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Introduction and overview

1. Year in review

Management and Accountability significant activities 2007-08

Management

In the lead-up to the announcement of the 2008-09 Budget, the Department reviewed the performance planning information that it publishes in its Portfolio Budget Statements (PBS), as part of a whole of government activity. As a consequence, the 2008-09 PBS contained more focused external performance indicators together with a text description of the output that each indicator supports. In addition, the 2008-09 PBS included an overall strategic direction statement for the Department along with a strategy for each outcome.

Following a competitive tendering process, the Department transitioned to a new IT service provider. The groundwork was laid for a technology refresh that will be completed by the end of 2008.

The effectiveness of the Department's awareness-raising and communications campaigns was recognised by the Public Relations Institute of Australia (refer Case Study: 'Green Vehicle Guide'). In the Institute's Golden Target Awards announced in October 2007, the Department's campaign for the introduction of new aviation regulations related to liquids, aerosols and gels won the Government Campaigns category, while the campaign for the introduction of the Maritime Security Identification Card won the Highly Commended Award in the same category. These campaigns played a key role in the successful introduction of two critical transport security initiatives.

A delegations management system, i-Delegate, was implemented by the Department in July 2007. The i-Delegate system enables immediate access to information about the powers and authority that departmental staff have in making decisions and taking action under approximately 120 pieces of legislation. The implementation of this system provides a higher level of assurance of the Department's responsible, effective and efficient use of its powers and resources, and improves staff awareness of some of their accountability responsibilities.

Financial performance

Departmental activities involve the use of assets, liabilities, revenues and expenses controlled or incurred by the Department in its own right. Administered activities involve the management or oversight by the Department, on behalf of the Australian Government, of items controlled or incurred by the Australian Government.

Departmental finances

This section should be read in conjunction with the Department's audited financial statements for 2007-08, which appear in the Financial Statements section of this report.

In 2007-08, the Department reported an operating surplus of $5.8 million.

Total income available in 2007-08 increased by $26.4 million. The increase mainly comprised funding for measures announced in, and since, the 2007-08 Budget ($28.7 million).

The operating surplus, along with the adjustment to asset values, contributed to an increase of $14.0 million in the Department's net assets. This is mainly reflected in the Department's Appropriation Receivable balance.

The Department's commitment to financial management continues to be reflected in its financial performance and unqualified financial statements. The Department's 2007-08 operating result placed the Department in a strong position to manage its finances in a tighter fiscal environment.

The Department also maintained its strong focus on compliance with the Financial Management and Accountability Act 1997 (FMA Act), and Accountability Act 1997 (FMA Act), and implemented systems to enhance its FMA Act compliance regime. implemented systems to enhance its FMA Act compliance regime.

Table 1.1 Summary of departmental financial performance and position

 

2003-04
$m
2004-05
$m
2005-06
$m
2006-07
$m
2007-08
$m
Change
since last year
Revenue from government 222.8 197.1 217.4 213.3 239.8 12.4%
Other revenue 18.9 40.1 5.1 4.1 4.5 9.8%
Gains     1.0 1.1 0.6 -45.5%
Total income 241.7 237.2 223.5 218.5 244.9 12.1%
Employee and supplier expenses 195.8 176.6 209.5 208.2 220.5 5.9%
Depreciation 14.0 8.2 9.7 11.8 13.6 15.3%
Other expenses 91.2 7.2 4.0 3.2 5.0 56.3%
Total expenses 301.1 192.0 223.2 223.2 239.1 7.1%
Operating result (Loss) (59.4) 45.2 0.3 (4.7) 5.8 >100.0%
Financial assets A 160.7 93.0 105.0 92.2 98.6 6.9%
Non-financial assets B 247.9 46.8 63.9 57.7 64.9 12.5%
Liabilities C 108.9 74.1 51.1 55.1 54.7 -0.7%
Net assets = A + BC 299.7 65.6 117.7 94.8 108.8 14.8%

Note: Historical data prior to 2006-07 reflects the respective year's financial statements as signed off by the Australian National Audit Office at the time. As such, it may not reflect current accounting policies or comparative figures published in later statements. For comparative purposes, figures for 2006-07 have been amended to reflect current accounting policies.

Asset management

The Department manages $64.9m of non-financial assets comprising several asset classes: land and buildings; infrastructure, plant and equipment; artworks; intangibles (software); inventories; and other non-financial assets. Of these, our major investments are in land and buildings ($32.7m) and intangibles ($22.4m).

The Department's capital program is underpinned by centralised approval processes. Business divisions submit proposals for the consideration of the Department's Strategic Information Technology Committee (for IT-related projects) and the Executive (for all other proposals >$50,000). Below this threshold the Chief Financial Officer can consider non-IT project proposals. All decisions are informed by input from the Financial Services Branch.

Assets were independently revalued to market selling price (for leasehold improvements to depreciated replacement cost) with the exception of leasehold makegood assets which were revalued internally on a current market basis.

The Department's Secretary has issued a Chief Executive Instruction on asset management and the Department also has documented asset policies and procedures on the management and safeguarding of assets. Asset registers are maintained and annual stocktakes are undertaken to verify their accuracy.

Administered finances

The government provided appropriations totalling $4.5 billion for grants, subsidies and other administered expenses in 2007-08, including additional appropriations of $75.0 million provided in the Portfolio Supplementary Additional Estimates Statements.

Expenses totalling $5.2 billion were recognised during the year. The major contributors were:

  • AusLink ($2,979.8 million);
  • Local Government Financial Assistance Grants ($1,780.8 million);
  • Tasmanian Freight Equalisation Scheme ($101.3 million);
  • Transfer of the Australian Maritime College to the University of Tasmania ($66.5 million);
  • Regional Partnerships ($58.0 million); and
  • Interstate Road Transport Fees ($54.4 million).

In aggregate, the administered programs managed by the Department were under-expensed by $323.0 million, or 5.8 per cent, of which $83.1 million was rephased (moved to later years) during the 2008-09 Budget update and $191.3 million was related to the recognition of expenses associated with prepayments made in 2005-06 and 2006-07. Other major variances are shown in Table 1.2.

Table 1.2 Administered programs - reporting variances of more than $10 million

Program Amount overspent ($m) More info
Local Government Financial Assistance Grants 19.6 page 209
Sustainable Regions -10.7 page 201
Regional Partnerships -28.0 page 196

Taxation revenue collected on behalf of the government rose by $3.6 million in 2007-08 largely due to increased fees collected under the Interstate Road Transport Act 1985 ($3.6 million) and airport land tax equivalents ($2.8 million). These were partially offset by decreased revenue from noise levies collected at Adelaide Airport ($2.9 million).

Non-taxation revenue declined by $14.3 million overall, due mainly to reduced revenue from refunds of prior-year payments ($13.7 million) and the transfer of revenue items following the Administrative Arrangements Order of 3 December 2007 ($13.2 million), partially offset by an increase in Australian Maritime Safety Authority (AMSA) levies ($10.3 million).

In 2007-08, administered net assets declined by $961.9 million due mainly to:

  • the transfer of assets ($449.2 million) and liabilities ($11.6 million) to the Attorney-General's Department following the Administrative Arrangements Order of 3 December 2007;
  • the transfer of the Australian Maritime College to the University of Tasmania ($61.4 million); and
  • decreases in prepayments due to the expensing of some prepayments made in 2005-06 ($635.4 million) and 2006-07 ($46.0 million).

The decrease was partially offset by increases in the net asset value of administered investments in government authorities and companies ($236.8 million).

Figure 1.1 illustrates the mix of administered assets at 30 June 2008. For more information, see the audited financial statements.

Figure 1.1 Value of administered assets held at 30 June 2008

Figure 1.1 Value of administered assets held at 30 June 2008

Table 1.3 Summary of administered financial performance and position

 

2003-04
$m
2004-05
$m
2005-06
$m
2006-07
$m
2007-08
$m
Change
since last year
Taxation revenue 147.2 151.6 150.1 77.1 80.7 4.7%
Non-taxation revenue 142.7 138.4 135.7 168.3 154.1 -8.4%
Gains     36.7 0.6 7.7 >100.0%
Total income 289.9 290.1 322.5 246.0 242.5 -1.4%
Grants 3,549.8 3,620.9 3,841.7 4,319.8 4,966.6 15.0%
Subsidies 134.3 138.8 136.3 128.0 142.4 11.3%
Other expenses 44.7 113.7 88.9 117.6 123.8 5.3%
Total expenses 3,728.8 3,873.5 4,066.9 4,565.5 5,232.8 14.6%
Financial assets 850.4 719.5 2,118.3 1,937.3 1,974.1 1.9%
Non-financial assets 85.5 289.2 2,494.7 2,459.4 1,459.5 -40.7%
Liabilities 82.3 70.6 25.2 31.5 30.3 -3.8%
Net assets 853.6 938.0 4,587.8 4,365.1 3,403.3 -22.0%

Note: Historical data prior to 2006-07 reflects the respective year's financial statements as signed off by the Australian National Audit Office at the time. As such, it may not reflect current accounting policies or comparative figures published in later statements. For comparative purposes, figures for 2006-07 have been amended to reflect current accounting policies.

Environmental performance

The Department is required by the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) to report on how it has implemented the principles for ecologically sustainable development (ESD) set out in section 516A of the EPBC Act. Overall, the Department performed well in this regard during 2007-08.

The Department reports the ESD impacts of both its daily operations and the delivery of its three outcomes. This chapter focuses on the Department's operations, while Appendix E ('Report on Ecologically Sustainable Development') provides a detailed report on the following aspects of the Department's performance:

  • how our activities accord with the five principles of ESD identified in the Act;
  • how we administer legislation in accordance with ESD principles;
  • how the outcomes we work towards and our appropriated resources contribute to ESD;
  • how our activities affect the environment, and how we minimise harm to it; and
  • how we review and increase the effectiveness of measures to minimise harm.

The Department's environmental policy is the driver for maintaining its environment management system (EMS). The EMS provides the supporting framework to guide operations in the Department's national office, located in the Australian Capital Territory, with a flow-on to interstate offices. It is compliant with ISO14001:2004, the international standard for EMSs.

The Department continues to seek ways to reduce its day-to-day impact on the environment and to continuously improve environmental performance by mitigating the primary environmental impacts of its operations, for example by:

  • minimising energy and water consumption;
  • reducing waste production while increasing recycling;
  • adopting sustainable purchasing practices; and
  • creating greater staff awareness of ESD principles and practices.

Working with the owners of the two buildings that accommodate the national office, through lease-negotiated base building upgrades, the Department has positioned itself to deliver significantly improved environmental performance in its key tenancies.

ESD principles were incorporated into the design of the fit-out of the Department's premises at 62 Northbourne Avenue with the aim of achieving a 4.5 Australian Building Greenhouse Rating, or better, on completion of the works. The sustainability measures included:

  • water - installation of a grey water recycling system, rainwater tanks, and a dual-flush toilet system and tap sensors to reduce water waste;
  • energy - installation of energy-efficient lamps, automated lighting controls, and solar panels to boost the hot water system; application of external solar-resistant film to reduce impact by solar loads; and a detailed upgrade of the mechanical base building system; and
  • waste - implementation of a waste management plan which saw approximately 63 per cent (by weight) of the previous fit-out being recycled.

The sustainable practices implemented at the Department's premises at 111 Alinga Street included:

  • water - installation of a low-flush toilet system, water-saving shower heads and low-flow taps to reduce water waste, leading to a reported 50 per cent reduction in water consumption; and
  • energy - installation of energy-efficient chillers for the airconditioning system, a gas-fired central hot water system, and motion detectors to control lighting in bathrooms, and upgrading of the computerised light management system, leading to a reported 40 per cent reduction in electricity and gas consumption.

ESD principles were also applied in establishing Infrastructure Australia's accommodation in Sydney. The Department was able to acquire a quality tenancy, enabling the extensive reuse of existing fit-out, furniture and fixtures and minimising the need for modifications. This helped to limit the new tenancy's impact on landfill and waste, while providing a significant cost saving.

Social performance

The Department is required to report annually on various aspects of its social performance. In particular, the Department must address the reporting requirements of the:

  • Occupational Health and Safety Act 1991;
  • Freedom of Information Act 1982;
  • Requirements for annual reports for departments, executive agencies and FMA Act bodies, Department of Prime Minister and Cabinet, 8 June 2008;
  • Commonwealth Access and Equity Strategy; and
  • Commonwealth Disability Strategy.

Detailed reports against these requirements are provided in Chapter 6 ('Management and Accountability') and related appendices.

To a large extent, these matters relate to the impacts of the Department's operations on its staff. As described in Chapter 6, the Department places a high priority on the wellbeing of its people, and has renewed its focus on people management to ensure it provides the necessary capability to deliver outcomes for government.

The Department's activities also have social implications for the wider community, through the nature of the programs and services which the Department delivers. At an outcome level this is particularly reflected in:

  • the 'infrastructure investment' focus of Outcome 1: Assisting the Government to provide, evaluate, plan and invest in infrastructure across industry sectors;
  • the 'safe and secure' focus of Outcome 2: Fostering an efficient, sustainable, competitive, safe and secure transport system; and
  • the 'assisting' focus of Outcome 3: Assisting regions and local government to development and manage their futures.

In turn, social performance is evident in the Department's nine outputs as follows:

  • the improved national transport system and infrastructure investment coordination delivered through outputs 1.1.1 and 1.1.2;
  • the 'no blame' investigations, research and statistical analysis undertaken through Output 2.1.1;
  • the transport security work undertaken through Output 2.2.1;
  • the surface transport policy development and program delivery work delivered through Output 2.3.1;
  • the vehicle safety regulatory work undertaken through Output 2.3.2;
  • the aviation transport policy development and program delivery work delivered through Output 2.3.3; and
  • the regional development and local government services and programs delivered through outputs 3.1.1 and 3.1.2.

Particular highlights of the Department's social performance in 2007-08, within Australia and overseas, include:

  • the finalisation of the Department's role as the lead agency on the COAG trial of arrangements to improve government linkages with remote Indigenous communities;
  • the work on ITSAP, which is enhancing the safety of Indonesia's aviation and marine transport networks;
  • the implementation of the program to fit seatbelts on regional school buses; and
  • the support provided for the establishment of IA.

Further detail on the social impacts of the Department's outputs can be found in chapters 3, 4 and 5 and in appendices A and D.

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