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Section 3: Explanatory tables and budgeted financial statements

Section 3 presents budgeted financial statements which provide a comprehensive snapshot of agency finances for the budget year 2008-09. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between the agency and outcome resource statements, movements in administered funds, special accounts and government indigenous expenditure.

3.1: Explanatory tables

3.1.1: Reconciliation of total available appropriation and outcomes

The Agency resource statement (Table 1.1) details the total available appropriation available to an agency from all sources. For departmental operating appropriations (outputs) this includes carry-forward amounts as well as amounts appropriated at Budget. As agencies incur and are funded for future liabilities, generally depreciation and employee entitlements, the total amount of departmental operating appropriation available to an agency is unlikely to be fully utilised in the Budget year. Outcome resource statements include details of the expected use of available resources in contributing towards outcomes in the Budget year.

3.1.2: Movement of administered funds between years

AMSA did not move administered funds between years.

3.1.3: Special Accounts

AMSA does not maintain Special Accounts.

3.1.4: Australian Government Indigenous Expenditure

AMSA has no Australian Government Indigenous Expenditure to report.

3.2: Budgeted financial statements

3.2.1: Differences in agency resourcing and financial statements

AMSA does not have any significant differences between the resource information presented in the Budget Papers and Portfolio Budget Statements as a result of differences between Australian Accounting Standards (AAS) and Government Finance Statistics (GFS).

3.2.2: Analysis of budgeted financial statements

AMSA is budgeting for a net deficit of $2.1m in 2008-09, which reflects the continued phasing-in of full cost recovery over three years (2006-07 to 2008-09) of the Australian Government's National Maritime Emergency Response Arrangements. AMSA is using its accumulated surplus and cash reserves to fund its functions under these arrangements until the relevant shipping levy is increased to a rate that achieves full cost recovery from the shipping industry in 2009-10, when AMSA expects to return to a balanced budget.

AMSA Revenue

AMSA's main revenue source is from government funding. This includes levies collected from the shipping industry and appropriated under Section 48 of the AMSA Act as Special Appropriations to fund AMSA's ship safety and environment protection functions and Community Service Obligation funding for search and rescue functions. AMSA has two lesser revenue sources from the sale of goods and services and from interest. In 2008-09, AMSA estimates receiving total revenue of $118.2m compared to $111.0m in the 2007-08 Budget, as summarised in the table below:

AMSA Revenue comparison

AMSA Revenue Sources 2008-09
Budget
2007-08
Budget
Special Appropriations of levies collected from the shipping industry: $62.7m $57.1m
Annual departmental appropriation for search and rescue functions* $39.7m $39.3m
Annual administered appropriation for search and rescue response*: $9.6m $9.6m
Revenue from independent sources (fees and charges and interest): $6.2m $4.8m
Administered capital (equity injections) - $0.2m
Total Revenue: $118.2m $111.0m

*The annual departmental and administered appropriations are combined into the departmental appropriation figure used in all AMSA tables in this PBS.

Revenue from government: levy funding

AMSA has three levies corresponding to its key ship safety and environment functions:

  • Regulatory Functions Levy funds ship safety and environment protection regulation;

  • Marine Navigation Levy funds the national network of marine aids to navigation, and

  • Protection of the Sea Levy funds pollution preparedness and response and emergency response services.

In 2008-09, levy revenue is estimated to total $62.7m, which is $5.6m higher than $57.1m in the 2007-08 Budget, mainly resulting from the increased levy collection of $3.3m anticipated from the proposed rise in the rate of the Protection of the Sea Levy required to fund the National Maritime Emergency Response Arrangements. A slight rise also is expected in the collection of the Marine Navigation and Regulatory Functions levies reflecting continued high levels of shipping activity from ongoing strong demand forecast in commodity exports. AMSA is continuing to phase-in the required increase in the Protection of the Sea Levy to recover the cost of the National Maritime Emergency Response Arrangements over the two financial years 2008-09 and 2009-10, as indicated in the table below:

Year Date of Proposed Levy Rate Increase Proposed Levy Rate
2008-2009 1 July 2008 9.6 cents per net registered ton
2009-2010 1 July 2009 11.25 cents per net registered ton

The changes in the levy rate require regulations to be made pursuant to the Protection of the Sea (Shipping Levy) Act 1981 and these are subject to the usual regulatory approval process. AMSA intends to continue using its accumulated surplus and cash reserves to offset the shortfall in the levy funding until the levy rate achieves full cost recovery in 2009-10.

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, which is estimated at $39.7m in 2008-09. This includes the ongoing additional funding, totalling $73.6m over four years, allocated to AMSA in the 2004-05 and 2005-06 Budgets for initiatives to strengthen its search and rescue capability. AMSA also receives an annual administered appropriation to cover the cost of search and rescue incidents (mainly aircraft/helicopter hire) estimated at $9.6m in 2008-09. The annual department and administered appropriations are combined into the departmental appropriation figure used in all AMSA tables in this PBS. This reflects the guidance from the Department of Finance and Deregulation that both appropriations should be combined into the departmental appropriation figure in the 2008-09 PBS.

Appropriation comparison between 2008-09 and 2007-08

The table below compares the appropriations in the 2008-09 and the 2007-08 Budgets:

  2008-09
Budget
($'000)
2007-08
Budget
($'000)
Appropriation Bill No. 1
Departmental Outputs
Australian Search and Rescue
Administered Expenses


39,763
9,631


39,340
9,631
Total 49,394 48,971
Special Appropriations
Marine Navigation Levy
Regulatory Functions Levy
Protection of the Sea Levy

20,030
26,990
15,638

19,058
25,663
12,369
Total 62,658 57,090
Appropriation Bill No. 2
Departmental capital (equity injections)
Administered assets and liabilities

0
0

0
172
Total 0 172
Total Appropriations 112,052 106,233

Revenue from independent sources: sale of goods and services and interest

AMSA may make determinations fixing charges under section 47 of the AMSA Act, which requires these fees and charges to be reasonably related to the costs incurred by AMSA in their provision. AMSA has a range of services with charges based on the average cost of delivering a specific service or the time taken to deliver the service multiplied by a standard hourly rate and may include waiting time, travelling expenses and cancellation fees.

AMSA services include: inspection of ships, cargo, and ships' safety equipment; activities involved with issuing certificates of competency to seafarers, including 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 2008-09, AMSA's total estimated revenue from independent sources is $6.2m ($4.8m in 2007-08). This includes sale of goods and services amounting to $4.5m ($2.9m in 2007-08) and interest of $1.7m ($1.9m in 2007-08). The decline in interest accrual is expected to result from the reduction in cash reserves, which are being used to offset the phasing-in of full cost recovery for the National Maritime Emergency Response Arrangements.

Resources for AMSA's output groups

Table 2.1 indicates the resources allocated to the two AMSA output groups with the trend in resources over the past four years illustrated in Chart 3.2.1 below:

Chart 3.2.1: Trends in Resources for AMSA Output Groups

Chart 3.2.1: Trends in Resources for AMSA Output Groups

(click on the image to view the larger version)

The higher level of resources allocated in 2008-09 to AMSA Outcome Group 1, Ship Operations, Safety and Marine Environment Protection Program, arises from AMSA's continued role in the National Maritime Emergency Response Arrangements. This includes the ongoing management of contracts for the provision of emergency towage services at strategic locations around the Australian coast and the regulation, monitoring and coordination of emergency response arrangements if there is a significant pollution risk in relation to a ship in Australia's waters and around the Australian coast.

The increased trend in resources allocated to AMSA Outcome Group 2, Search and Rescue Program, since 2005-06 flows from the ongoing measures in the 2004-05 and 2005-06 Budgets to strengthen AMSA's search and rescue capability.

Expenses

The main elements of AMSA's expenses are employee and supplier expenses and depreciation. Employee expenses in 2008-09 of $31m are higher compared with the $28.4m in the 2007-08 Budget. This mainly relates to the replacement of consultants with permanent staff and additional staff that will be required to meet increased workload in relation to delivery of new programs, such as the Indonesian Transport Safety Assistance project.

The supplier expenses anticipated in 2008-09 to be $81.7m is higher than the 2007-08 budget of $71.2m. This mainly reflects the addition of the expenditure covered by the annual administered appropriation, which is the cost to AMSA of responding to search and rescue incidents (mainly comprising aircraft/helicopter hire). The annual administered and departmental appropriations have been combined into the departmental appropriation in 2008-09, as discussed above.

Revenue/Expense Comparison

The following chart shows the overall trend in AMSA's revenue and expenses since 2004-05. The rise in revenue and expenses since 2005-06 results from two influences. The first is the Budget measures in 2004-2005 and 2005-2006 allocating additional funding to enhance AMSA's search and rescue capability. The second is the rise in levy revenue required to fully recover the costs of AMSA's functions in providing emergency response services under the National Maritime Emergency Response Arrangements.

AMSA has approval to budget for a deficit in the three financial years, from 2006-07 to 2008-09, as a one-off measure to support the proposed staged increase in the levy revenue required to fund the National Maritime Emergency Response Arrangements, with the aim of achieving full cost recovery from the shipping industry in 2009-10. AMSA has been drawing upon its accumulated surplus and cash reserves to cover the deficit years.

Chart 3.2.2: AMSA Revenue and expenses*

Chart 3.2.2: AMSA Revenue and expenses

(click on the image to view the larger version)

*Financial figures for 2005-2006 and the out years in the above table are based on AMSA's adoption of the Australian Equivalents to International Financial Reporting Standards (AEIFRS). The figures for 2004-05 in this table have not been adjusted for the AEIFRS and so are not strictly comparable.

3.2.3: Budgeted financial statements tables

Table 3.2.1: Budgeted departmental income statement (for the period ended 30 June)

Table 3.2.2: Budgeted departmental balance sheet (as at 30 June)

Table 3.2.3: Budgeted departmental statement of cash flows (for the period ended 30 June)

Table 3.2.4: Departmental statement of changes in equity summary of movement (Budget year 2008-09)

Table 3.2.5: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)

Table 3.2.6: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

There is nothing to report in this schedule as all items were reclassified as departmental.

Table 3.2.7: Schedule of budgeted administered cash flows (for the period ended 30 June)

3.2.4: 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 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 entity.

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 program, 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 and long service leave.

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

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Budget 2008-09