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

    Budgeted departmental income statement

    AMSA has three main sources of income:

    • Revenues from Government including appropriation of levy funding for AMSA's safety and regulatory functions and Community Service Obligation (CSO) funding for AMSA's search and rescue capability.
    • Sales of goods and services, and
    • Interest.

    The Budgeted departmental income statement at table 5.1 indicates that AMSA is budgeting for net deficits of $6.1m in 2006-07 and in the two forward years of $6.2m in 2007-08 and $3.1m in 2008-09. These deficits result from a one-off factor whereby AMSA plans to use its accumulated surplus and cash reserves to fund the initial implementation of its new functions under the National Maritime Emergency Response Arrangements (NMERA) until the relevant levy rate is increased to achieve full cost recovery from the shipping industry by 2009-2010. This is discussed in more detail below and in Section 4.2 Cost Recovery Arrangements.

    Revenues from Government: Levy Funding

    The major part of AMSA's revenue arises from the three levies corresponding to AMSA's three major functions in ship safety regulation (the Regulatory Functions Levy), provision of the national network of marine aids to navigation (the Marine Navigation Levy), and management of the National Plan to Combat Pollution of the Sea by Oil and Other Noxious and Hazardous Substances and the new NMERA (the Protection of the Sea Levy). A detailed description of the levies is included in Section 2.5, Special Appropriations, and Section 4.2 Cost Recovery Arrangements.

    AMSA anticipates that the total amount of levies collected from the shipping industry in 2006-07 to be around $50.9m. These are appropriated under Section 48 of the Australian Maritime Safety Authority Act 1990 as special appropriations. The 2006-07 total levy collection is expected to be $1.7m higher than the projected total of $49.2m in 2005-06 resulting from anticipated growth in the overall levy revenue in 2006-07 in line with higher levels of shipping activity flowing from continued strong demand forecast in commodity exports.

    The Australian Maritime Safety Authority Act 1990 (section 2A) states that one of AMSA's objectives is to promote efficient provision of AMSA services. Since its inception, AMSA has substantially consolidated its asset base and adopted a range of management strategies making considerable efficiency gains in service delivery. This has provided regular opportunities to reduce levy rates on an ongoing basis as reflected in the overall downward trend in the Marine Navigation and Regulatory Functions levy rates.

    In November 2005, the Australian, State and Territory Governments agreed at an Australian Transport Council (ATC) meeting to implementation of the NMERA, which is a comprehensive package of measures for the ongoing protection of Australia's coastal and marine environment. This involves AMSA contracting emergency towage vessels at strategic locations around the Australian coast. AMSA also is to regulate, monitor and coordinate emergency response as national decision-maker when there is a significant pollution risk in relation to a ship in Australia's waters and around Australia's coast. This measure continues from the Department's 2005-06 Budget measure under Maritime Emergency Towage Services. The NMERA is to be funded on the basis of full cost recovery from the shipping industry through a proposed increase in the Protection of the Sea Levy.

    AMSA proposes to phase-in the required increase in the Protection of the Sea Levy over the next three financial years. The current levy rate of 3.3 cents per Net Registered Ton, which has not changed since 1 July 1995, will be gradually raised as indicated in the table below:

    YEAR
    Date of Proposed Levy
    Rate Increase
    Levy Rate
    2006-2007
    No change proposed
    3.3 cents per NRT
    2007-2008
    1 July 2007
    7.7 cents per NRT
    2008-2009
    1 July 2008
    9.6 cents per NRT
    2009-2010
    1 July 2009
    11.25 cents per NRT

    The change in the levy rate require regulations to be made pursuant to the Protection of the Sea (Shipping Levy) Act 1981 and is subject t o the usual regulatory approval process.

    Revenue from Government: Community Service Obligation Funding

    AMSA receives an annual departmental appropriation for providing a search and rescue co ordination service to the community with the amount appropriated for 2006-07 being $39.2m. This includes $21.4m being allocated to AMSA in the 2004-05 and 2005-06 Budgets from the total $73.6m additional funding over four years from each Budget for initiatives to strengthen AMSA's search and rescue capability.

    In the 2005-06 Budget, a total funding package of $54.7m over four years was allocated to AMSA for the following measures:

    • Contracting four turbine engine dedicated search and rescue aircraft to be based at Perth, Cairns, Melbourne and Brisbane. The aircraft are to have a capability for day and night search operations, on-scene coordination, homing to distress beacons, and deploying emergency supplies to people in distress; and
    • Improving communications and other search and rescue equipment for existing aircraft that are used for search and rescue operations on an opportunity basis.

    This complemented the measures announced in the 2004 05 Budget from a total funding package of $18.9m over four years including:

    • Contracting a dedicated turbine engine aircraft in Darwin with the capability to deliver lifesaving equipment and fitted with surface search radar and night search camera;
    • Upgrading of AMSA's Rescue Coordination Centre to an Emergency Response Centre including improved communication and search coordination systems;
    • Assisting existing contracted search and rescue aviation operators to address new aviation regulatory requirements planned for introduction in 2005; and
    • Developing a new system to deliver lifesaving equipment from turbine engine pressurised aircraft.

    AMSA also receives an annual administered appropriation to cover the cost of search and rescue incidents (mainly comprising aircraft/helicopter hire) estimated at $6.2m in 2006-07, which is the same as the $6.2m projected actual amount in 2005-06.

    Sales of Goods and Services

    AMSA may make determinations fixing charges under section 47 of the Australian Maritime Safety Authority Act 1990. Section 47(12) requires AMSA's fees and charges for the sale of its services to be reasonably related to the costs incurred, or to be incurred, by AMSA in their provision. AMSA provides a range of marine services for which it makes a charge based on the average cost of delivering a specific service or the time taken to deliver the service multiplied by a standard hourly rate. Charges may also include waiting time, travelling expenses and cancellation fees associated with particular services.

    AMSA marine services include: inspection of ships, cargo, and ships' safety equipment; activities involved with issuing qualifications (certificates of competency) to seafarers (conducting oral practical examinations for navigating and engineering officers and assessing sea time prerequisites for qualifications); issuing and renewing coastal pilot licences; and services provided by the Australian Shipping Registration Office.

    In 2006-07, AMSA's total estimated revenue from independent sources is $4.5m, compared to the estimated actual total of $3.7m in 2005-06. This includes sales of goods and services amounting to $2.3m ($2.2m in 2005-06) and interest of $2.3m ($1.5m in 2005-06).

    Expenditure

    The main elements of AMSA's operating expenditure are employee and supplier expenses and depreciation. Employee expenditure in 2006-07 of $26.9m is relatively stable compared with the estimated actual expenditure of $26.5m in 2005-06.

    The increase in supplier expenditure anticipated in 2006-2007 of $67.7m compared to the estimated actual expenditure in 2005-06 of $40.8m (a 66% increase) mainly reflects higher expenditure on technical consultancy and contract services and information technology services associated with implementation of the initiatives announced in the 2004-05 and 2005-06 Federal Budgets to strengthen AMSA's search and rescue capacity and AMSA's implementation of the emergency towage contracts under the NMERA.

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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)

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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 AMSA that are used in producing its outputs and include:

      • infrastructure, 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 programs that are controlled by the government and managed, or oversighted, by AMSA on behalf of the government. Administered expenses included live search and rescue response activities and administered revenues are appropriated from government.

    3. Departmental revenue

      Revenue from government represents the purchase of outputs from AMSA by the government and is recognised to the extent that it has been received into AMSA's 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 AMSA, using straight-line calculation method.

    7. Departmental assets - financial assets

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

    8. Departmental assets - non-financial assets

      These items represent future economic benefits that AMSA 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 - provisions and payables

      Provision has been made for AMSA's liability for employee entitlements arising from services rendered by employees. This liability includes unpaid annual leave, long service leave and sick leave.

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

    10. Administered Assets - Financial Assets

      Comprise primarily cash.

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