Australian Maritime Safety Authority
Section 3: Budgeted Financial Statements
ANALYSIS OF BUDGETED FINANCIAL STATEMENTSAUSTRALIAN MARITIME SAFETY AUTHORITY
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
The Budgeted departmental income statement at table 3.1 indicates that AMSA is budgeting for higher net deficits in 2006-07 and 2007-08 and a reduced net deficit in 2008-09, compared to its original 2006-07 Budget. The deficit in 2006-07 increases from $6.1m to $8.2m and in 2007-08 from $6.2m to $6.5m, but in 2008-09 reduces from $3.1m to $2.2m.
The original deficits resulted from a one-off factor whereby AMSA plans to use accumulated surplus and cash reserves to fund the initial implementation of its new functions under the Australian Government's National Maritime Emergency Response Arrangements (NMERA). AMSA proposes to phase-in the required increase in the Protection of the Sea Levy over the next three financial years until full cost recovery from the shipping industry is achieved by 2009-10 and the AMSA budget is expected to return to a modest surplus.
Revenues from Government: Levy Funding
In November 2005, the Australian, State and Territory Governments agreed at an Australian Transport Council (ATC) meeting to implementation of the NMERA, a comprehensive package of measures for the ongoing protection of Australia's coastal and marine environment. This involved AMSA contracting emergency towage vessels at strategic locations around the Australian coast and regulating, monitoring and coordinating 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. The ATC agreed to the NMERA being funded on the basis of full cost recovery from the shipping industry through the proposed increase in the Protection of the Sea Levy to be administered by AMSA.
The ATC anticipated that AMSA's role in implementing the emergency towage and emergency management elements of the NMERA would be completed by 1 July 2007. However, AMSA finalised these elements by 30 June 2006, a year ahead of schedule and at the lower end of AMSA's budget forecast. This has led to savings in AMSA's emergency towage program in 2006-07 and the forward years, which reduces the level of AMSA's forecast deficits in 2006-07, 2007-08 and 2008-09.
In implementing the emergency towage contracts, AMSA took advantage of synergies between its emergency towage and aids to navigation functions by combining the emergency towage contract for a dedicated vessel in the Great Barrier Reef and Torres Strait with its aids to navigation maintenance work in the region. While this produces long-term efficiencies in AMSA's service delivery, it has slightly increased the cost for its aids to navigation services.
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 in the 2006-07 Budget being $39.2m. This included $21.4m 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 2004 05 Budget, the additional funding provided for AMSA to contract in 2004 for a high speed, turbine engine aircraft dedicated to search and rescue to be located in Darwin with the capability to deliver lifesaving equipment and fitted with surface search radar and night search camera. In the 2005 06 Budget, the additional funding provided for AMSA to contract in late 2005 for four more turbine engine dedicated search and rescue aircraft to be based at Perth, Cairns, Melbourne and Brisbane. These four aircraft also have the capability for day and night search operations, on-scene coordination, homing to distress beacons, and deploying emergency supplies to people in distress.
The second contract resulted in these four aircraft having different technical and operational capabilities compared to the Darwin aircraft and AMSA intends standardising the aircraft operations to facilitate its search and rescue operations. The standardisation is to be accommodated within the Budget funding allocation over the seven-year life of the Darwin aircraft contract, but requires expenditure to be brought forward in 2006-07, 2007 08 and 2008 09 to allow the work to be completed by 30 June 2008.
AMSA also proposes installing in-flight openable cargo doors on the four aircraft for deploying emergency supplies. This work is already included in the second contract but the cost is amortised over the ten year contract period. AMSA intends to bring forward this expenditure to complete installation of the doors by 30 June 2008.
AMSA also receives an annual administered appropriation to cover the cost of search and rescue incidents (mainly comprising aircraft/helicopter hire). The administered appropriation has increased from $6.2m to $8.6m due to additional funding of $2.4m required to cover the higher hourly operating costs for the turbine engine dedicated search and rescue aircraft compared to the hourly rate for previously hired piston engine aircraft.
The table below shows the impact of each of the above factors (with the exception of the increase in the administered appropriation for search and rescue incidents - which is shown in table 3.7) on AMSA's budget and the revised net deficit/surplus position, as reflected in table 3.1:
|2006-07 Budget Adjustment Factors||2006-07
|NMERA emergency towage savings:||($0.973)||($1.256)||($1.537)||($1.685)|
|Aids to navigation increased costs:||$0.242||$0.280||$0.321`||$0.408|
|Standardisation of aircraft operations costs:||$0.167||$0.270||$0.274||$0.274|
|Rescheduling of aircraft doors expenditure - Costs:
|Total adjustment required to 2006-07 Budget:||$2.061||$0.298||($0.948)||($1.381)|
|2006-07 Budget net (deficit)/surplus:||($6.129)||($6.201)||($3.104)||$0.338|
|Revised net (deficit)/surplus:||($8.190)||($6.499)||($2.156)||$1.719|
Table 3.5: Departmental capital budget statement
Table 3.6: Departmental property, plant, equipment and intangibles - summary of movement (Budget year 2006-07)
Table 3.7: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)
Table 3.8: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)
Table 3.10: Schedule of administered capital budget
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 the 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.