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Departmental Performance

Financial performance

Increased operating surplus - up $1.9 million from budget - due to reduced expenses.

The department achieved an operating surplus for 2002-03 of $20.1 million before allowing for the $24.6 million capital use charge for assets employed. This surplus was $1.9 million greater than the budgeted surplus and is attributable to lower than projected expenses.

Table 1: Summary of the 2002-03 result in comparison with the 2001-02 result and the 2002-03 budget
Result
$'000
Variation on
2001-02
%
Budget
$'000
Variation on budget
%
Revenue from government 229 264 +8 239 172 -4
Own source revenue 17 556 -15 10 884 61
Total revenue 246 820 +6 250 056 -1
Employee expenses 83 938 +10 84 757 -1
Supplier expenses 110 245 +18 133 461 -17
Depreciation 12 803 +14 13 660 -6
Other expenses 19 746 +10 0 +100
Total expenses 226 732 +14 231 878 -2
Operating result 20 088 -42 18 178 11

Revenue increased by 6 per cent from 2001-02 due to new measures and estimates adjustments to existing activities.

Total revenue of $246.8 million was up $13 million from 2001-02 and down $3.2 million from budget. This revenue consists of appropriations from government of $229 million and own source revenue, comprising sales of goods and services, asset sales and interest of $17.6 million.

Appropriations from government increased by $16.3 million from 2001-02 primarily due to two factors.

Funding for new measures associated with: strengthening air safety ($2 million); the Immigration Reception and Processing Centre (IRPC) on Christmas Island ($1.6 million); development of AusLink ($1.1 million); war risk indemnities ($0.6 million); the Black Spots Programme ($0.5 million); and National Highways and Roads of National Importance ($0.4 million). This was offset by savings from the Very High Speed Train Scoping Study ($5 million).

Estimates adjustments to existing activities including: reclassification of capital funds for the Asia Pacific Space Centre Project (APSC) ($10 million); operational costs associated with the APSC and IRPC ($1.6 million); and revised property arrangements for Sydney West Airport rental properties ($0.5 million).

Own source revenue decreased by $3.2 million from 2001-02 due to reduced bank account interest and a reduction in miscellaneous revenue.

Total expenses increased by 14 per cent from 2001-02, but were 2 per cent lower than budget due to the deferral of some activities.

Total operating expenses of $226.7 million were up $27.7 million or 14 per cent from 2001-02, but were $5.1 million or 2 per cent lower than budgeted. This decrease is primarily attributable to the deferral of expenses in relation to the IRPC ($20 million), which was partially offset by unbudgeted expenses for the write-down of assets ($3 million) and other expenses ($13.5 million).

The main items comprising total operating expenses are employee expenses ($83.9 million, down 1 per cent from budget) and payments to suppliers ($110.2 million, down 17 per cent from budget).

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Financial position

Net equity position increased by 40 per cent from 2001-02 due to increased assets.

The department's net equity position increased to $312.1 million, representing an increase of $88.6 million from 2001-02. The increase was as a result of an increase in assets.

Total assets increased by $96.6 million.

Total assets were $360.5 million, representing a $96.6 million increase from 2001-02. The increase is primarily attributable to an increase in appropriation receivables (totalling $105.1 million). These 'financial' assets compare to cash and investment holdings at 30 June 2002 of $32.8 million. This large increase is due to the deferral in the timing of expenditure for a number of large projects on the Indian Ocean Territories (IOTs) totalling $75.4 million. The change in the mix of 'financial' assets from cash and investments in 2001-02 to cash and appropriation receivables in 2002-03 reflects the fact that most of the cash reserves held by the department were returned to the Official Public Account in June 2003 following the government's decision to cease the agency banking incentive scheme.

Further, land and buildings ($20 million) and infrastructure, plant and equipment ($8.5 million) on the IOTs increased in value primarily in relation to capital works associated with the IRPC. It should be noted that some $23.8 million in new housing assets for the IRPC were subsequently transferred to the Department of Immigration and Multicultural and Indigenous Affairs on 1 July 2003.

Figure 1: Departmental assets as at 30 June 2003

Figure 1: Departmental assets as at 30 June 2003

Primary liability, employee entitlements, increased by $1.3 million to $28.1 million.

Total liabilities increased by $8 million from 2001-02 to $48.3 million, due to an increase in unearned income of $9.7 million. The department's primary liability continues to be employee provisions associated with accrued leave entitlements for staff. This liability increased by $1.3 million to $28.1 million. Supplier payables decreased by $1.5 million to $7.6 million.

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Asset management

Non-financial assets total $250.9 million, mostly attributable to the IOTs.

The total value of the department's non-financial assets is $250.9 million. The majority of this asset base comprises land, buildings and infrastructure located in the IOTs.

Capital expenditure is in accordance with the department's strategic asset management plan.

Expenditure on capital works is in accordance with projects identified in the department's strategic asset management plan. This plan includes the programme of works proposed by the 1999 Commonwealth Grants Commission Report for the IOTs and subsequently agreed by the government as necessary to provide standards of services on the IOTs consistent with comparable mainland communities.

Asset management activities in 2002-03 include asset stocktake, annual asset revaluation, a review of work in-progress and completion of IRPC housing project.

Specific asset management activities undertaken during the year included:

  • Performance of the annual asset stocktake. The department's stocktake occurs on a three year cycle based on geographic location. The 2002-03 stocktake included Norfolk Island and the regional offices.
  • Performance of the annual asset revaluation. Revaluations occur on the same cycle as stocktakes. This ensures that assets are revalued at least every three years, which complies with Australian Accounting Standards and the Finance Minister's Orders' requirements.
  • A detailed review of the Work-In-Progress account was undertaken.
  • The department successfully managed the completion of the IRPC housing project. Responsibility for the ongoing administration of the houses, as well as the assets, was transferred to the Department of Immigration and Multicultural and Indigenous Affairs as of 1 July 2003.

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Cash flows

Cash held decreased to $12.9 million.

The department decreased its cash balance by $19.9 million to $12.9 million during the year due to the cessation of the agency banking incentive scheme. This change involved the department returning the majority of its cash held, totaling $92.2 million (an appropriation receivable), to the Official Public Account.

These cash reserves and appropriation receivables are held to cover employee leave liabilities accrued since the commencement of Commonwealth accrual budgeting arrangements on 1 July 1999 and to fund:

  • asset replacement, in particular the purchase of property, plant and equipment for the delivery of services to the IOTs
  • capital expenditure for the APSC
  • the delivery of services for the IRPC
  • creditors.

Figure 2: Departmental net cash flow

Figure 2: Departmental net cash flow

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