1. Financial Performance

This section analyses the financial performance of the Department for the year ended 30 June 2017.

1.1 Expenses

1.1A: Employee benefits
 2017
$'000
2016
$'000
Wages and salaries 97,798 98,881
Superannuation    
Defined contribution plans 8,049 7,940
Defined benefit plans 11,228 12,861
Leave and other entitlements 11,116 14,718
Separation and redundancies 1,824 1,691
Other employee expenses 3,350 3,146
Total employee benefits 133,365 139,237
1.1B: Suppliers
 2017
$'000
2016
$'000
Goods and services supplied or rendered    
Legal 10,395 12,203
Contracted services 23,457 18,330
Consultants 27,988 29,554
Contractors 11,882 12,204
Travel and accommodation 5,780 5,865
Communications 2,766 2,759
Property operating costs 7,166 7,599
Information technology services 3,643 2,972
Training and conferences 2,621 2,382
Other goods and services 5,350 5,314
Total goods and services supplied or rendered 101,048 99,182
Goods supplied 954 668
Services rendered 100,094 98,514
Total goods and services supplied or rendered 101,048 99,182
Other suppliers    
Operating lease rentals 12,807 13,645
Workers compensation expenses 967 901
Surplus lease space - 783
Total other suppliers 13,774 15,329
Total suppliers 114,822 114,511
Leasing Commitments    
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:    
Within 1 year 13,623 15,126
Between 1 to 5 years 50,848 48,169
More than 5 years 53,010 64,269
Total operating lease commitments 117,481 127,564

Leasing Commitments

The Department, in its capacity as lessor/lessee, has entered into operating leases for office accommodation purposes. Most departmental leases contain a clause for fixed rate increases. These lease conditions vary and rent reviews are undertaken annually with increases determined by either: fixed percentage increases, increases in the Consumer Price Index or the outcome of local or national property market reviews. Operating leases are effectively non-cancellable.

The Department had commitments receivable for sublease rental income of $0.208 million (2016: $0.014 million).

1.1C: Grants
 2017
$'000
2016
$'000
Local Governments - 52
Non-profit organisations 357 830
Total grants 357 882
1.1D: Finance costs
 2017
$'000
2016
$'000
Unwinding of discount 17 179
Total finance costs 17 179
 2017
$'000
2016
$'000
1.1E: Write-down and impairment of assets
Impairment of financial instruments 144 177
Write-down of leasehold improvements 74 642
Write-down other property, plant and equipment 67 54
Impairment of intangible assets 188 53
Total write-down and impairment of assets 473 926

Accounting Policy

Employee Benefits

Accounting policies for employee related expenses are contained in the People and Relationships section (Note 6.1).

Leases

The Department had no finance leases in its capacity as lessee at 30 June 2017 (2016: Nil).

Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the lease arrangements.

Lease incentives taking the form of ‘free’ leasehold improvements and rent holidays are recognised as liabilities. These liabilities are reduced by allocating lease payments between rental expense and reduction of the liability over the life of the lease. Lease incentives are recognised as a reduction of rental expense over the lease term on a straight-line basis unless another systematic basis is more reflective of the time pattern of the lessee's benefit.

Where leased premises are considered surplus, the operating rent has been brought to account in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. The net present value of future net outlays in respect of surplus space under non-cancellable lease agreements is expensed in the period in which the space becomes surplus.

The Department makes an immediate allowance for property make-good where required under lease agreements.

Borrowing Costs

All borrowing costs are expensed as incurred.

1.2 Own-Source Revenue and Gains

Own-Source Revenue

1.2A: Sale of goods and rendering of services
 2017
$'000
2016
$'000
Sale of goods 30 38
Rendering of services 3,359 4,027
Total sale of goods and rendering of services 3,389 4,065
1.2B: Other revenue
 2017
$'000
2016
$'000
Resources received free of charge    
Remuneration of auditors 540 530
Other 400 106
Total other revenue 940 636

Gains

1.2C: Other gains
 2017
$'000
2016
$'000
Unwinding of provision for surplus lease space 1,055 1,132
Reversal of lease liabilities - 9,304
Other 12 -
Total other gains 1,067 10,436
1.2D: Revenue from Government
 2017
$'000
2016
$'000
Appropriations    
Departmental appropriations 248,457 261,691
Total revenue from Government 248,457 261,691

Accounting Policy

Revenue from the Sale of Goods or Rendering of Services

Revenue from the sale of goods is recognised when:

  1. the risks and rewards of ownership have been transferred to the buyer;
  2. the Department retains no managerial involvement or effective control over the goods;
  3. the revenue and transaction costs incurred can be reliably measured; and
  4. it is probable that the economic benefits associated with the transaction will flow to the Department.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

  1. the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
  2. the probable economic benefits associated with the transaction will flow to the department.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Other Revenue

Resources Received Free-of-Charge

Resources received free-of-charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free-of-charge are recorded as either revenue or gains depending on their nature.

Other Gains

Resources Received Free-of-Charge

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements (refer to Note 8.2).

Sale of Assets

Gains and losses from disposal of assets are recognised when control of the assets has passed to the buyer.

Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the Department gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

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