6. People and Relationships
This section describes a range of employment and post-employment benefits provided to our people and our relationships with other key people.
6.1 Employee Provisions
| 2017 $'000 | 2016 $'000 | |
|---|---|---|
| Leave | 45,001 | 46,184 |
| Total employee provisions | 45,001 | 46,184 |
| 2017 $'000 | 2016 $'000 | |
|---|---|---|
| Leave | 3,477 | 3,863 |
| Total employee provisions | 3,477 | 3,863 |
Accounting Policy
Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits expected within twelve months of the end of the reporting period are measured at their nominal amounts.
Other long term employee benefits are measured as the net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.
Leave
The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting.
The leave liabilities are calculated on the basis of employees' remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the Department's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.
The liability for long term benefits is determined by reference to the work of an actuary. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.
Separation and Redundancy
Provision is made for separation and redundancy benefit payments. The Department recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.
Superannuation
The Department's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other superannuation funds held outside the Australian Government.
The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.
The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance's administered schedules and notes.
The Department makes employer contributions to the employees' defined benefit superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government. The Department accounts for the contributions as if they were contributions to defined contribution plans.
The liability for superannuation recognised as at 30 June represents outstanding contributions for the final pay fortnight of the reporting period.
Accounting Judgements and Estimates
Employee provisions have been calculated based on the Department's specific probability and other factors as determined by the Australian Government Actuary as at 31 December 2015. The Department has assessed that these factors remain relevant as at 30 June 2017.
6.2 Key Management Personnel Remuneration
Key management personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling the activities of the Department, directly or indirectly. The Department has determined KMP to be Portfolio Ministers, the Secretary, Deputy Secretaries and the Chief Operating Officer. KMP remuneration is reported in the table below:
| 2017 $'000 | 2016 $'000 | |
|---|---|---|
| Short-term employee benefits | 1,478 | 1,363 |
| Post-employment benefits | 266 | 352 |
| Other long-term employee benefits | 250 | 351 |
| Total key management personnel remuneration expenses1 | 1,994 | 2,066 |
The total number of KMP included in the above table are 5 (2016: 7)2.
- Remuneration is reported on an accrual basis and excludes short term acting arrangements. Remuneration excludes the remuneration and other benefits of Portfolio Ministers. The Portfolio Ministers' remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the Department.
- The Department had four KMP positions in 2017 (2016: four). The total number of KMP above includes employees occupying KMP positions for part of the year.
6.3 Related Party Disclosures
Related party relationships:
The Department is an Australian Government controlled entity. Related parties to the Department are key management personnel (see Note 6.2 above), other Australian Government entities and the Norfolk Island Health and Residential Aged Care Service (see Note 4.1D).
Transactions with related parties:
The following transactions with related parties occurred during the financial year and are considered to be significant due to their size and/or nature:
| Transaction | Related party | Note | 2017 $'000 |
|---|---|---|---|
| Transfer of land and associated assets—Moorebank NSW | Department of Defence | 4.2A | 356,276 |
| Lease of land—Moorebank1 | Moorebank Intermodal Company Ltd | 2.1E | - |
| Equity payments | Moorebank Intermodal Company Ltd | 4.1D | 42,000 |
| Australian Rail Track Corporation Ltd | 4.1D | 81,000 | |
| Service Delivery Agreement | Norfolk Island Health and Residential Aged Care Service | 2.1B | 6,569 |
- Land transferred from the Department of Defence was leased to the Moorebank Intermodal Company Ltd for 99 years at a nominal annual rental, resulting in a write-down of $356.3 million in the carrying value of the land and associated assets (See Note 2.1E).
Other related party transactions with Australian Government entities include, but are not limited to:
- Employer superannuation contributions, insurance premiums, information technology and communication expenses and other whole of government payments (included in Notes 1.1A, 1.1B, 2.1A and 2.1B);
- Legal services provided by the Australian Government Solicitor (included in Notes 1.1B and 2.1B);
- Shared service arrangements provided to the Australian Transport Safety Bureau and Infrastructure Australia (included in Note 1.2A);
- Land tax equivalent payments received from the Moorebank Intermodal Company Ltd (included in Note 2.2A);
- Recovery of costs from other Australian Government entities associated with functions in non self-governing territories (included in Notes 2.2B, 2.2C and 2.2E);
- Sub-lease arrangements (included in Note 1.1B);
- Audit services provided free of charge by the Australian National Audit Office (Note 1.2B);
- Grant administration services provided by the Department of Industry, Innovation and Science (included in Note 1.2B);
- Reimbursements paid to the Department of Foreign Affairs and Trade for costs incurred at overseas posts (included in Note 1.2B);
- Payments to other Australian Government entities in connection with services provided in non self-governing territories (included in Note 2.1B);
- Research and scoping studies paid to Geoscience Australia and the CSIRO (included in Note 1.2B);
- Grant and other payments to corporate Commonwealth entities (included in Note 2.1D and Note 2.1F);
- Grant payments to State and Territory Governments paid via the Treasury (included in Note 2.1D); and
- Dividend receipts from the Australian Rail Track Corporation.