5 years
5,258
1,159
6,528
14,588
5,590
1,358
5,432
11,002
Total loans by maturity
27,533
23,382
Note 25: Loans
96
Note 26: Leases
2001
$m
2000
$m
Not later than one year
Later than one year and not later than 5 years
Later than 5 years
196
174
55
173
214
60
Minimum lease payments
less future finance charges
425
48
446
64
Total finance lease liabilities
377
382
Finance lease liabilities maturity schedule
Current
Non-current
92
285
152
230
Total finance lease liabilities by maturity
377
382
2001
$m
2000
$m
Swap principal payable
Amounts outstanding under repurchase agreements
Special reserve - International Monetary Fund special
drawing rights
Inscribed stock - face value
Finance lease incentives
Other
4,543
1,654
1,154
2,457
4,137
1,050
175
18
14
162
12
178
Total other interest bearing liabilities
7,558
7,996
Finance lease liabilities as at the reporting date
are reconciled to the lease liability as follows:
Note 27: Other interest bearing liabilities
97
Note 28: Employee provisions
Remuneration:
Superannuation (a)
Leave and other entitlements
Accrued salaries and wages
Separations and redundancies
Non-military workers compensation and outstanding insurance claims
Military workers compensation
Judges pension
Other
Total employee liabilities
2001
$m
2000
$m
78,753
5,141
370
233
1,635
1,196
267
184
76,552
5,152
389
635
1,609
1,031
251
43
87,779
85,662
Number of employees
Number of full time equivalent employees at year end
291,163
(a) Superannuation liability predominantly represents the present value of the Commonwealth's contractual
liability under its various superannuation schemes for past services as estimated by the actuaries to the
respective schemes.
These liabilities do not fall due until the rules of the schemes provide for benefits to be payable, which
generally is when members retire. They are thus spread over many years, of the order of sixty, into the
future. Accordingly, a maturity schedule has not been provided for this liability.
When the Commonwealth discharges this liability, it will normally obtain reciprocal benefits in the form of
savings in old age pension payments to past employees and the receipt of income tax on superannuation
payments. In effect, these reciprocal benefits provide a partial offset to the liability, usually referred to as
a clawback. The value of the clawback is the present value of additional costs that would fall elsewhere
upon the Commonwealth (either through increased expenditure on old age pensions or through reduced
tax receipts) if the unfunded liabilities were not discharged.
Since the liability for future pensions is not recognised in the financial statements, it has not been
considered appropriate to recognise any potential savings in this liability. Also, the estimated future
taxation revenue arising at the time of payment of the superannuation benefits has not been recognised
as an asset in these consolidated financial statements.
Note 29: Other provisions
Prepayments received/unearned income
Accrued expenses
Restructuring
Unclaimed monies and outstanding claims
Provision for interest on overpayment of taxes
Customs rebates
Guarantees likely to be called
Provision for superannuation guarantee amounts
Total other provisions
98
2001
$m
2000
$m
2,228
2,157
429
397
232
19
44
98
1,422
1,513
397
368
193
20
30
98
5,604
4,041
Note 30: Receivables
2001
$m
2000
$m
4,620
7,448
759
427
6
19
265
353
265
196
4,335
4,347
278
418
8
17
202
112
40
116
14,358
9,873
5,176
5,281
115
7,211
2,095
5,713
4,639
124
6,243
1,838
19,878
18,557
4,171
3,311
322
837
91
16
146
2
11
119
213
1,291
3,740
1,309
363
820
123
224
6,290
13
84
1,460
Total other receivables
10,530
14,426
Total receivables
44,766
42,856
2,145
2,286
208
1,068
2,639
1,540
1,882
239
862
3,342
8,346
7,865
36,420
34,991
Taxes due
Income tax:
Individuals
Companies
Superannuation funds
Petroleum resources rent tax
Withholding tax
Excise duty
Sales tax
Fringe benefits tax
Customs duty
Other taxes
Total taxes due
Advances and loans
Loans to State and Territory governments
Other loans and advances
Advances
HECS
Student Supplement Loan Scheme
Total advances and loans
Other receivables
Goods and services receivable
Bills of exchange and promissory notes
Swap principal
Recoveries of benefit payments
Interest receivable
Dividends receivable
Sales of property, plant and equipment
Asset sales program
International Monetary Fund related monies
Finance lease receivable
GST input credits receivable
Other
less provision for doubtful debts:
Taxes receivable
Advances and loans receivable
Goods and services receivable
Other receivables
less provision for credit amendment to taxes
Net receivables
99
Note 30: Receivables (continued)
2001
$m
2000
$m
Receivables maturity schedule
Not later than one year
Later than one year and not later than 2 years
Later than 2 years and not later than 5 years
Later than 5 years
25,105
471
1,869
8,975
24,923
728
4,221
5,120
Total net receivables by maturity
36,420
34,991
Note 31: Investments — accounted for using the equity method
2001
$m
2000
$m
Investments - accounted for using the equity method
Investments in associates
Investments in joint ventures
91
1,194
214
284
Total investments - accounted for using the equity method
1,285
498
2001
$m
2000
$m
784
869
739
1,007
1,653
1,746
1,381
7,812
37,746
172
8,137
2,129
1,233
9,318
31,248
110
7,363
1,948
Total investments - other
59,030
52,966
Investment maturity schedule
Not later than one year
Later than one year and not later than 2 years
Later than 2 years and not later than 5 years
Later than 5 years
29,461
1,337
4,000
24,232
27,801
1,663
2,487
21,015
Total investments by maturity
59,030
52,966
Note 32: Investments — other
Shares
Shares in international financial institutions
Shares in companies
Total shares
Gold holdings
Deposits
Government securities
Debentures
International money fund quota
Other
100
Note 33: Accrued revenue
2001
$m
2000
$m
Accrued revenue
Accrued taxation revenue
Accrued interest revenue
Other accrued revenue
220
562
1,181
271
455
1,157
Total accrued revenue
1,963
1,883
101
Note 34: Land and buildings, infrastructure, plant and intangibles
Note (a): Total (This includes amounts detailed in parts b, c, d and e)
Land
Buildings Total land
and
buildings
Total
Other
Specialist
military infrastructure infrastructure
plant and
plant and
equipment
equipment
equipment
$m
$m
$m
102
$m
$m
$m
101,262
1,732
3,452
(298)
554
240
4,006
(58)
131,063
1,611
4,388
175
961
39
(144)
(299)
(1,922)
59,662
7,173
175
1,383
123
(2,627)
1,389
(1,924)
108,686
1,016
6
3
(22)
11
(18)
4,150
2,731
(6)
(4)
3,515
3,747
3
(26)
11
(18)
7,665
11,905
199
2,133
175
(2,792)
1,126
(2,665)
142,755
16,230
1,628
19,963
(126)
(1,469)
3,440
36,193
(126)
(1,469)
5,068
1,052
(114)
(15)
525
161
57
147
1,213
(57)
(15)
672
42,134
(186)
(1,564)
6,484
(213)
6
(65)
(213)
4,904
153
594
(1,463)
792
17,934
(68)
6
(113)
(80)
21,553
85
600
(1,576)
712
39,487
3
1
(16)
(7)
1,429
(6)
(3)
3
359
(3)
1
(19)
(4)
1,788
(131)
607
(1,660)
495
46,179
14,578
21,500
31,090
38,109
69,199
2,721
3,156
5,877
96,576
14,507
21,067
29,210
35,859
65,069
2,400
393
2,793
88,929
$m
$m
6,560
(29)
19,235
(34)
25,795
(63)
45,440
1,090
55,822
642
98
710
1
(15)
(153)
(250)
6,922
887
24
40
48
(124)
(121)
(473)
19,482
985
24
750
49
(139)
(274)
(723)
26,404
2,785
422
84
(2,483)
1,688
(2)
49,024
-
4,728
(3)
(80)
744
4,728
(3)
(80)
744
-
(213)
6
(65)
(213)
4,904
Net book value as at 30 June 2001
6,922
Net book value as at 30 June 2000
6,560
Accumulated Depreciation/Amortisation
As at 30 June 2000
Adjustment to opening balances
Disposals
Depreciation/Amortisation
charge for the year
Revaluations: write-back
Reclassification
Write-offs
Other movements
As at 30 June 2001
(a)
Total
$m
$m
Item
Gross value
As at 30 June 2000
Adjustment to opening balances
Additions:
Purchase of new or secondhand assets
Acquisition by finance lease
Revaluations: write-ups/(write-downs)
Reclassification
Write-offs
Other movements
Disposals
As at 30 June 2001
Total
Other
Computer
software intangibles intangibles
This depreciation range excludes certain leasehold improvements which have depreciation rates of up to 50 per cent.
Note 34: Land and buildings, infrastructure, plant and intangibles (continued)
Note (b): Assets at cost
Land
Item
Buildings Total land
and
buildings
Specialist
Other
Total
military infrastructure infrastructure
equipment
plant and
plant and
equipment
equipment
$m
$m
$m
$m
$m
$m
As at 30 June 2001
Gross value
Accumulated depreciation/amortisation
2,122
-
3,945
(780)
6,067
(780)
42,914
(14,621)
46,810
(18,117)
Net book value
2,122
3,165
5,287
28,293
As at 30 June 2000
Gross value
Accumulated depreciation/amortisation
246
-
2,207
(582)
2,453
(582)
Net book value
246
1,625
1,871
Computer
Other
Total
software intangibles intangibles
Total
$m
$m
$m
$m
89,724
(32,738)
3,806
(1,252)
3,493
(353)
7,299
(1,605)
103,090
(35,123)
28,693
56,986
2,554
3,140
5,694
67,967
14,566
(1,211)
38,264
(15,274)
52,830
(16,485)
2,925
(805)
525
(147)
3,450
(952)
58,733
(18,019)
13,355
22,990
36,345
2,120
378
2,498
40,714
103
(a) Pursuant to Australian Accounting Standard 38, certain Commonwealth entities, including Telstra, Snowy Mountains Hydro Electric Authority, Sydney Airport
Corporation and Employment National have elected to apply the cost basis of recording property, plant and equipment. The above assets at cost table includes assets
that were previously recorded at valuation for these entities.
Note 34: Land and buildings, infrastructure, plant and intangibles (continued)
Note (c): Assets at valuation
Land
Item
Buildings Total land
and
buildings
Specialist
Other
Total
military infrastructure infrastructure
equipment
plant and
plant and
equipment
equipment
$m
$m
$m
$m
$m
$m
As at 30 June 2001
Gross value
Accumulated depreciation/amortisation
4,800
-
15,537
(4,124)
20,337
(4,124)
6,110
(3,313)
12,852
(3,436)
Net book value
4,800
11,413
16,213
2,797
As at 30 June 2000
Gross value
Accumulated depreciation/amortisation
6,314
-
17,028
(4,146)
23,342
(4,146)
Net book value
6,314
12,882
19,196
Computer
Other
Total
software intangibles intangibles
Total
104
$m
$m
$m
$m
18,962
(6,749)
344
(177)
22
(6)
366
(183)
39,665
(11,056)
9,416
12,213
167
16
183
28,609
30,874
(15,019)
17,558
(4,689)
48,432
(19,708)
527
(247)
29
(14)
556
(261)
72,330
(24,115)
15,855
12,869
28,724
280
15
295
48,215
Computer
Other
Total
software intangibles intangibles
Total
(a) Further details of assets at valuation can be found in Note 1.
The reporting periods in which these assets were revalued are as follows:
Land
Item
Assets at
Assets at
Assets at
Assets at
Assets at
Assets at
valuation - pre 1996-97
valuation - 1996-97
valuation - 1997-98
valuation - 1998-99
valuation - 1999-2000
valuation - 2000-01
Net book value
Buildings Total land
and
buildings
Specialist
Other
Total
military infrastructure infrastructure
equipment
plant and
plant and
equipment
equipment
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
2,094
372
2,334
2,732
3,106
5,575
4,826
3,478
7,909
2,797
-
66
1,374
527
7,449
66
4,171
527
7,449
1
3
93
10
60
2
14
1
3
95
10
74
1
69
9,092
4,015
15,432
4,800
11,413
16,213
2,797
9,416
12,213
167
16
183
28,609
Note 34: Land and buildings, infrastructure, plant and intangibles (continued)
Note (d): Assets held under finance lease
Land
Item
Buildings Total land
and
buildings
Specialist
Other
Total
military infrastructure infrastructure
equipment
plant and
plant and
equipment
equipment
$m
$m
$m
105
$m
$m
$m
As at 30 June 2001
Gross value
Accumulated depreciation/amortisation
7
-
124
(13)
131
(13)
228
(37)
270
(73)
Net book value
7
111
118
191
As at 30 June 2000
Gross value
Accumulated depreciation/amortisation
7
-
109
(16)
116
(16)
Net book value
7
93
100
Computer
Other
Total
software intangibles intangibles
Total
$m
$m
$m
$m
498
(110)
-
-
-
629
(123)
197
388
-
-
-
506
-
414
(77)
414
(77)
-
-
-
530
(93)
-
337
337
-
-
-
437
Note 34: Land and buildings, infrastructure, plant and intangibles (continued)
Note (e): Assets under construction
Land
Item
Buildings Total land
and
buildings
Specialist
Other
Total
military infrastructure infrastructure
equipment
plant and
plant and
equipment
equipment
$m
$m
$m
$m
$m
$m
As at 30 June 2001
Gross value
Accumulated depreciation/amortisation
3
-
580
-
583
-
9,434
-
219
-
Net book value
3
580
583
9,434
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
As at 30 June 2000
Gross value
Accumulated depreciation/amortisation
106
Net book value
Computer
Other
Total
software intangibles intangibles
Total
$m
$m
$m
$m
9,653
-
210
-
8
-
218
-
10,454
-
219
9,653
210
8
218
10,454
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Note 35: Inventories
2001
$m
2000
$m
Inventories held for sale
Finished goods
Land held for sale or resale
Raw materials and stores
Work in progress
269
70
16
214
7
28
18
Total inventories held for sale
355
267
Inventories not held for sale
Consumable stores
3,575
3,225
Total inventories not held for sale
3,575
3,225
Total inventories
3,930
3,492
2001
$m
2000
$m
Prepayments
Work in progress (excluding inventory)
Work in progress asset sales program
Deferred acquisition costs
Other
1,621
189
18
3
736
1,345
116
6
7
112
Total other non-financial assets
2,567
1,586
Note 36: Other non-financial assets
107
Note 37: Equity
(a)
Equity of the Commonwealth Government of Australia(a)
Item
108
Opening balance as at 1 July 2000
Adjustment to opening balances - refer Table 1
Net result for 2001
Dividends provided for or paid
Net revaluation inc/(dec) - excluding
investment reserves - refer Table 2
Net acquisition/(disposal) of investments
Transfers to/(from)/between reserves
Changes in accounting policies
Currency translation gain/(loss)
Capital payments made/
(repayments received)
Other movements
As at 30 June 2001
less: Outside Equity Interests - refer to 37 (b)
Total equity attributable to the
Commonwealth
Accumulated
results
$m
(81,494)
2,848
8,092
(1,155)
Reserves
Asset
Foreign Investments Statutory
Other
Total
revaluation
currency
reserve
funds reserves reserves
reserve translation
reserve
$m
8,731
(57)
$m
(41)
-
$m
26,308
(22)
$m
545
-
$m
1,591
(12)
$m
37,134
(91)
2,376
(283)
-
16
-
(112)
-
$m
3,344
-
$m
(41,016)
2,757
8,092
(1,155)
2,376
283
465
30
465
12
39,744
36
3,809
3,809
12
(28,439)
7,886
39,708
-
(36,325)
379
30
11,066
Total
2,376
30
(71,992)
4,041
Contributed
equity
(12)
(23)
26,174
545
24
1,982
(76,033)
Table 1 - Details of adjustments to opening balances opening balances (as per AAS 31, para 21.3) are as follows:
Recognition of assets for the first time and
correction to previously recognised assets
Correction to other previously recognised
liabilities
Other
Total
2,645
-
228
(25)
2,848
(57)
(57)
-
(22)
(22)
-
-
-
(12)
(12)
(91)
(91)
(a) Details contained in this table relate to the economic entity (ie, inclusive of both Commonwealth and outside equity interests).
2,645
-
228
(116)
2,757
Note 37: Equity (continued)
Table 2 — Net revaluation increases/(decreases)
2001
$m
Net Inc/(Dec)
2000
$m
Net Inc/(Dec)
Financial assets
Non-financial assets
Land
Buildings
Specialist military equipment
Other infrastructure, plant and equipment
Other non-financial assets
Intangibles
155
251
624
316
268
1,008
4
1
234
431
1,818
197
(1)
5
Total
2,376
2,935
2001
$m
2000
$m
3,187
2,028
(22)
(1,155)
3
2,464
(128)
2,475
(18)
(1,628)
21
4,041
3,186
(6)
14
22
6
6
(19)
(12)
2
18
(1)
36
(6)
Interest in capital
3,809
3,344
Total outside equity interests
7,886
6,524
(b)
Outside Equity Interests
Outside equity interests in controlled entities comprise:
Interest in opening accumulated results as at 1 July 2000
Interest in adjustments to opening accumulated results
Interest in operating result and abnormal items after income tax
Interest in amounts transferred (to)/from reserves
Interest in dividends provided for or paid
Interest in other movements in accumulated results
Interest in closing accumulated results
Interest
Interest
Interest
Interest
Interest
Interest
in opening reserves as at 1 July 2000
in adjustments to opening reserves
in net revaluation increases/(decreases)
in foreign currency translation gain/(loss)
in amounts transferred (to)/from accumulated results
in other movements in reserves
Interest in closing reserves
Note: Shaded areas in Note 37(a) Accumulated Results and Reserves of the Commonwealth Government of
Australia are not applicable.
109
Note 38: Financial Instruments
(a)
Accounting policies
The terms and conditions and accounting policies relating to the Commonwealth’s
financial assets and liabilities are detailed in Table A.
(b)
Derivatives
Commonwealth entities utilise derivative financial instruments in the normal course of
business in order to hedge exposure to fluctuations in interest and foreign exchange
rates. Derivatives in use include interest rate swaps, interest rate futures, cross-currency
swaps and forward foreign exchange contracts.
Details of significant derivatives are outlined below.
Interest Rate Swaps
A number of Commonwealth entities utilise interest rate swaps to hedge against
interest rate risk. At balance date, the notional principal amounts and periods of expiry
of interest rate swaps, are as follows:
2001
Floating
Interest
Rate
$m
Fixed Interest Rate Maturity
1 year or
1 to 5
more than 5
less
years
years
$m
$m
$m
Financial Liabilities
Telstra
EFIC
Australia Post
404
1,360
(280)
(270)
(12)
-
(173)
(575)
60
39
(773)
220
(30,575)
120
10
1,600
-
14,525
(120)
(10)
14,450
-
Off Balance Sheet Items
AOFM
National Railway Corporation
ABC
2000
Floating
Interest
Rate
$m
Fixed Interest Rate Maturity
1 year or
1 to 5
more than 5
less
years
years
$m
$m
$m
Financial Liabilities
Telstra
EFIC
Australia Post
1,238
1,012
(280)
(261)
(88)
-
623
(339)
60
(1,600)
(585)
220
(24,225)
120
(15)
1,500
(25)
10,375
(120)
40
12,350
-
Off Balance Sheet Items
AOFM
National Railway Corporation
ABC
110
Note 38: Financial Instruments (continued)
Reserve Bank of Australia: Foreign Currency Swaps
The Reserve Bank of Australia uses foreign currency swaps to assist daily domestic
liquidity management or to smooth the impact of other foreign currency transactions
on Reserve Assets. As at 30 June 2001, the Bank was under contract to purchase
$16.7 billion (2000: $10.1 billion) of foreign currency and sell $45.6 billion
(2000: $27.5 billion) of foreign currency. As of that date, there was an unrealised net
gain of $0.256 billion (2000: $0.279 billion) on these swap positions. These foreign
currency swaps are off balance sheet items.
Cross-Currency Swaps
Commonwealth entities generally enter into cross-currency swaps to protect against
exchange rate movements. The most significant of these contracts are entered into by:

The Australian Office of Financial Management undertakes cross-currency swap
transactions on behalf of the Commonwealth to assist with the management of
exchange rate risk associated with the Commonwealth debt portfolio. As at
30 June 2001, the principal amount of cross-currency swap receivables was
$9.317 billion (2000: $8.983 billion) whilst the principal amount of cross-currency
swap payables was $13.079 billion (2000: $11.115 billion). The swap principal and
interest payable/receivable in relation to these cross currency swaps are disclosed
in the financial statements on a net basis.

Certain other Commonwealth entities, primarily Telstra and the Export Finance
Insurance Corporation, utilise cross-currency swaps to hedge borrowings
denominated in foreign currencies. The remaining terms and notional principal
amounts of these outstanding cross-currency swaps at balance date are:
2001
Telstra
EFIC
(6,624)
(2,523)
2000
Telstra
EFIC
Floating
Interest
Rate
$m
Floating
Interest
Rate
$m
(3,796)
(1,545)
111
Fixed Interest Rate Maturity
1 year or
1 to 5
more than 5
less
years
years
$m
$m
$m
892
3,080
1,148
4,036
106
Fixed Interest Rate Maturity
1 year or
1 to 5
more than 5
less
years
years
$m
$m
$m
444
2,109
885
1,838
160
Note 38: Financial Instruments (continued)
Interest Rate Futures
As at 30 June 2001, the Reserve Bank of Australia used interest rate futures to hedge
about 91 per cent of the Bank’s foreign currency reserves (excluding gold). The Export
Finance Insurance Corporation also uses interest rate futures to reduce its exposure to
interest rate risk on its loans and borrowings. The interest rate risks associated with
these derivatives are provided in Table B.
Forward Foreign Exchange Contracts
Forward foreign exchange contracts entered into by Commonwealth entities are
detailed in Part (c), Foreign exchange risk
Cashflow Matching Deed
The Australian Industry Development Corporation entered into a Cashflow Matching
Deed with UBS Warburg in 1997. Under the Deed, UBS Warburg provides a
cashflow-matching portfolio of assets and derivative financial instruments, which
matched the cashflow requirements of the Corporation's liabilities. The derivative
instruments used include interest rate swaps and exchange rate swaps. The notional
principal amounts and period of expiry of the foreign currency components of the
cashflow-matching swap contracts are as follows:
2001
$m
2000
$m
270
78
188
191
164
151
2001
$m
2000
$m
Financial Assets
374
374
Financial Liabilities
314
314
Japanese Yen
Two to five years
Greater than five years
Swiss Francs
Two to five years
(c)
Foreign exchange risk
Foreign exchange risk is the risk that the value of a financial instrument will fluctuate
due to changes in foreign exchange rates.
A number of Commonwealth entities enter into forward foreign currency contracts to
hedge the exchange rate risk on firm or anticipated purchase commitments and
112
borrowings denominated in foreign currencies or to hedge the exchange risk on
investments denominated in foreign currencies.
113
Note 38: Financial Instruments (continued)
The following table sets out the net value of outstanding contracts, including forward
exchange contracts, the weighted average contracted exchange rates and the settlement
period for these entities:
Notional Principal Amount
US Dollars receivable:
Less than one year
One to five years
US Dollars payable:
Less than one year
One to five years
Greater than five years
2000
$m
2001
2000
2,389
33
1,645
58
0.5136
0.4994
0.6010
0.6046
2,422
1,703
(166)
(6)
(11)
(262)
(3)
(12)
0.5205
0.6645
0.7100
0.3063
0.7100
0.7100
(183)
(277)
26
33
64.3951
63.3614
26
33
(59)
(41)
64.3951
63.3614
(59)
(41)
92
-
201
1
0.5452
0.0000-
3.1958
0.5927
92
202
(145)
(5)
(120)
(10)
2.1044
2.5402
0.2627
2.2344
(150)
(130)
Japanese Yen receivable:
Less than one year
Japanese Yen payable:
Less than one year
Other currencies receivable:
Less than one year
One to five years
Other currencies payable:
Less than one year
One to five years
Weighted Average Rate
2001
$m
Where these contracts are utilised to hedge anticipated future transactions, any
unrealised gains and losses on the contracts, together with the costs of the contracts,
will be recognised in the financial statements at the time the underlying transaction
occurs. The net unrecognised gains/(losses) on anticipated foreign currency
transactions are:
Net Gains / (Losses)
Less than one year
114
2001
$m
2000
$m
777
116
Note 38: Financial Instruments (continued)
The Commonwealth, through the Australian Office of Financial Management, is open
to foreign exchange risk as a result of contractual obligations in relation to
cross-currency swap contracts and foreign currency loans. As a matter of portfolio
benchmark policy, exposure to movements in the Australian dollar are not hedged. As
at 30 June 2001, foreign currency liabilities of $4.175 billion (2000: $2.697 billion) and
foreign currency assets of $0.034 billion (2000: $0.034 billion).
(c)
Interest rate risk
The Commonwealth’s exposure to interest rate risk and the effective weighted average
interest rate for each class of financial asset and liability is set out at Table B.
(d)
Credit risk
Credit risk in relation to financial assets, is the risk that a third party will not meet its
obligations in accordance with agreed terms. Generally, the Commonwealth’s
maximum exposure to credit risk in relation to each class of recognised financial asset is
the carrying amount of those assets as indicated in the Consolidated Statement of
Financial Position. For off-balance sheet financial instruments, including derivatives,
credit risk also arises from the potential failure of counterparties to meet their
obligations under the respective contracts at maturity.
The majority of Commonwealth entities do not have significant exposures to any
concentrations of credit risk. Generally, Commonwealth entities' exposures are to a
large number of customers or highly rated counterparties and their credit risks are very
low Commonwealth entities with geographically based concentrations of credit risk
outside of Australia include:

The Export Finance and Insurance Corporation with exposure to credit risk arising
from the financing and credit insurance facilities extended by the Corporation.
These facilities are provided by EFIC on both a commercial basis and on the
National Interest Account.
EFIC's principal exposure risk arises from Loans and Rescheduled Sovereign Debt
totalling $4,089.2 million as at 30 June 2001 (2000: $3,671.3 million) and Export
Credit Insurance, Guarantees, Residual value insurance, Bonds, Political Risk
Insurance and Reinsurers with a combined risk of $2,126.6 million
(2000: $2,083.7 million).
EFIC employs risk grading systems to rank its risks according to counter party and
country risk exposures.
115
Note 38: Financial Instruments (continued)

The Reserve Bank of Australia with foreign exchange holdings which are invested
mainly in securities (issued by the governments of the United States, Japan and
Germany) and bank deposits (with major OECD foreign commercial banks and
central banks). The carrying amount of foreign exchange holdings as at 30 June 2001
is $35,786 million (2000: $30,228).
The RBA's exposures are all to highly rated counterparties and its credit risk is very
low.

Telstra with concentrations of credit risk in the United States of $5,809 million (2000:
$1,773 million), Europe $4,542 million (2000: $1,404 million) and other countries of
$68 million (2000: $146 million).
From time to time the Commonwealth may have significant exposures to credit risk in
relation to major asset sales.
(e)
Net fair value
The net fair values of the majority of Commonwealth financial assets and liabilities
equal or exceed their carrying amounts. The carrying value of assets and liabilities are
determined using Generally Accepted Accounting Principles, while net fair value is
often determined on market value or a discounted cash flow.
116
Note 38: Financial Instruments (continued)
The carrying amounts and net fair values of financial assets and liabilities as at the
reporting date are as follows:
2000-2001
1999-2000
Total
Carrying
Amount
$m
Aggregate
Net Fair
Value
$m
Total
Carrying
Amount
$m
Aggregate
Net Fair
Value
$m
2,236
2,236
2,568
2,568
30
30
17,576
7,167
17,514
6,996
16,674
24,146
16,674
24,146
32
32
32
32
32
32
32
33
1,381
7,817
37,746
172
1,700
8,137
175
1,790
109
1,381
7,823
37,731
172
1,700
8,137
179
1,790
109
1,233
9,318
31,248
110
1,783
7,363
101
1,604
10
1,233
9,318
31,248
110
1,783
7,363
101
1,604
10
Total financial assets
86,006
85,768
96,158
96,158
Financial liabilities
Suppliers
20
Personal benefits payable
Subsidies payable
Grants payable
21
Other provisions and other payables 22, 29
Overdrafts
Deposits
23
Government securities
24
Loans
25
Leases
26
Other interest bearing liabilities
27
Australian currency on issue
2,732
414
242
8,243
4,906
10
3,079
53,569
27,439
382
7,520
27,168
2,732
414
242
8,243
4,906
10
3,079
61,181
27,576
382
7,123
27,168
3,059
2,237
192
7,591
5,225
7
3,534
59,315
23,429
381
7,886
25,434
3,059
2,237
192
7,591
5,225
7
3,534
63,734
23,429
381
7,886
25,434
135,704
143,056
138,290
142,709
Note
Financial assets
Cash
Receivables
Advances and loans (incl HECS)
Other receivables
Investments
Gold
Deposits
Government securities
Debentures
Shares
International Monetary Fund quota
Other investments
Accrued revenue
Other financial assets
Total financial liabilities
117
Table A: Accounting policies
Financial instrument
Accounting policies and methods
FINANCIAL ASSETS
Financial assets are recognised when control over future economic
benefits is established and the amount of the benefit can be
reliably measured.
Nature of underlying instrument
Cash:
Cash — Deposits at call
Deposits are recognised at their nominal amounts. Interest is
credited to revenue as it accrues.
Cash is a combination of Australian notes and coins on
hand, net amounts owed to the Commonwealth for
overnight clearance of financial transactions through
clearing houses and deposits with financial institutions.
Receivables for goods and
services, fees, fines and
recoveries.
Receivables are recognised at the nominal amounts due less any
provision for bad and doubtful debts. Collectability of debts is
reviewed at balance date. Provisions are made when collection of
the debt is judged to be less rather than more likely.
All receivables are with entities external to the
Commonwealth. Credit sales are normally on
14 — 30 day terms.
Receivables for loans and
advances
Loans are recognised at the amounts lent. Collectability of
amounts outstanding is reviewed at balance date. Provision is
made for bad and doubtful loans where collection of the loan or
part thereof is judged to be less rather than more likely. In rare
circumstances, loan repayment may be waived. Interest is credited
to revenue as it accrues.
There are certain entities within the Commonwealth that
have significant loan balances. The details of the
significant terms and conditions relating to these loans are
as follows:
Receivables:
118
Australian Office of Financial Management/Department of
Finance and Administration — The Commonwealth has
various funding/advance arrangements in place with the
States and Territories. The States and Territories are
responsible for meeting interest and principal payments.
Export Finance Insurance Corporation — Loans are made
to external entities to extend the availability of export
finance.
Aboriginal and Torres Strait Islander Commission — Loans
are made to external parties for periods up to 25 years and
security is required.
Table A: Accounting policies (continued)
Accounting policies and methods
Nature of underlying instrument
Receivables for asset sales
Receivables are carried at their nominal amounts due less any
provision for doubtful debts. A provision for doubtful debts is
recognised when collection of the full nominal amount is no longer
probable.
All receivables are with entities external to the
Commonwealth. Receivables for asset sales are settled in
accordance with the terms agreed in the sale contract.
Receivables for bills of
exchange and promissory notes
Bills of exchange and promissory notes are valued at amortised
cost with interest revenue recognised on an effective yield to
maturity basis.
The bills of exchange and promissory notes have varying
maturity terms and interest arrangements.
Higher Education Contribution
Scheme (HECS)
Loans are recognised at the amounts lent. Collectability of
amounts outstanding is reviewed at balance date. Provision is
made for bad and doubtful loans where collection of the loan or
part thereof is judged to be less, rather than more, likely. In rare
circumstances, loan repayments may be waived. Indexation is
credited to revenue on 1 June each year.
Loans are made under agreements with students. No
security is required. All loans are indexed on 1 June each
year using the movement in the CPI over the previous 12
months as the basis for indexation. Repayments are
recovered through the Australian Taxation Office's
taxation system.
Student Allowances
These receivables are recognised at the time an overpayment is
identified or the services are performed. Fines or charges may be
imposed where this is allowed under specific legislation.
Collectability of amounts outstanding is reviewed at balance date.
Provision is made for bad and doubtful loans where collection of
the loan is judged to be less, rather than more, likely.
All receivables are recorded at their nominal values.
Levies, fines and charges may be levied at rates specified
in specific legislation, particularly the Student and Youth
Assistance Act.
Deposits
Depending on the type of instrument, deposits are recognised at
either nominal or market value. Interest is credited to revenue as it
accrues.
Deposits have varying terms and rates of interest.
Gold holdings
Gold holdings (including gold on loan to other institutions) are
valued at the Australian dollar equivalent of the 3pm fix in the
London gold market on the last business day of June. The Reserve
Bank of Australia loans gold to financial institutions participating in
the gold market.
All gold loans are secured to 110 per cent of their market
value by Australian dollar denominated collateral security.
Interest on gold loans is accounted for on a standard
accrual basis.
119
Financial instrument
Investments:
Table A: Accounting policies (continued)
Accounting policies and methods
Nature of underlying instrument
Domestic government securities
The Reserve Bank of Australia holds Australian dollar denominated
securities issued by the central borrowing authorities of State and
Territory Governments where these are acquired under
repurchase agreements. Realised and unrealised gains or losses
on domestic government securities are immediately taken to profit
and loss.
Securities have varying interest rates and maturity dates
depending on terms and conditions of the underlying
security.
Foreign government securities
Foreign government securities comprise coupon and discount
securities and repurchase agreements. Interest earned on
discount securities is the difference between the actual purchase
cost and the face value of the security. Interest earned on
securities is accrued over the term of the security.
Coupon securities have bi-annual or annual interest
payments depending on the currency and type of security.
Securities have varying interest rates and maturity dates
depending on terms and conditions of the underlying
security.
Investments —
Quota-International Monetary
Fund
The investment is denominated in Special Drawing Rights and is
valued at the Australian dollar equivalent. Dividend income is not
earned from this investment.
The quota represents Australia's membership subscription
to the International Monetary Fund (IMF). Each member is
required to pay the IMF the amount of its initial quota and
subsequent increases partly in the members own currency
and the remainder in the form of reserve assets. A
members quota is not increased until the member has
consented to the increase.
Investments — International
financial institutions
Investment is recognised at historical cost. Dividend income is not
earned from these investments.
The investment represents Australia's membership in the
Asian Development Bank, the International Bank for
Reconstruction and Development, the International
Finance Corporation and the European Bank for
Reconstruction and Development.
Investments in other companies
Investments in other listed and unlisted companies are carried at
the lower of cost and recoverable amount. The value of listed
shares is determined by reference to the current quoted market
price of the shares. The value of unlisted shares is determined by
reference to underlying net assets. Dividends are brought to
account as they are received.
The shareholdings represent shares in listed and unlisted
companies.
120
Financial instrument
Table A: Accounting policies (continued)
Financial instrument
Accounting policies and methods
Nature of underlying instrument
Accrued revenue
Accrued revenue is recognised when a service has been provided
but has not been invoiced. Accrued revenue is recognised at the
nominal amounts due.
As for Receivables for Goods and Services once billed.
Financial liabilities
Financial liabilities are recognised when a present obligation to
another party is entered into and the amount of the liability can be
reliably measured.
Accrued revenue:
Overdrafts:
Bank overdrafts
Bank overdrafts are carried at the principal amount. Interest is
charged to expense as it accrues.
Interest is charged at banks’ benchmark rates. No security
is provided over bank overdraft facilities.
Debt is measured at face value and discount securities are
measured at cash value. Premiums and discounts in relation to
such borrowing are netted and amortised over the life of the
borrowing on a straight line basis.
The Australian Office of Financial Management (AOFM) is
responsible for advising the Treasurer on all aspects of
debt management on behalf of the Commonwealth,
including the issue of various borrowing instruments and
the administration of the redemption of debt. The AOFM
also administers the redemption of Commonwealth
Government security debt on allocation to the States and
Territories.
Loans
Loans are recognised at their principal amounts. Non-bank loans
are carried at the balance yet to be repaid. Interest is expensed as
it accrues.
Loans are carried at the amounts borrowed. Borrowings
are on commercial terms. Effective interest rates vary
according to individual loan terms and conditions. The
loans are made under varying loan facility arrangements.
Student Supplement Loan
Scheme
The amounts loaned by the Commonwealth have been disclosed
as a liability and a receivable. The liability for the loans represents
the amount of the principal outstanding.
The loans are provided by the Commonwealth Bank and
are purchased by the Commonwealth after the loan
guarantee has been in place for 5 years.
Government securities:
Commonwealth Government
securities
121
Loans:
Table A: Accounting policies (continued)
Financial instrument
Accounting policies and methods
Nature of underlying instrument
Bills of exchange and
promissory notes
Bills and Notes are either recognised when issued at the amount of
the net proceeds received and carried at amortised cost until the
liabilities are fully settled or at nominal face value. Interest on the
instruments is recognised as an expense on a yield to maturity
basis.
The bills of exchange and promissory notes issued have
varying maturity terms and interest arrangements.
Bonds
Bonds are carried at cost or adjusted cost (face value of debt
adjusted for any unamortised premium or discount). Interest is
calculated on a yield to maturity basis. Bonds repurchased are
cancelled against the original liability and any gains or losses are
taken to the profit and loss account as interest expense.
Bonds have varying interest rates and maturates.
Liabilities are recognised at the present value of the minimum
lease payments at the beginning of the lease. The discount rates
used are estimates of the interest rates implicit in the leases.
The period and effective interest rates vary according to
the terms and conditions of the Finance Lease.
The liabilities are recognised at their nominal amounts. Interest is
charged as an expense as it accrues.
The Commonwealth takes deposits for varying periods and
differing effective interest rates. The majority of these
deposits are from banks, Government Instrumentalities,
foreign governments and other foreign institutions.
This is valued at the Australian dollar equivalent of its liability in
Special Drawing Rights. Interest expense is recognised as it
accrues.
The SDR allocation liability reflects the current value in
Australian dollars of the Department’s liability to repay to
the IMF Australia’s cumulative allocations of SDRs.
Interest is payable to the IMF in relation to the amount by
which Australia’s SDR holdings are below Australia’s net
cumulative allocations.
Leases:
Finance leases
Deposits:
122
Deposits
Other debt:
International Monetary Fund
(IMF) Special Drawing Right
(SDR) Allocation liability
Table A: Accounting policies (continued)
Financial instrument
Accounting policies and methods
Nature of underlying instrument
Repurchase agreements
Securities sold but contracted for purchase under repurchase
agreements are reported within the relevant investment category
and are valued at market prices. The counterpart obligation to
repurchase is reported as an interest bearing liability. The
difference between the sale and purchase price is recognised as
interest expense over the term of the agreement.
In the course of it’s financial market operations the
Reserve Bank of Australia engages in repurchase
agreements involving foreign and Australian dollar
marketable securities.
Inscribed stock
Inscribed stock is recognised at face value net of any unamortised
discount on issue. The discount on issue is amortised over the term
of the issue. Interest is expensed as it accrues.
Inscribed stocks have varying terms to maturity and have
their interest rate normally set quarterly.
Lease incentives
The lease incentive is recognised as a liability on a receipt of the
incentive. The amount of the liability is reduced on a straight line
over the life of the lease by allocating lease payments between
rental expense and reduction of the liability.
Commonwealth entities have received lease incentives on
entering property operating leases.
Suppliers
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 having been invoiced).
All creditors are entities external to the Commonwealth.
Settlement is usually made net 30 days.
Personal benefits payable
A financial liability for personal benefits is recognised when a
present obligation to another party is entered into and the amount
of the liability can be reliably measured
Period based benefits are paid in arrears following an
entitlement period. Period based benefits owing at the end
of the financial year are included as liabilities.
Pay-day based benefits are not paid in relation to an
entitlement period. Recipients qualify for payment on the
date of payment. Accordingly, no liability is recognised in
relation to these benefits.
Payables:
123
Table A: Accounting policies (continued)
124
Financial instrument
Accounting policies and methods
Nature of underlying instrument
Grants payable
Multi-year non reciprocal grants are expensed when the recipient
government provides the agreed services. Other grants are
recognised as liabilities and expensed in the year in which the
grant agreements are made.
The Commonwealth makes multi-year funding agreements
with State and Territory governments under various
programs to meet its public policy objectives. Funds are
provided annually and expensed in accordance with these
agreements, except in cases where further funding is not
provided until specific milestones have been met. As these
grants are non-contractual in nature, no further
disclosures required by AAS33 are made in this note.
Subsidies
Subsidies are recognised as liabilities at balance date to the extent
that the services have been received and the recipient is entitled to
the subsidy.
These liabilities relate to contracts and/or agreements with
parties external to the Commonwealth. Payments are
made in accordance with the terms and conditions set out
in the contract or agreement.
Outstanding claims
Outstanding claims comprise the estimated costs of meeting all
claims incurred whether reported or not.
Settlement due upon resolution of claim assessment.
Other payables
Interest expense is recognised as it accrues.
Interest is payable on Commonwealth Government
Securities, swaps and other loans.
Australian currency issued represents a liability of the Reserve
Bank of Australia (RBA) in favour of the holder. Currency issued for
circulation including demonetised currency is measured at face
value. When the RBA issues currency notes to the commercial
banks, it receives in exchange funds equal to the full face value of
the notes issued.
The RBA assesses regularly the value of the notes still
outstanding at least five years after the note issue ceased
which are judged to have been destroyed and therefore
unavailable for presentation.
Provisions:
Australian currency on issue
There is no interest rate associated with currency on issue.
Table A: Accounting policies (continued)
Financial instrument
Accounting policies and methods
Nature of underlying instrument
Commitments are recognised where there are obligations or
undertakings to make future payments to other entities that exist
at the end of the reporting period and have not been recognised as
liabilities in the Statement of Financial Position.
Commitments recorded include the following classes of
transactions:
Unrecognised financial
liabilities:
Commitments
- committed future year grant payments;
- non-cancellable operating lease obligations;
- capital commitments for the acquisition or improvement
of property, plant and equipment; and
- commitments in respect of contractual obligations for
goods and services that have not been provided at
balance date.
The amounts guaranteed or indemnified by the Commonwealth
have been disclosed in the Schedule of Contingencies. At the time
of completion of the financial statements, there was no reason to
believe that the guarantees would be called upon, and recognition
of the liabilities was therefore not required.
The guarantees or indemnities have been given in relation
to various schemes/activities operated/supported by the
Commonwealth and in relation to borrowing obligations.
Other contingencies
Other contingencies relate to litigation action pending against the
Commonwealth and other liabilities the future materialisation of
which is uncertain, and are disclosed in the Schedule of
Contingencies.
Legal action pending against and contested by the
Commonwealth, and other contingent liabilities.
Derivatives
Refer to 38(b) — Derivatives for a detailed coverage of accounting
treatment and the underlying nature of the relevant financial
instruments.
125
Guarantees/Indemnities
Table B: Interest rate risks — financial assets
Floating
Interest Rate
Fixed Interest Rate Maturing in:
1 year or less
1 to 5 years
more than 5
Non-Interest
Bearing
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
%
99-00
%
1,137
1,383
787
43
-
-
-
30
312
1,112
2,236
2,568
6.21
5.19
30
30
1,887
1,385
1,875
290
396
594
556
1,212
1,651
121
1,482
82
5,097
1,789
5,133
302
8,545 7,629
3,275 22,260
17,576
7,167
16,674
24,146
6.15
4.09
6.30
6.68
32
32
32
32
32
1,528
-
1,020
1
-
1,086 1,181
6,014 8,033
22,712 21,204
32
21
-
222
181
7,260
52
-
46
125
5,097
32
-
94
7,503
89
-
128
4,589
57
-
73
271
1,700
6
11
358
1,783
1,381
7,817
37,746
172
1,700
1,233
9,318
31,248
110
1,783
1.60
5.88
2.67
5.01
n/a
1.50
5.93
5.40
2.23
n/a
32
-
-
-
-
-
-
-
-
8,137
7,363
8,137
7,363
n/a
n/a
32
33
58
5
-
11
1
-
77
155
-
52
-
-
-
-
-
40
1,630
108
38
1,603
10
175
1,790
109
101
1,604
10
5.11
5.72
n/a
6.89
1.29
n/a
6,000
4,580
31,853 32,302
9,487
24,091 42,174
86,006
96,160
Note
126
Financial assets:
Cash
Receivables:
Advances and loans
Other receivables
Investments:
Gold
Deposits
Government securities
Debentures
Shares
International Monetary
Fund quota
Other investments
Accrued revenue
Other financial assets
Total financial assets
Weighted
Average
Effective
Interest Rate
6,864 14,572 10,239
Total
Table B: Interest rate risks — financial liabilities
Note
127
Floating
Interest Rate
Fixed Interest Rate Maturing in:
1 year or less
1 to 5 years
more than 5
Non-Interest
Bearing
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
$m
99-00
$m
00-01
%
99-00
%
100
2,719
2,778
-
-
27
90
2,732
414
242
8,243
2,135
3,059
2,237
192
7,591
2,258
2,732
414
242
8,243
4,906
3,059
2,237
192
7,591
5,225
6.32
n/a
n/a
n/a
6.70
n/a
n/a
n/a
n/a
7.16
7
3,301
2,224
4,771
281
1,542
-
1,199
7,873
2,486
18
1,044
-
8,581 18,353 16,865 27,127 31,638
2,876 6,589 7,870 1,562 3,171
40
67
54
36
4,286
(483)
456
455
542
-
2
233
6
8
5,221 4,741
1
6
1,193 1,060
27,168 25,434
10
3,079
53,569
27,439
382
7,520
27,168
7
3,534
59,315
23,429
381
7,886
25,434
14.00
4.80
7.58
6.16
7.15
5.36
n/a
16.10
5.90
7.99
6.78
5.88
5.81
n/a
Financial liabilities:
Suppliers
20
Personal benefits payable
Subsidies payable
Grants payable
21
Other provisions and
22, 29
24
other payables
Overdrafts
10
Deposits
23
1,879
Government securities
24
211
Loans
25 11,580
Leases
26
259
Other interest bearing liabilities 27
5,312
Australian currency on issue
Total financial liabilities
Off-balance sheet
instruments(a)
Interest rate futures(b)
Weighted
Average
Effective
Interest Rate
19,275 12,226
17
96
15,339 18,560 24,526 25,246 29,207 35,441
-
334
(17)
(170)
287
(111)
Total
47,357 46,819 135,704 138,292
-
(a) The interest rate risk associated with interest rate and cross-currency swaps is disclosed in Note 36(b), Derivatives.
(b) Notional principal amounts.
-
287
149
Note 39: Events occurring after balance date
(a)
The Commonwealth Government entered into an arrangement with HIH Claims
Support Limited (HCSL) to provide assistance to policyholders suffering
financial hardship as a result of the failure of the HIH Insurance Group. HCSL is
a not-for-profit company and is the Trustee for the HIH Claims Support Group
Trust. The agreement between HCSL and the Commonwealth was finalised on
6 July 2001, the same day as the Trust was formed.
On 27 August 2001, the NSW Supreme Court placed each of the 19 companies of
the HIH group into formal liquidation and ordered the winding up.
Tony McGrath and Alex Macintosh, partners from KPMG were formally
appointed as Liquidators of each of the HIH companies.
(b)
On the 24th August 2001, it was announced that the Commonwealth and the New
South Wales Government had agreed to a comprehensive examination of the
access and track management arrangements for interstate track in New South
Wales, with a view to reaching an agreement to transfer management
responsibility for this track to the Australian Rail Track Corporation.
(c)
The Australian government has announced that it would seek to exchange land
with the East Timorese government to construct consular facilities. As at the
reporting date, the financial effect of the initiative is yet to be determined.
(d)
On 1 July 2001, the Government announced a $1,000 tolerance for families who
incur a Family Tax Benefit or Childcare Benefit overpayment due to misestimates
of their income or shared care in 2000-01. The event occurred after balance date
and has not been brought into account in the 2000-01 financial statements
because it is not possible to reliably measure any impact in 2000-01.
(e)
Following the terrorist attacks on the United States, global aviation insurers
cancelled war-risk insurance. In response, the Commonwealth Government
agreed to provide terrorist and war indemnity for Australian airlines, airports
and other key service and facility providers in the aviation sector. Subsequently
limited amounts of war risk insurance cover have been progressively
reintroduced. The indemnity covers the gap between war risk insurance
commercially available and the cover available prior to the 11 September 2001
events. The indemnities were provided initially for a period of one month and
are being reviewed on a monthly basis.
128
Note 39: Events occurring after balance date (continued)
The Commonwealth Government also invoked Article IV of the ANZUS Treaty
on the 14th September 2001. The extent of Australian involvement in any action
taken by the United States as a result of the terrorist attacks is not clear at the date
of this financial report and, as such, the financial effect of this event has not been
recognised in this financial report.
(f)
Following the collapse of the Ansett Group, the Commonwealth Government has
established a Special Employee Entitlement Scheme to provide a safety net
arrangement for Ansett Group employees if Ansett or it's parent company Air
New Zealand cannot meet the cost of the entitlements. To fund the payment of
these entitlements, the Government has also introduced two bills into Parliament
to impose and collect a passenger ticket levy on all flights that originate in
Australia. These events occurred after 30 June 2001 and the financial effect of the
events have not been recognised in this financial report.
On 26 September 2001, the Commonwealth indemnified the Voluntary
Administrators of the Ansett Group, Arthur Andersen, for the face value of
tickets sold but not honoured in the event that Ansett Airlines ceases to operate.
The Commonwealth’s maximum liability is capped at $25 million and the
arrangement commenced on 29 September 2001 and extends to 31 January 2002.
129