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Section 5 : Budgeted Financial Statements

  • 5.1 Analysis of budgeted financial statements
  • 5.2 Budgeted financial statements tables
  • 5.3 Notes to the financial statements
  • 5.1 Analysis of budgeted financial statements

    An analysis of the Department's budgeted financial statements, as reflected in the budgeted departmental financial statements and administered schedules for 2006-07, is provided below.

    Departmental

    Budgeted departmental income statement

    The Department is budgeting for a break even operating result for 2006- 07.

    Total revenues and expenses are estimated to be $220.8m in 2006-07, a decrease of $3.2m from the 2005 06 estimated actual. The decrease is primarily due to the transfer of several territory programmes ($7.9m) to administered. The decrease is partially offset by measures disclosed in the 2006-07 Budget ($4.2m).

    Chart 5.1: Total departmental expenses

    Chart 5.1: Total departmental expenses

    (click on the image to view the larger version)

    The significant drop in expenses from 2003-04 to 2004-05 largely reflects two factors:

    • expenses associated with the provision of services to the Indian Ocean Territories, which were transferred from departmental to administered appropriation, and
    • the one-off impact in 2003-04 of expenses related to the recognition of a provision for asbestos-related disease claims.

    Budgeted departmental balance sheet

    The Department's budgeted net asset position of $97.9m represents a decrease of $17.4m from the 2005-06 estimated actual. The decrease is primarily attributable to the transfer of assets associated with the Jervis Bay Territory programme ($20.3m) to administered.

    Total assets are expected to decrease by $16.5m to $142.5m, reflecting, in large part, the transfer of assets associated with the Jervis Bay Territory programme.

    Chart 5.2: Budgeted assets for 2006-07

    Chart 5.2: Budgeted assets for 2006-07

    (click on the image to view the larger version)

    The Department's primary liability continues to be accrued employee leave entitlements of $32.9m.

    Administered

    Schedule of budgeted income and expenses administered on behalf of government

    The Department administers the collection of taxes, fees and fines, other non-taxation revenue and interest and dividends estimated at $216.9m, representing a decrease of $64.1m from the 2005-06 estimated actual. The decrease is primarily due to reduced revenue from:

    • noise levies collected at Adelaide and Sydney Airports ($28.6m)
    • levies collected under the Stevedoring Levy (Collection) Act 1998 ($20.0m), and
    • dividends received from Airservices Australia ($17.3m).

    Administered expenses, such as for grants and subsidies programmes, are budgeted at $4 534.7m, representing an increase of $432.9m from the 2005 06 estimated actual and will be incurred for the programmes set out at Section 3, Table 3.2.1 for Outcome 1 and Table 3.2.2 for Outcome 2. The increase is due to:

    • the impact of new measures announced in the 2006-07 Budget ($213.8m)
    • the movement of funds for programmes between years ($132.5m), resulting in a lower level of expenses in 2005-06 ($84.7m); and higher expenses in 2006-07 ($47.8m).
    • changes in the funding profile of several administered programmes.

    Chart 5.3: Total administered expenses

    Chart 5.3: Total administered expenses

    (click on the image to view the larger version)

    Schedule of budgeted assets and liabilities administered on behalf of government

    Total assets are expected to decrease by $96.6m to $3 092.1m from the 2005-06 estimated actual. The decrease relates mainly to the timing of payments to the states and territories associated with the AusLink programme ($207.9m), partially offset by an increase in receivables relating to concessional loan advances provided under the Natural Disaster Relief Arrangements programme ($100.0m) in response to the impact of Tropical Cyclone Larry and the transfer of assets associated with the Jervis Bay Territory programme.

    Total liabilities are expected to decline by $2.1m, from the 2005-06 estimated actual to $20.1m. The decrease primarily reflects the reduction in payables attributable to MIFCo ($1.2m) and the Local Government Financial Assistance Grants programme ($1.0m).

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    5.2 Budgeted financial statements tables

    Table 5.1: Budgeted departmental income statement (for period ended 30 June)

    Table 5.2: Budgeted departmental balance sheet (as at 30 June)

    Table 5.3: Budgeted departmental statement of cash flows (for the period ended 30 June)

    Table 5.4: Departmental statement of changes in equity - summary of movement (Budget year 2006-07)

    Table 5.5: Departmental capital budget statement

    Table 5.6: Departmental property, plant, equipment and intangibles - summary of movement (Budget year 2006-07)

    Table 5.7: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)

    Table 5.8: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

    Table 5.9: Schedule of budgeted administered cash flows (for the period ended 30 June)

    Table 5.10: Schedule of administered capital budget

    Table 5.11: Schedule of property, plant, equipment and intangibles - summary of movement (Budget year 2006-07)

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    5.3 Notes to the financial statements

    1. Accounting policy

      The budgeted financial statements have been prepared on an accrual accounting basis, having regard to Statements of Accounting Concepts, and in accordance with:

      • the Finance Minister's Orders
      • Australian Accounting Standards
      • Other authoritative pronouncements of the Australian Accounting Standards Board, and
      • The Consensus Views of the Urgent Issues Group.

    2. Departmental and administered items

      Agency assets, liabilities, revenues and expenses are those items that are controlled by the Department that are used by the Department in producing its outputs and include:

      • computers, plant and equipment used in providing goods and services
      • liabilities for employee entitlements
      • revenue from appropriations or independent sources in payment for outputs, and
      • employee, supplier and depreciation expenses incurred in providing agency outputs.

      Administered items are those items incurred in providing programmes that are controlled by the government and managed, or oversighted, by the Department on behalf of the government. Administered expenses included grant payments and subsidies, and administered revenues include levies, fees and fines.

    3. Departmental revenue

      Revenue from government represents the purchase of outputs from the Department by the government and is recognised to the extent that it has been received into the Department bank account.

      Revenue from other sources, representing sales from goods and services, is recognised at the time that it is imposed on customers.

    4. Departmental expenses - employees

      Payments and net increases in entitlements to employees for services rendered in the financial year.

    5. Departmental expenses - suppliers

      Payments to suppliers for goods and services used in providing agency outputs.

    6. Departmental expenses - depreciation and amortisation

      Depreciable property plant and equipment, buildings and intangible assets are written-off to their estimated residual values over their estimated useful life to the Department, using straight-line calculation method.

    7. Departmental assets - financial assets

      The primary financial asset relates to receivables. Financial assets are used to fund the Department's capital programme, employee entitlements, creditors and to provide working capital.

    8. Departmental assets - non-financial assets

      These items represent future economic benefits that the Department will consume in producing outputs. The reported value represents the purchase price paid less depreciation incurred to date in using the asset.

    9. Departmental liabilities - interest bearing liabilities

      Property lease incentives that the Department has received. These incentives are written-off over the life of the lease.

    10. Departmental liabilities - provisions and payables

      Provision has been made for the Department's liability for employee entitlements arising from services rendered by employees. This liability includes unpaid annual leave and long service leave. No provision has been made for sick leave because the level of sick leave taken is less on average than the amount which employees are entitled to each year.

      Provision has also been made for unpaid supplier expenses as at balance date.

    11. Administered revenue

      Details of the range of taxation and non-taxation revenue collected by the Department are provided at Appendix 5.1.

    12. Administered expenses

      The majority of the Department's administered programmes are classified as grants, the most significant being: Local Government Financial Assistance Grants; AusLink; Natural Disaster Relief Arrangements; and Regional Partnerships.

    13. Administered assets - financial assets

      Comprise primarily the Australian Government's investments in portfolio agencies.

    Appendix 5.1: Administered income

    Appendix 5.2: Administered loan repayments

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    Budget 2006-07

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