Department of Infrastructure, Transport, Regional Development and Local Government
SECTION 3: BUDGETED FINANCIAL STATEMENTS
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 2007-08, is provided below.
Budgeted departmental income statement
The Department is budgeting for approved operating losses in each financial year from 2007-08 to 2009-10. The losses are attributable to costs associated with planned, but non ongoing, National Office leasehold improvements and activities the Department has been asked to implement from previous year surpluses.
Total expenses are estimated to be $253.1m, an increase of $3.8m from Budget. The increase is due to measures announced since the 2007-08 Budget.
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 appropriations; and
- the one-off impact in 2003-04 of expenses related to the recognition of a provision for asbestos-related disease claims.
The increase in expenses between 2004-05 and 2005-06 largely reflects measures associated with transport security activities. The subsequent increase in 2007-08 reflects the impact of new measures.
Budgeted departmental balance sheet
The Department's budgeted net asset position of $95.6m represents an increase of $4.9m from the 2006-07 actual. The increase is primarily attributable to the timing of asset asquisitions.
Total assets are expected to increase by $5.6m to $151.4m from the 2006-07 actual. The increase reflects the timing of asset acquisitions.
The Department's primary liability continues to be accrued employee leave entitlements of $36.3m.
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 $240.1m, representing an increase of $19.3m from Budget. The increase is primarily due to:
- dividends received from Airservices Australia ($16.1m);
- gains from the sale of land at leased airports ($9.8m); and
- fees collected under the Interstate Road Transport Act 1985 ($4.3m).
The increase in revenue is partially offset by the transfer of revenue items following the Administrative Arrangements Order of 3 December 2007 ($14.3m).
Administered expenses, such as for grants and subsidies programs, are budgeted at $5 480.8m, representing an increase of $39.3m from the Budget and will be incurred for the programs set out at Section 2, Table 2.2.1 for Outcome 1 and Table 2.2.2 for Outcome 2. The increase is largely due to:
- recognition of expenses associated with prepayments made in 2005-06 ($169.9m);
- measures disclosed since the 2007-08 Budget ($48.0m);
- parameter adjustments ($12.1m);
- the movement of funding for programs between years ($3.4m); and
- other estimates adjustments ($3.2m).
The increase is partially offset by the transfer of programs to the Attorney-General's Department following the Administrative Arrangements Order of 3 December 2007 ($197.5m).
Schedule of budgeted assets and liabilities administered on behalf of government
Total assets are expected to decrease by $1 402.0m from the 2006-07 actual to $3 119.6m. The decrease relates mainly to:
- the timing of payments to the states and territories associated with the AusLink program ($872.8m);
- the transfer of non-financial assets ($313.4m) and loan receivables ($134.9m) to the Attorney-General's Department following the Administrative Arrangements Order of 3 December 2007; and
- the transfer of the Australian Maritime College to the University of Tasmania (61.4m).
Total liabilities are expected to decrease by $26.6m from the 2006-07 actual to $4.9m. The decrease is primarily due to the transfer of provisions and payables to the Attorney-General's Department following the Administrative Arrangements Order of 3 December 2007 ($14.5m), and the flow on effects of the 2006-07 actuals ($12.1m).
BUDGETED FINANCIAL STATEMENTS TABLES
Table 3.5: Departmental capital budget statement
Table 3.10: Schedule of administered capital budget
NOTES TO THE FINANCIAL STATEMENTS
- 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.
- Departmental and administered items
Agency assets, liabilities, revenues and expenses are those items that are controlled by the Department and 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 programs 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.
- 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's bank account.
Revenue from other sources, representing sales from goods and services, is recognised when:
- the risks and rewards of ownership have been transferred to the buyer;
- the seller retains no managerial involvement nor effective control over the goods;
- the revenue and transaction costs incurred can be reliably measured; and
- it is probable that the economic benefits associated with the transaction will flow to the Department.
- Departmental expenses - employees
Payments and net increases in entitlements to employees for services rendered in the financial year.
- Departmental expenses - suppliers
Payments to suppliers for goods and services used in providing agency outputs.
- Departmental expenses - depreciation and amortisation
Depreciable infrastructure, plant and equipment, buildings and intangible assets are written off to their estimated residual values over their estimated useful life to the Department, using the straight-line calculation method.
- Departmental assets - financial assets
The primary financial asset relates to receivables. Financial assets are used to fund the Department's capital program, employee entitlements, creditors and to provide working capital.
- 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.
- Departmental liabilities - interest bearing liabilities
The main interest bearing liabilities are information technology assets that the Department has procured under finance leases. These are written-off over the life of the lease.
- 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.
Provision has also been made for unpaid supplier expenses as at balance date.
- Administered revenue
Details of the range of taxation and non-taxation revenue collected by the Department are provided at Appendix 3.1.
- Administered expenses
The majority of the Department's administered programs are classified as grants, the most significant being: Local Government Financial Assistance Grants; AusLink; and Regional Partnerships.
- Administered assets - financial assets
Comprise primarily the Australian Government's investments in portfolio agencies.
Appendix 3.1: Administered income
Appendix 3.2: Administered loan repayments